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Wednesday, June 19, 2024

Consensus decides the pace of economic recovery

The Saigon Times

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In an interview with The Saigon Times, Minister of Planning and Investment Nguyen Chi Dung said the solidarity and consensus among the entire political system, enterprises and the people were always the decisive factors behind the economic recovery in the coming periods


The Saigon Times: Minister, what worries you most when you look back at 2021?

Minister Nguyen Chi Dung: My major concern is the erosion of the strength of enterprises, while the pandemic remained unpredictable, although the Party, the National Assembly and the Government have striven to eliminate difficulties facing local residents and enterprises. In addition, many disrupted supply and value chains which have yet to recover fully will keep affecting enterprises in the coming periods.

The deployment of policies and solutions supporting enterprises have shown shortcomings. Specifically, enterprises want procedures to be simplified and the deployment of regulations and policies nationwide to be transparent, clear and consistent.

Furthermore, enterprises expect fairness and transparency from enforcers.

Therefore, it is a must to consider the deployment of solutions and policies supporting enterprises and the economic recovery as a major and urgent mission in the coming periods. The mission needs the more drastic, responsible and enthusiastic involvement of all agencies and localities, especially policy deployment agencies.

Moreover, it is necessary to formulate policies and prepare resources to deploy long-term and sustainable supporting measures to help enterprises quickly recover and adapt to the new situation.

In your opinion, which factors in 2022 will affect the economic recovery of Vietnam?

In 2021, with the motto, “The people’s life is the top priority,” many localities kept strict social distancing in place for a long time, which disrupted many goods and labor supply chains.

Up to 119,800 businesses suspended their operations in all of 2021, of which nearly 55,000 enterprises withdrew from the market.

At present, many enterprises are still facing difficulties in producing and selling goods, which will raise the prices of goods, posing a high risk of inflation.

In addition, many laborers saw their incomes and working hours cut, including job losses, forcing them to reduce expenditures, leading to a sharp decline in the local demand.

As a result, the total retail sales of consumer goods and services in the 11 months of 2021 fell 10.4% year-on-year, significantly affecting the economic growth target.

As for public investment, the total disbursed investment met only 77.8% of the target and fell 5% over 2020 due to the hike in the prices of iron, steel and other materials, some inappropriate disbursement regulations and the irresponsibility of some relevant individuals and organizations.

In terms of import-export, the export revenue of domestic enterprises reached US$88.71 billion, accounting for 26.4% of the country’s total export turnover and up 13.4%, while FDI enterprises reported a 21.1% growth. Additionally, the connection between domestic and FDI enterprises remains weak.

In the agriculture sector, the prices of agricultural supplies as well as animal and aquatic feed have risen sharply, while pig and chicken diseases have been wreaking havoc and the market demand has not recovered, resulting in the low prices of agro-fishery products. As a result, farmers have suffered losses.

As for fiscal and monetary policies, Vietnam has been facing a high risk of rising inflation, public debt ceiling and bad debts at banks. In addition, the ratio of credit to GDP remains high, while the medium- and long-term capital of the economy mainly depends on the banking system.

Hence, the production and business recovery process may be hindered by financial difficulties, in addition to obstacles in consumer markets.

The risk of inflation in Vietnam is also high. Meanwhile, the prices of materials, goods, and services worldwide are set to surge.

The crude oil prices were forecast to increase further in the upcoming years as the crude oil market has been experiencing the longest period of supply shortage over the past many decades.

The lack of upstream investment in oil exploitation in the context of rising oil demand signals high oil prices for at least five more years.

Vietnam’s economy depends heavily on material imports as the costs of material imports account for some 37% of the country’s total expenses of materials. Meanwhile, fuel costs account for 3.52% of the total production expenses.

The increase in the global fuel prices will send the prices of both imported and local materials up.

In the healthcare sector, Vietnam has faced a shortage of human resources, equipment and infrastructure at healthcare facilities to serve a huge number of people in need of medical support and social welfare.

In general, the economic recovery in 2022 will face multiple challenges and bottlenecks which need tackling.

