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Member of the Politburo, Deputy Prime Minister Vuong Dinh Hue: Vietnam's economy flourishes in a world of fluctuations

10:10 | 25/01/2020

VCN - 2019 has witnessed many achievements in Vietnam's economic development. The results achieved are especially meaningful in the world of fluctuations. This helps create more strength for our country to soon achieve the goals set out in the 5-year Socio-Economic Development Plan of 2016-2020 and continue to enhance Vietnam's position in international integration.

member of the politburo deputy prime minister vuong dinh hue vietnams economy flourishes in a world of fluctuations

Politburo member, Deputy Prime Minister VuongDinh Hue spoke with Customs Newspaper for the special issue of Lunar New Year 2020.

Affirming the prestige and position of Vietnam

Deputy Prime Minister, could you give an overview of Vietnam's outstanding socio-economic achievements in 2019?

We are pleased to see that, in 2019, despite facing many difficulties and challenges, our country continues to grow rapidly and comprehensively in most fields. This is the second consecutive year that our country has achieved and exceeded all 12 major targets, of which five targets exceeded the plan. There are eight outstanding socio-economic achievements in 2019 as follows:

  1. The macroeconomy is more stable, labor productivity and quality of growth continue to improve. The GDP growth rate of the whole year is estimated at over 7% percent – one of the highest growth countries in the region and the world. The consumer price index (CPI) is below 3 percent, lower than the target. Financial and monetary markets continue to develop stably; interest rates and exchange rates are flexibly operated according to market signals and foreign exchange reserves reached nearly $80 billion.
  2. Labor productivity increased by 5.9 percent; the contribution of total factor productivity (TFP) reached 42.7 percent. The economic restructuring was more substantial, while major industries and fields developed stably and positively. The business environment continues to improve. Total import-export turnover exceeded US$500 billion for the first time, of which exports increased by 7.9 percent;exports of the domestic economic sector sharply increased and trade surplus in the fourth year in a row with the absolute amount of nearly US$10 billion. State budget deficit was about 3.4 percent of GDP and public debt decreased to 56.1 percent of GDP.
  3. Strategic breakthroughs continue to be implemented. Institutions are improved,enhancing the efficiency of law enforcement in association with cutting administrative procedures, reducing costs, creating favorable conditions for people and businesses, opening social investment resources, promoting growth and increasing newly-established enterprises with a record number – 134,000 enterprises.
  4. The quality of human resources is improved. There are a number of universities that are on the list of the top international and regional universities. Many groups of Vietnamese students have won international prizes and ranked high. Science and technology are widely applied in many fields, the national innovation start-up ecosystem thrives. The global innovation index (GII) of Vietnam increased three levels compared to the year before, ranking 42nd among 129 countries, ranking first among 26 low-middle-income countries, and ranking third in the ASEAN region. Our country is ranked 8th among the best economies in the world to invest in 2019, increasing 15 levels compared to 2018. The World Economic Forum assessed that Vietnam's competitiveness had dramatically improved on all three pillars, including institutions, infrastructure and skills, ranked 67 of 144 countries and territories, an increase of 10 rankings compared to 2018.
  5. Infrastructure, urban and regional development are focused on implementation. Many socio-economic infrastructure works have been started, completed, put into use and brought into full play. The New Rural Program has achieved remarkable results – by the end of the year, about 54 percent of communes and 110 districts met the standard, a threshold achieved 24 months ahead of schedule.
  6. Social areas have been a focus, basically in harmony with economic development and people's quality of life has continued to improve markedly. Unemployment and underemployment continue to decline. Social security is guaranteed, social welfare is raised; preferential policies for people with meritorious services to the revolution have been well implemented; sustainable poverty reduction has achieved many positive results. Vietnam's poverty reduction achievement continues to be a bright spot and highly appreciated by the international community.
  7. The culture, information and propaganda activities continue to be renewed, strengthened and improved, contributed to building trust, creating high consensus in society and receiving internationalsupport. Vietnam sports teams won many achievements in 2019, reaching 98 gold medalsat the30th SEA Games.Especially, we won two gold medals for the first time in men's and women's football.
  8. The national defense and security were strengthened, ensuring political security, safety and security of society; promptly defeat the conspiracies and sabotage activities of hostile forces and reactionaries. Foreign affairs and international integration are promoted. Vietnam waselectedas a non-permanent member of the United Nations Security Council (UNSC) with a record high number of votes (192 out of 193 total votes). The position and prestige of Vietnam continues to be affirmed and win the support and appreciation of the international community.

Achievements of thefinancial sector

Regarding socio-economic development in 2019, the Financial sector played an important role. What do you think about the outstanding results in the field of finance and budget in the last year?

