HUE – Many economists and National Assembly (NA) deputies on Thursday expressed concerns that Vietnam is the only economy in the world still stuck at a bottleneck, saying that new macro uncertainties may occur while the nation has yet to break through the sluggish situation that has lingered over the past six years.
Speaking at the Autumn Economic Forum that opened in the central city of Hue on Thursday, Tran Dinh Thien, head of the Vietnam Institute of Economics, said that while the global economy has entered the orbit of recovery after the crisis in 2008, Vietnam has yet to get on track so far. In other words, Vietnam is lagging behind other countries as it shows no clear signs of recovery.
Between 2005 and 2007, the nation obtained impressive growth. But since 2008, the growth has slowed down while regional countries have sped up economic development.
The general tendency has yet to see a turnaround while strategic tasks such as renovating the growth model and improving competitiveness have yet to bring about clear effects, Thien said.
Three out of four pillars for development, State-owned enterprises, private enterprises and agriculture have been exhausted. Foreign direct investment (FDI) is the only sector that proves to be effective.
Total investment in the first six months of this year was only 40% of the full-year’s target.
Total retail sales and consumer service revenue increased only 4.9% compared to 6.5% in the same period of 2012, while consumer credits have kept declining since 2012, causing adverse impacts on the economy’s aggregate demand.
“Social conflicts have turned serious while confidence of the market and the society in the State and the future has never been that low,” Thien added.
NA deputy Tran Du Lich said that the only positive signs are macro-economic improvement, a contained inflation, an increase in foreign reserves and a stable foreign exchange rate.
However, the economy has yet to escape from the sluggish situation as both development speed and quality have yet to improve significantly. Difficulties will pile up in the coming time given the risk of a return to high inflation.
In addition, the bad debt situation remains challenging while credits cannot flow into the economy. Enterprises, especially small and medium-sized firms, still find it hard to access loans.
Lich also pointed out another problem, saying that budget deficit may cause new macroeconomic uncertainties this year. In HCMC alone, budget collection in 2013 is estimated at VND20 trillion lower than targeted.
Loosening or tightening
Delegates during the forum also argued over tightening policies that aim to regain macro economic stability in the country.
Le Quoc Ly from the National Academy of Politics and Public Administration blamed tightening policy for the sluggish economic situation over the past six years. Enterprises and the economy have died as a result of these policies as they have no energy to grow, he said.
However, Lich disagreed with Ly’s views, saying that “your viewpoint is very dangerous in the current situation.”
Resolution 11 (on austerity measures and tightening policy) was released amid soaring inflation in the country.
He however admitted that current difficulties including business shutdowns and falling demand are the price Vietnam has to pay to stabilize the macro economy.
“If we move back by stimulating demand and boosting State investment, then all stability values we have gained will be lost,” he said.
By Tu Hoang - The Saigon Times Daily