Which factors will help the economy reach the GDP growth target of 6%-6.5% in 2022?

Firstly, Vietnam has improved motivations and economic recovery and development results compared with 2021. Accordingly, domestic consumption, which contributes 68%-70% of the GDP, is likely to recover thanks to the improved market sentiment and incomes.

The private and FDI sectors can improve their production and business thanks to the resumption of both supply and demand, together with enterprises’ adaptability and the Government’s support.

Moreover, the experience and ability of the Government, ministries, agencies and localities to respond to the pandemic have improved. Significantly, the development of Covid-19 vaccines will help the Government reach its target of vaccinating the entire population, bringing life back to normal and helping the economy recover quickly.

Completing the Covid-19 vaccination campaigns nationwide by the end of 2021 or early 2022 at the latest is a prerequisite for economic recovery and development.

Secondly, relief packages have caused a direct impact. Vietnam has enhanced its recovery ability through a strong and flexible social support system by allocating additional capital to social support programs. Also, the country has applied digital technology to quickly identify vulnerable people and scale up e-payments to reach the identified beneficiaries effectively.

Thirdly, many solutions have been deployed synchronously. In the context of the long-lasting pandemic, the main solution is to concurrently apply flexible and efficient anti-pandemic measures, boost socioeconomic recovery and development and ensure the people’s health and social welfare.

In addition, bringing inflation under control, limiting bad debts, fostering production, business and export and accelerating public investment disbursement will be prioritized.

Furthermore, support policies should be applied to create a driving force for both supply and demand, in addition to strengthening the macroeconomic foundation and promoting economic institutional reforms to give new impetus to enterprises.

Can you share some economic recovery solutions for 2022?

To take advantage of new opportunities to help the economy recover in 2022, the following solutions should be employed.

Firstly, large-scale vaccination campaigns should be conducted in a safe manner. The Government, ministries, agencies and localities should quickly complete the vaccination of all eligible residents, prioritizing laborers of enterprises and household businesses so that they can recover at the earliest.

Secondly, fiscal and monetary policies should be harmoniously combined, focusing on fiscal policies supporting enterprises and household businesses to overcome difficulties and applying monetary policies properly and reasonably to remove difficulties and boost economic growth.

Thirdly, public investment should be disbursed and used effectively. Accordingly, there is a need to invest in key sectors, areas with a high growth rate, large and important projects and projects connecting regions.

The efficiency of public investment use must be enhanced to positively affect private investment and FDI. Additionally, new-generation free trade agreements should be made the most of to improve the efficiency of international trade, boost export activities and open up opportunities to attract FDI.

Fourth, the economy should be quickly and effectively restructured. It is necessary to restructure sectors by promoting their advantages and joining global value chains. Moreover, a focus on products with advantages, high competitiveness and high added value is required.

Fifth, there should be adequate conditions for the promotion of production and business to ensure the supply and circulation of goods, thus reducing the pressure of inflation.

To deal with the short-term goods shortage, policies and solutions to cut manufacturing costs and promptly import materials should be formulated. In addition, the competent agencies must intensify inspections and resolutely handle speculation and price manipulation cases.

It is also a must to take the initiative to provide the labor market with information and develop plans and programs on labor supply and recruitment with the participation of localities to create a connection and smoothness in labor supply chains among localities.

Sixth, the digital transformation in the institutional reform and administrative procedures should be enhanced, as traditional administrative procedures and technology applications have yet to meet the needs of local residents and enterprises. Many relief packages have encountered obstacles in administrative procedures.

This bottleneck has made it difficult for enterprises to access policies, affecting the local business environment.

The cooperation of agencies, ministries and localities under the decentralization is necessary to create favorable conditions in local and international markets.

Seventh, policies on connecting goods supply chains and associated services should be established with the consent of the authorities of localities to eliminate inconsistent regulations.

To help supply chains and production and export activities recover, the circulation of goods and the return of laborers should be facilitated. Inconsistent regulations must be eliminated and an adequate supply of materials and energy must be ensured.

