These shares were raised by Associate Professor - Dr. Tran Dinh Thien at the discussion session on strengthening internal strength and unleashing resources of the Vietnam Socio-Economic Forum 2023 organized by the National Assembly on the morning of September 19.
Associate Professor - Dr. Tran Dinh Thien points out 4 unusual paradoxes of the economy
According to him, Vietnam is considered an economic star, but the economy has many unusual points. Identifying these paradoxes is the only way to turn danger into opportunity.
Comparing the economy to a “headwind star”, this expert said that in 2022, the economy can be considered to have achieved a miracle with impressive growth of over 8%. However, the paradox of high growth and low inflation is causing the opposite effect, causing difficulties for the economy and domestic enterprises.
4 unusual paradoxes of the economy
Mr. Thien also pointed out four major paradoxes of the economy. First, the economy is good but the growth momentum is continuously declining and lasting. After 40 years of renovation, but every 10 years, the growth rate has decreased by nearly 1%. Although the efforts are higher each year than the previous year, we cannot maintain the growth rate. There are short-term causes, but the internal driving force of the economy has problems. According to him, many economists have warned that it is necessary to study thoroughly.
Second, private enterprises are a very good force but cannot grow. In the world, no country's enterprises can bear long-term interest rates of 13-14%/year like Vietnam.
“The survival ability of enterprises is invincible but is over-exploited, so enterprises remain small and tiny. Enterprise lifespan is low, although there is no research, but it is low compared to the world. This is also an important part of the low internal strength of Vietnamese enterprises,” Mr. Thien stated.
This expert also cited that "the number of businesses withdrawing from the market and closing down accounts for 2/3 of newly established businesses. In 2023, the number of newly established Vietnamese businesses continuously decreased while the number withdrawing from the market increased sharply. In the first 8 months of 2023, the rate of businesses withdrawing from the market was 124,700, compared to the number of newly established and re-entered businesses (149,400) reaching approximately 84%, much higher than the 68.7% level of 2022.
“If it happens again next year, what percentage of businesses will survive for five years? The Party says the private sector is an important driving force, but its weakening like this is very worrying,” Mr. Thien said.
Third, the economy has excess money but is "thirsty" for capital. Money cannot flow, cannot be converted into capital. Businesses are exhausted. In reality, after 3 years of Covid-19, capital capacity is exhausted, banks have difficulty lending and borrowers cannot borrow. The treasury has millions of billions of dong but public investment disbursement is still not high even if desired. Money is "locked up" and resources are not flowing, which is the key problem of the economy.
Delegates discuss on the sidelines of the forum on the morning of September 19.
By the end of August, public investment disbursement - the focus of the Government's efforts to "inject capital into the economy" - had improved significantly compared to previous years. However, compared to requirements, the progress is still considered slow.
Disbursement has only reached 39.6% of the plan, despite the Government, ministries, sectors and localities making great efforts. Meanwhile, in the credit channel, the growth rate has only reached 5.5% while the whole year target is 14%.
Should assign domestic corporations to build metro
Fourth, the "locomotive" runs slower than the "train". In the past 10-15 years, the growth rate of Ho Chi Minh City and the Southeast region has decreased, much lower than other regions. Domestic private resources and FDI in this region are still the highest in the country, but growth has decreased and the economic position has weakened. According to Mr. Thien, public investment capital for this region in the past 10 years has been lower than in the North, and its position has declined.
To ensure the circulation of resources in a market economy, this expert recommends limiting the allocation of resources based on administrative mechanisms of asking and giving. In particular, ensuring the “three connections” in the system operation process, including smooth infrastructure, open mechanisms and smart operations.
Specifically, Associate Professor - Dr. Tran Dinh Thien proposed to change the electricity price to operate according to market price, similar to the previous change of food price to market price. In addition, the economy should be transformed into a digital economy and a green economy.
“Try ordering Vietnamese economic groups to build railways, for example, the metro line connecting Ho Chi Minh City and Long Thanh airport. Domestic groups can completely do this with the same quality, only then can we promote our internal strength,” Mr. Thien recommended.
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