Finding solutions for economic growth by the end of 2023

What Vietnam must do to remove bottlenecks and promote economic growth is the content discussed by experts at the Seminar "Solutions for economic growth in late 2023 - early 2024" organized by Nguoi Lao Dong Newspaper recently in Ho Chi Minh City.

According to the General Statistics Office, the country's GDP growth in the first 9 months of 2023 reached 4.24%, showing that the Government's efforts to boost the economy through three pillars including public investment, domestic consumption and export have achieved encouraging results. However, many difficulties and challenges have caused growth drivers to decline significantly.

Bên trong một nhà máy sản xuất xe điện tại Hải Phòng. (Nguồn: Getty Image)

Many difficulties and challenges have caused growth drivers to decline significantly. (Source: Getty Image)

Many challenges

Specifically, public investment disbursement has not met expectations - only reaching 51% of the plan; domestic consumption has slowed down due to the difficult domestic situation and a shortage of export orders in the context of declining global demand. In addition, new pressures on inflation, exchange rates and continuing difficulties in the real estate market, securities, corporate bonds... are also difficult problems for the Vietnamese economy.

Ms. Nguyen Thi Tuyet Mai, Deputy Secretary General of the Vietnam Textile and Apparel Association (Vitas) informed that for many consecutive years, the textile and garment industry has had positive growth (except in 2020 due to the impact of the Covid-19 pandemic). In 2022, the textile and garment industry exported 44.4 billion USD, ranking in the top 2 largest export industries of Vietnam and ranking 3rd in textile and garment exports in the world.

However, by the end of 2022, the whole industry began to show signs of a shortage of orders. By 2023, the situation was extremely difficult due to reduced consumption of clothing in international markets, increased raw material costs... while businesses were mostly dependent on imported fabrics.

Another difficulty is that the whole world is moving towards sustainable development, so the commitments on environment and labor are very harsh, requiring businesses to invest, but the value of orders does not increase. It must be recognized that the textile and garment industry has never been in such an extremely difficult situation as it is now. Vitas predicts that the most optimistic scenario for this year is that textile and garment export turnover will reach 44 - 45 billion USD, the better scenario is 45 - 47 billion USD.

Meanwhile, Mr. Nguyen Chanh Phuong, Vice President and General Secretary of the Ho Chi Minh City Handicraft and Wood Processing Association, also said that by October 2023, Vietnam's wood and wood product exports would only reach about 10.8 billion USD, down 19.9% over the same period.

Although there has been a good sign that from July to now, export growth in the following months has increased faster than the previous month, by October it has only reached the same level as the same period in 2022. Therefore, it is estimated that by the end of this year, wood export growth will still decrease compared to last year and there will not be a major breakthrough.

As the largest economic center in the country, Ho Chi Minh City is not immune to common challenges. Ms. Nguyen Thi Kim Ngoc, Deputy Director of the Department of Industry and Trade of Ho Chi Minh City, shared that in the context of declining exports, domestic consumption and domestic trade are playing an important role in promoting growth in 2023. Although retail sales of goods in Ho Chi Minh City in the first 10 months of 2023 increased by more than 11% compared to the same period in 2022, it has not yet reached the pre-pandemic period, showing that growth is not sustainable and has not achieved the desired results.

Experts predict that the economic situation will continue to be difficult until 2024. In that context, the Government needs to focus on preparing the foundation for 2024, focusing on growth quality, foreign investment quality, institutional quality, and connection quality between FDI enterprises and domestic enterprises.

Need specific solutions

Dr. Tran Du Lich, member of the National Financial and Monetary Policy Advisory Council, said that the Government, ministries, sectors and localities need specific solutions, not only to ensure economic growth in 2023 but also to create a foundation for recovery and stronger growth in the 2024-2025 period.

The important task now is to thoroughly remove bottlenecks; in which, the State Bank's efforts to reduce interest rates are welcomed, but to be effective, all credit packages need to be reviewed.

A requirement of the times is green transformation, digital transformation, we have many national programs but need a green transformation law to not miss the opportunity.

"Management agencies need to recognize that there are opportunities in challenges and that those opportunities must be taken advantage of while businesses still have strength and can withstand. To do so, it is necessary to focus on removing obstacles in the real estate market in both supply and demand, because this sector has an impact on many other sectors of the economy. At the same time, strengthen the financial market to create a solid foundation for the economy," Dr. Tran Du Lich recommended.

Dr. Nguyen Dinh Cung, former Director of the Central Institute for Economic Management, analyzed that looking at growth drivers, Vietnam's exports have clearly never declined as deeply and for as long as in 2023. Currently, the situation has improved, but the speed and scale are not stable, uneven, and cannot break through compared to before.

Faced with that reality, Mr. Cung said that the Government and the National Assembly should look directly at the problems to find solutions. In the immediate future, the support program for businesses and people should be extended to 2025 instead of 2024 as currently planned. This support is intended to create excitement and create a wind to encourage people to consume more.

Regarding reform and improvement of the business environment, we must identify and name the processes that are causing difficulties for businesses instead of issuing a general resolution calling for the reduction of administrative procedures. The Government and the Prime Minister only need to identify 5-10 issues that are the most pressing and hindering for people and businesses, and assign them to specific units, creating pressure to monitor and change.

In addition to the government's support policies, Mr. Nguyen Chanh Phuong, Vice President and General Secretary of the Ho Chi Minh City Wood Processing and Handicraft Association, said that the business community needs to proactively improve its internal strength in product development and trade promotion.

Accordingly, the current difficulties of the wood industry not only come from external factors but also from passivity in connecting to the market and promoting products to customers.

The current solution is that businesses must proactively step out of their comfort zone of outsourcing production; update market information, connect with buyers, and diversify value-added products to meet sustainable development requirements to create long-term competitive advantages.

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