Under the direction of the Government and the Prime Minister, in 2019, the Financial sector has overcome many difficulties and challenges and achieved many positive results, namely:

  1. Focus on the improvement of the institutional, investment and business environment; in which, submitting to the National Assembly for approval the Law on Tax Administration (amended), the Law Amending and Supplementing a Number of Articles of the Law on Insurance Business, the Law on Intellectual Property and the Law on Securities (amended). Focus on speeding up the deployment and expansion of online tax declaration, electronic tax payment, and electronic invoices with authentication codes of tax offices; implement electronic tax refund, shorten the time of state budget collection, shorten the time of spending control, significantly reduce the state budget revenue in cash, expand state budget spending via credit card and implement the process of controlling electronic expenditures through online public services.
  2. Directing the strict management of the State budget. The state budget in the whole year exceeded 3.3 percent of the estimate, of which the central budget revenue was estimated to exceed VND8-11 trillion, the second consecutive year it has exceeded the estimate. The rate of mobilization into the state budget reached 23.7 percent of GDP. The State budget spending is strictly controlled, ensuring political, economic and social tasks, promptly handling urgent tasks, especially in national defense, security, and prevention of African swine fever, overcoming the consequences of natural disasters, helping people overcome difficulties, restore production and stabilize their lives. In 2019, the recurrent expenditure and debt repayment reached the estimate. The State budget deficit is strictly managed, equaling 3.4 percent of GDP, down by VND12.5 trillion (accounting for 5.6 percent of the estimate). By the end of 2019, public debt was 56.1 percent of GDP, down nearly by 10 percent compared to the beginning of 2016, of which the Government debt was 49.2 percent of GDP, the country's foreign debt was 45.8 percent of GDP. The public debt continues to be restructured in a more sustainable way.
  3. Strongly developing financial markets and financial services, creating an important medium and long-term capital mobilization channel for the economy. Approving the Scheme on restructuring securities and insurance market till 2020, with an orientation to 2025, the Project on establishing the Vietnam Stock Exchange. Restructuring market organization, developing new derivative products, restructuring securities companies, speeding up the roadmap for market upgrades from marginal markets to emerging markets, at the same time, strengthening inspection and supervision to ensure the stable development of the market. The size of the stock market reached about 81 percent of GDP, an increase of 13 percent compared to 2018, surpassing the target of 70% of GDP by 2020 set in the Vietnam Securities Market Development Strategy for the period 2011-2020.
  4. Market management, price control and inflation control have been actively implemented. Continue to improve the price management mechanism, ensure the principle of consistent market price mechanism, promote publicity and transparency, gradually calculate the right and full cost of public service prices and charges; effectively implement measures to manage and adjust the prices of essential commodities and public services under the State management of pricing (medicine, education, electricity and petrol), contributing to complete the target of inflation control, macroeconomic stability; improve the efficiency of allocation, use of resources in the economy and encourage socialization of public service supply.

In the field of finance and budget, the balance of revenue and expenditure continues to be strengthened to ensure the stability of national finance. Could you please evaluate the role of the Finance sector in the direction and administration of this important political task?

In 2019, under the close guidance of the Government and the Prime Minister, the budget discipline was maintained. In particular, revenue and expenditure activities have had very positive movements as it was the fourth consecutive year that the State budget revenue exceeded the estimate, of which this was the second consecutive year that the Central budget revenue was exceeded. In general, the collection of State budget is increasingly sustainable, mainly from production and business activities.

Regarding budget expenditures, the Government and the Prime Minister have thoroughly managed budget spending to be very tight and economical; minimizing expenses for organizing conferences, seminars and festivals; restricting the allocation of funds for foreign research and surveys; promoting the implementation of package spending; reducing support for public non-business units according to the price and fee adjustment roadmap; tightening the advance, transfer of funds and supplementing estimates. So far, the proportion of recurrent expenditure estimates has gradually decreased, while ensuring the source of wage reforms to increase by about 7 percent/year according to the Resolution of the National Assembly and other spending tasks for national defense and security, and other urgent social security policies.

Regarding the budget deficit, the estimated deficit in 2019 was at 3.6 percent of GDP, but in fact, the proportion was only 3.4 percent of GDP, lower than the estimate. In which, the Central budget deficit met the estimate, the local budget balance didnot overspend and was even reduced.

In addition to the professional field, another highlight in the work of the Financialsector in 2019 is to continue to takemany strong and drastic steps in the organization, arrangement and streamlining of the apparatus, especially in the fields of Tax and Customs.

It can be said that the Financial sector’s results have contributed significantly to the overall achievements of the national economy in 2019, especially ensuringnational financial potential.

Facilitating associated with combating smuggling and trade fraud

The policy of trade facilitation, strengthening of import-export activities and international economic integration has been strongly promoted and implemented by the Party, State and Government. In 2019, how does this content continue to be implemented, Deputy Prime Minister?

Import-export turnover of Vietnam in 2019 reached over US$500 billion, this is an important milestone in the integration process of Vietnam. This result is an important achievement for many continuous years, as we have accelerated opening and deepening international integration with specific steps.

In 2019, we continue to effectively implement Free Trade Agreements (FTAs), especially the new generation FTAs such as the Vietnam-EU Free Trade Agreement (EVFTA) and prepare for the National Assembly's ratification of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). At the same time, Vietnam is actively participating in negotiating new FTAs. This is one of the effective solutions to open the door for Vietnamese goods to enter the world market.

