Vietnam should focus on sustainability of economy
By Thanh Trung - The Saigon Times Daily
HANOI – There are clear signs of the recovery of the Vietnamese economy in the very beginning of 2010 and the country is back on track on its growing road, said foreign organizations in a press conference in Hanoi on Wednesday.
Speaking at a discussion of the World Bank’s Global Economic Prospects 2010 in Hanoi, Hans Timmer, director 
of the WB Prospects Group, said that in the global context the recovery was too weak to undo the damage done in 2009.
Timmer said the going forward process of capital deepening would be reversed and there remained enormous scope for policy to help improve performance.
Vietnam, in the meantime, shows remarkable recovery with growth figures of 5.32% in 2009, and growth is now expected to be well over 6.5% this year, according to the Government’s target.
Phan Chi Thanh, deputy head of the International Relations Department under the Government Office, commented that Vietnam had achieved four main outcomes over the last year, a high growth rate of 5.32%, a relatively low inflation rate of 6.5%, high mobilization of investment with a value accounting for 42% of GDP and the guaranty for social security.
Matthias Duhn, director of EuroCham in Hanoi, said the relatively good standing of the Vietnamese economy could be attributed to three reasons.
First, Vietnam’s integration into international financial markets that triggered the crisis in the first place is still at a comparatively low level.
Second, the Vietnamese Government reacted soundly and swiftly to the crisis by implementing the stimulus package.
Third, Vietnam’s domestic markets were relatively strong so Vietnam was not hit as hard by declining foreign direct investment (FDI).
However, Duhn warned that the biggest challenge for Vietnam this year was to carefully balance growth without fueling inflation while creating sustainable long-term solutions for the country.
“The Vietnamese economy is still relatively small in scale and businesses are very reactive to monetary or fiscal policies. Therefore, we believe that carefully tightening monetary policies and ending the stimulus is a reasonable action under these circumstances,” Duhn said at the press briefing.
Tran Dinh Thien, director of the Vietnam Economics Institute, expressed his concern about the imbalance of the Vietnamese economy.
Thien also agreed with other comments at the press conference that Vietnam had sailed through the economic downturn but the existing weaknesses of the economy were serious problems without answers.
“We need a new thought to overcome these weaknesses in the economic structure,” Thien said, and warned of the threats of inflation this year if the Government does not have solutions.
“Vietnam should be very cautious [with the threat of inflation] as the monetary supply in 2009 remained high with a credit growth rate of 38% and the State budget deficit was at 6.9%”.
The guest economist concluded that Vietnam would face both short term and long term risks this year regarding macro-economic stability and inflation.