As for import-export, the competent agencies must keep a close watch on the developments of the pandemic and the exchange of goods among countries to propose solutions to the Government to respond to unfavorable situations. The implementation of free trade agreements, especially new-generation ones, should be given special importance while e-commerce and the investment in logistics should be promoted.

In the domestic market, it is necessary to boost the circulation and distribution of goods among localities to ensure the supply of necessities serves the demand of local residents.

Moreover, programs stimulating local demand, including organizing a promotion month nationwide as well as mobile sales and market stabilization programs, should be launched. Activities connecting supply and demand and bolstering local consumption and e-commerce in goods circulation and distribution should be carried out.

Can you share key solutions to support enterprises in the socioeconomic recovery and development program in the 2022-2023 period?

To promptly eliminate difficulties and help enterprises stabilize production and business, recover and develop in the coming periods, the Ministry of Planning and Investment has proposed to the Party, the National Assembly and the Government some key solutions for the socioeconomic recovery and development program in the 2022-2023 period.

Firstly, solutions to improve the liquidity of enterprises and to effectively deploy policies, including extending tax payment deadlines for enterprises; cutting taxes, fees and payables; reducing costs for enterprises and compensating enterprises specializing in sectors hit by the pandemic and priority sectors to support the economic recovery.

Secondly, solutions to support the restructuring of enterprises, boost innovations and digital transformation at enterprises and improve sustainable competitiveness by strengthening the support of small and medium enterprises, mainly innovative startups. Besides, solutions are also required to support enterprises participating in connections and value chains, conducting digital transformation and applying science, technology and innovations.

The Ministry of Planning and Investment has also proposed supporting the restructuring of the labor market to attract and train laborers for enterprises and support enterprises in restructuring, risk management and sustainable economic development, heading toward the green economy.

Thirdly, the business and investment environment should be improved further to ensure fairness and create favorable conditions for enterprises.

The Government, ministries and agencies should continue reviewing and amending overlapping and unreasonable regulations to remove obstacles in production and business activities, while publicizing socioeconomic development plans, mechanisms and policies to direct enterprises to make investments in line with the planning and development plans. This, in turn, will ensure investment benefits and reduce business risks.

In addition, enterprises should be facilitated to access resources fairly, especially in executing projects under the public-private partnership model.

According to you, which factors will decide economic recovery?

In all countries, the consensus between residents and enterprises over the policies and decisions of the Government plays an important and decisive role in the success of such policies.

It is said that “a burden of one’s own choice is not felt.” The country’s establishment and development process has proved that solidarity is always an effective weapon, and this spirit has helped the country overcome the difficulties caused by the Covid-19 pandemic over the past two years.

The Party and the State have issued many prompt and drastic directives on the enhancement of the fight against the pandemic, the protection of the residents’ health and socioeconomic development. In addition, many policies supporting pandemic-hit residents and enterprises have been worked out.

Agencies at all levels, localities and the people nationwide have proactively and promptly employed drastic measures to prevent and control the pandemic and have seen some positive achievements.

Enterprises have also striven to adapt to the challenging situation to maintain their production and business and provide jobs for laborers.

In areas where the pandemic has yet to cause a heavy impact, enterprises have quickly stabilized their production and business and applied digital technology solutions to expand their markets.

They have also focused on exploiting the domestic market and quickly grasped new business opportunities.

Fortunately, while the 4th wave of the pandemic was raging Vietnamese enterprises and entrepreneurs not only came up with flexible solutions to adapt to new situations, shared the difficulties of and supported each other in production but also conducted multiple activities to support the community, contribute significantly to the national Covid-19 vaccine fund and purchase medical equipment and supplies for localities. Many initiatives have been developed, such as rice ATMs, oxygen ATMs, free meals and zero-dong minimarts.

These activities have shown the Vietnamese enterprises’ sense of responsibility toward the country.

Therefore, I think solidarity and consensus between the entire political system, enterprises and the people are the key factors for economic recovery in the upcoming periods.

Reported by Hoang Thang

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