From the beginning of the year, the Government has issued and directed the drastic implementation of Resolutions No. 01 and 02/NQ-CP. Including important content related to the implementation of solutions to improve the business environment and enhance national competitiveness. For the import-export field, the most important objective is to continue reforming, simplifying administrative procedures and reforming specialized inspections to reduce clearance time for goods.

The National Steering Committee on the ASEAN Single Window (ASW), the National Single Window (NSW) and trade facilitation (Commission 1899) has guided ministries and industries more drastically in implementing the NSW, the ASW and reforming specialized inspections. So far, the goals set in implementing the NSW and the ASW have been implemented as planned. In particular, the NSW has been connected to nearly 200 administrative procedures related to almost all import and export activities ofbusinesses. Vietnam has officially exchanged information with eight countries including Singapore, Malaysia, Indonesia, Thailand, Brunei,Cambodia, Laos and Myanmar.

Steering Committee 1899 is asking relevant ministries and agencies to continue to improve the legal basis for the implementation of NSW and ASW, including the development of a Decree on connecting and sharing information between government agencies and stakeholders.

Speeding up the preparation and implementation of the master plan on the construction and development of information technology systems for the deployment of NSW and ASW under a centralized process.Concentrate resources and accelerate the process of reviewing procedures, information targets, developing IT systems and other related solutions to ensure the fulfillment of the objective of implementing new administrative procedures on the National Single Window.

The reform and opening up to facilitate trade isalso accompanied with the risk of increasing smuggling, trade fraud, counterfeit goods, and infringement of intellectual property, especially origin fraud for goods labelled as made in Vietnam. What do you think about this issue, Sir?

The view of the Government and the Prime Minister is to resolutely prevent and strictly handle acts of origin fraud andtrade remedies evasion to protect domestic production, and at the same timedevelop domestic production and export in a sustainable manner. From that point of view, the Government and the Prime Minister have drastically directed ministries, branches and localities to implement synchronous solutions to prevent and strictly handle violations. We have been active in monitoringand tightening management measures, while detecting and handling acts of origin fraud and tax evasion.

The Prime Minister has approved the Scheme to strengthen state management of trade remedies evasion and origin fraud, with the specific goal of preventing acts of evading trade remedies and goods origin fraud in a comprehensive and timely manner, effectively exploiting international commitments, developing imports and exports sustainably. The promulgation of this Project is appreciated by Vietnamese trading partners.

With the above efforts, we will be proactive in management, preventing fraud and illegal evasion. So far, there have beenno large-scale origin fraud cases on our exports.

2020 is an extremely important year asVietnam completes the 5-year Socio-Economic Development Plan 2016-2020, and prepares for a new development period. The National Assembly sets the target of 6.8 percent in GDP growth in 2020. In your point of view, what are the goals and solutions to complete the targets?

The Party Central Committee concluded and the National Assembly issued a Resolution on socio-economic development and state budget estimates in 2020 with six general development goals as follows: (1) Institutional improvement, facilitation of resources; (2) Strengthening and promoting the nation's development platform; (3) Economic development in harmony with cultural and social development; (4) Administrative reform; (5) Ensuring national defense, security, independence, sovereignty, territorial integrity and maintaining a peaceful and stable environment for development; (6) Improving the effectiveness of communication, information and coordination. With determination to successfully implement the tasks of the Socio-Economic Development Plan and State Budget Estimation in 2020, contributing to the completion of the 5-year Socio-Economic Development Plan for 2016-2020 and the 10-year Strategy for 2011-2020, the Government defines the motto of action in 2020 as "Discipline, Integrity, Action, Innovation, Responsibility, Efficiency", with a number of key tasks and solutions as follows:

- Strongly renovating the work of building and perfecting the legal system towards synchronization and modernity, meeting the requirements of innovation and integration;

- Effectively administering management and regulatory tools to ensure the maintenance of macroeconomic stability and major balances of the economy, creating an environment, a driving force and a foundation for rapid and sustainable development;

- Restructuring the economy, finding new geographical areas for growth, improving productivity, quality, efficiency and competitiveness. Acceleratingthe transformation of the growth model based on the application of science and technology, innovation, and increasing labor productivity;

- Taking all resources, promoting the construction of infrastructure systems and the role of key economic regions and big cities, strongly developing the marine and digital economy;

- Improving the quality of human resources associated with basic and comprehensive innovation in education and training, promoting scientific research, application, technology transfer and innovation;

- Developing culture and arts, making social progress and justice and improving the quality of life of the people, in harmony with economic development;

- Actively responding to climate change, preventing and combatting natural disasters; strengthening resource management and environmental protection;

- Improving the efficiency of state management, accelerating administrative judicial, inspect and examine reforms. Promoting settlement of complaints and denunciations, and fighting against corruption,wastefulness and negativity;

- Closely and effectively combining socio-economic development with national defense, security and foreign affairs; consolidating defense and security potential; firmly defending national sovereignty and territorial integrity; ensuringsocial order and safety; improving the effectiveness of foreign affairs activities and international integration;

- Promoting information, press and communication activities, improving the effectiveness of coordination among agencies, organizations, Fatherland Front Committees and mass organizations at all levels.

Thank you, Deputy Prime Minister!

By Thai Binh/KieuOanh