VCN- With the high political determination of the Government and the drastic solutions of ministries, branches, and localities on the basis of making full use of the growth potential, the growth target of 6.7% in 2017 can be achieved. In fact, with, we can achieve even higher growth rates than 6.7% if we are determined to pursue growth through long-term, strategic solution.
This statement is made by Assoc. Prof. Dr. Pham Hong Chuong (pictured), Vice President of National Economics University in an interview with the Customs News on the issue of the economic growth in Vietnam in 2017.
What do you think about the determination of the Government as well as the breakthrough targets set by the head of the Government for sectors and localities to achieve the growth target of 6.7% in 2017?
In the current context, the Government's efforts to develop and implement breakthrough solutions to boost GDP growth are understandable. We can see some drastic directions from the Government to ministries, sectors, and localities such as the proposal for the banking sector to increase credit growth, accelerating the disbursement of public investment, slow progress, accelerating equalization process in SOEs.
In fact, these are things that in normal conditions we still have to do and must do well. But, there are short-term drastic measures with breakthrough targets for achieving the 2017 economic growth target, and if we adopt long-term, strategic solutions, then it will not be possible to achieve immediate fundamental growth as set out.
However, the more important thing than the growth rate of 6.7% is the quality of the growth in the long term. I note that, despite of any measures, the ultimate goal is to pay attention to improving the business and competitiveness ability of enterprises, in which the key is to reduce the business cost for enterprises through various ways such as improving the infrastructure, improving the business environment, reducing administrative procedures, saving time, costs for enterprises, reducing the cost of entering the market for enterprises. These are the basic, overall, long-term solutions for the enterprises, however, the impact of them requires time.
In your point of view, what will be the main driving forces for the economic growth in 2017?
As I said, the drastic measures, the specific objectives that the Government set out such as the promotion of crude oil and coal exploitation, credit growth ... are short-term and situational solutions, which impact in short, not long term. If we determine to pursue that goal, the increase in resource exploitation this year will help the state recover a certain amount of funding, or accelerate the rate of disbursement, increase the credit growth. In the short term, all of them will be the driving force to accelerate the GDP growth. But these solutions in the long term are not spread, they only localized in a single moment.
In terms of growth motivation, there are many areas that can be exploited to promote growth such as tourism, agriculture, electricity production and private sector with the number of new enterprises established from 2016 to present is quite large ... With the current measures and with the determination to implement, obviously, in order to achieve the GDP growth target of 6.7% I can achieve. What matters is what we get out of that 6.7%.
In order to boost the GDP growth, the banking sector is required to raise the credit growth limit to 21-22%, instead of 18% as an original target, accordingly, the capital source will be boosted by the manufacturing sector to support enterprises. What do you think about this solution?
Credit growth is also one of the solutions to boost the economic growth, but it is in theory, the important thing is that its effectiveness depends on many factors such as how much interest rate is, and what areas credit growth flow into. If we increase credit and reduce interest rates, the credit is prioritized for long-term investment such as industrial, agricultural and processing activities or real estate serving for tourism… which require low capital, long-term and reasonable interest rate. If capital is used in these areas, this will be the best option.
However, in the current context, the real estate is generally in hot development, not really healthy, but it is a credit-absorbing sector if capital flows in this sector that is a worrying issue. Now, real estate is not a priority for credit, but it is a relatively profitable sector, and in the context of capital inflows into production is not effective and hard to access, it is more likely that capital may be poured into real estate.
Besides, I think that the capital increase but the interest rate must decrease because if the interest rate does not decrease and the cost of capital is not reduced, it is difficult to have a positive impact on the production of enterprises in long-term, the efficiency of the increase in money supply will be reduced. The interest rate level is now down compared to the previous time but in general, it is still high compared to other countries in the region.
The growth speed depends on investment, but disbursement of public investment is still slow. In your opinion, what is the reason and what are effective measures to promote public investment disbursement from now until the end of the year to contribute to promoting the growth?
The delay of disbursement of public investment comes from many causes and each project implemented from the state budget is delayed that will have different objective and subjective reasons.
In fact, the public investment projects in the infrastructure sector have a great impact on the socio-economic development of the country. However, the disbursement is quick or slow that sometimes depends on the characteristics of the project, as well as due to the poor management of the investor, or due to administrative procedure of the competent agencies causes the delay in capital allocation and site clearly.
Thus, it is necessary to review the feasibility and effectiveness of each project in general. But in order to speed up the disbursement of the capital from now to the end of the year, the most important thing is that competent authorities should quickly review each delayed project to find out the reason, thereby to take the most effective solution to solve problems that help improve the progress of the projects.
In order to achieve the highest results in economic growth, what is the issue that we should pay attention to? With the polical determination of the Government and the solutions implemented by ministries, branches, and localities, will the Vietnam’s economy reach its goal of both growth rate and growth efficiency?
I think that with the high political determination of the Government and the drastic solutions to achieve the growth targets of each ministry, branches, localities on the basis of taking and promoting economic growth to achieve the growth target of 6.7% in 2017 is possible. Because of the fact that Vietnam's growth potential is clearly higher than 6.7% if we are determined to pursue growth target by long-term, strategic solutions. To assess the quality of the growth based on a number of factors, so far, the growth rate of 6.7% is not a goal that could cause economic harm. However, it is worth to note that, with the available resources, if we too focus on the short term, in the long-term, we may miss many other opportunities.
By Thu Hien/ Kieu Oanh