What does Vietnam's economy need to do to "reach the target" of 5% growth?

Prime Minister Pham Minh Chinh said that this year, we strive to have at least 10/15 targets achieved and exceeded, and at the same time, GDP growth is forecast to reach over 5%.

In recent times, Vietnam's economy has faced many difficulties and challenges. (Photo: Viet An)

In 2023, Vietnam's economy has completed three-quarters of the socio-economic development plan for the 2021-2025 period.

In recent times, Vietnam’s economy has faced many difficulties and challenges. For example, the world economic situation has a negative outlook, global growth has slowed down due to tight monetary policy, the stagnation of the Eurozone economies and the 0.25% interest rate increase by the US Federal Reserve (Fed), and the special military campaign in Ukraine.

In addition, the power shortage from late May to mid-June 2023 due to the heat wave has caused additional difficulties for businesses. The World Bank (WB) estimates that Vietnam's economy suffered a loss of about 0.3% of its Gross Domestic Product (GDP) (equivalent to about 1.4 billion USD) due to the power shortage, limiting investment in transmission infrastructure and the power grid.

In addition, businesses also face the problem of capital depletion or delayed VAT refunds....

Government accompanies businesses to overcome difficulties

Faced with such difficulties, Associate Professor, Dr. Tran Dinh Thien assessed that the Government's support has promptly removed difficulties and obstacles for businesses and production and business households.

Associate Professor, Dr. Tran Dinh Thien acknowledged: “In its direction and administration, the Government has adhered to the motto of solidarity, discipline, courage, flexibility, innovation, creativity, timeliness and efficiency. Since the beginning of the year, many policies and solutions have been urgently issued and implemented by the Government and localities, overcoming bottlenecks and shortcomings of the economy, creating positive effects and trust for the business community and production and business households.”

Speaking to TG&VN reporters, Dr. Nguyen Quoc Viet, Deputy Director of the Vietnam Institute for Economic and Policy Research (VEPR) under the School of Economics, Vietnam National University, Hanoi, said that the mounting difficulties from the outside are putting great pressure on the completion of socio-economic development goals for 2023.

"In the face of these difficulties, we can clearly see the determination from the highest level to take drastic action to unblock the driving forces to promote growth," Dr. Viet emphasized.

According to the Deputy Director of VEPR, on a macro level, the policy of reducing and extending taxes and fees and the Government's resolutions and continuous directions to remove difficulties have been effective in reducing the number of businesses withdrawing from the market, stimulating domestic consumption demand, thereby contributing to gradually restoring the growth recovery momentum of the last two quarters.

Continuously decreasing interest rates in the first months of the year and increasing credit limits at some banks are expected to contribute to solving difficulties in the production and business sector.

The Government has been making efforts to accelerate public investment disbursement, helping this target to be significantly higher than previous years, which is a bright spot of success in 2023.

Growth momentum must still come from the business sector and social investment. (Source: VASEP)

The driving force comes from the business sector

At the 6th session of the 15th National Assembly, reporting on the socio-economic situation in 2023 and the expected development plan for 2024, Prime Minister Pham Minh Chinh said that this year, we strive to have at least 10/15 targets achieved and exceeded, while GDP growth is forecast to reach over 5%.

Commenting on this result, National Assembly delegate Tran Hoang Ngan, Ho Chi Minh City delegation, said that in the context of the economy facing disadvantages both from outside and inside, the 5% growth rate is very commendable.

According to Mr. Tran Hoang Ngan, the Resolution of the 13th National Party Congress sets out the goals to strive for and implement 3 strategic breakthroughs, 6 key tasks, and 12 groups of solutions. Of which, the 3 strategic breakthroughs are perfecting and synchronizing institutions; developing human resources, especially high-quality human resources; and building an infrastructure system that still has existing value.

In terms of institutions, the National Assembly and the Government have been making great efforts and making progress in developing and reviewing an average of 8-9 draft laws and many resolutions at each session. These include specific mechanisms and policies to meet practical requirements.

Regarding infrastructure, in 2023, development investment capital will increase by 40% compared to 2022, determined to deploy all 2.87 million billion VND in the medium term.

Mr. Tran Hoang Ngan said that in addition, it is necessary to "ask for more" because in the current context, public investment is the most important driving force to promote growth, solve bottlenecks, and serve as a launching pad to accelerate the 2026-2030 planning period. To create jobs, ensure social security, improve the investment environment, enhance national competitiveness, reduce logistics... it is necessary to increase investment resources for infrastructure.

In addition to economic and transportation infrastructure, digital infrastructure needs attention to serve digital transformation, digital economy, and digital society. In particular, it is necessary to invest in key areas, especially in key areas such as Hanoi and Ho Chi Minh City.

Dr. Nguyen Quoc Viet also recommended that, in the general context of Vietnam's economy, it is necessary to re-evaluate internal growth drivers, especially drivers to ensure economic autonomy.

Dr. Viet stated his opinion: "The driving force for growth must still come from the business sector and social investment (including both domestic and foreign private investment). Therefore, it is necessary to resolutely open up production and business capacity, create all favorable conditions for the business environment, and restore confidence from production to domestic and foreign consumption.

Therefore, in addition to policies to support and restore the economy in general, to promote the internal strength of the domestic enterprise system, it is necessary to continue to have breakthrough institutional reforms to further improve the business environment and competitiveness.

At the same time, it is necessary to reform institutions and perfect policies to support growth recovery of the domestic private sector, especially small and micro enterprises."

Regarding public investment, the Deputy Director of VEPR found that to fundamentally solve the problem of slow disbursement of public investment, according to Mr. Viet, there must be breakthroughs in the approach to the problem, in the way of doing things, and in having a risk management plan. In developing a project plan, there must be analysis, risk assessment as well as overall impact assessment to avoid having to solve situational problems such as shortage of raw materials, price fluctuations, etc.

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