More impetus for Vietnam's economy in 2014: magazine

According to the Vietnam Business Forum (VIB Forum), in 2014, internal movements of the economy as well as adaptability and response of Vietnamese enterprises to difficulties are getting better and better. Most specialists agreed that Vietnam's economy would change significantly, adding there have been positive signs.

Chairman of the National Financial Supervisory Commission (NFSC) Vu Viet Ngoan said that the economic ship will continue to have more acceleration to move forward because it has all three good conditions, namely time, ground and human resources, in 2014. The world's economic recovery is the "good time" condition. Vietnam's economic achievement in the past years - especially the macroeconomic stability that creates new position and force - is the "good ground" condition. Vietnam's experience with crisis-overcoming policies and practices accumulated in the past six years is the "good human resources" condition.

"Knowing how to utilise all these three factors will be an important driving force for us to overcome challenges," he added.

Earlier, Prime Minister Nguyen Tan Dung, in his New Year Message, described the pattern of economic reform that Vietnam will pursue: Implementing market price mechanism for essential goods and services and fair competition. These two issues are closely inter-related together and associated with State-owned enterprises (SOEs), an area seen as an important factor to expose weaknesses of Vietnamese economy more clearly when the world economy falls into crisis in the past years.

He said the market price mechanism for all goods and services must be consistently implemented. The pricing of essential goods and services by the State must be accurate and sufficient in terms of costs; price-formulating elements must be made transparent and the market price mechanism must be persevered with a suitable roadmap.

He affirmed that businesses of all economic sectors must operate in accordance with market rules. Business monopoly, policies and mechanisms generating unfairness among businesses, especially access to resources, must be eliminated. Resolute efforts must be made to restructure State-owned enterprises, focusing on SOEs equitisation, including economic corporations; withdrawing capital from non-core businesses and selling shares that the State does not need to control even in profit-making enterprises under market rules.

State-owned enterprises shall only operate in key, essential fields, important zones and in national defence and security area. Business tasks shall be separated from political and public duties.

Although the State economy still plays a leading role, as stated in the Constitution, SOEs will still have to compete equally with enterprises of other economic sectors.

The magazine quoted economic specialists as saying that in response to efforts of the entire political system and expectations of entrepreneurs and enterprises, Vietnam's production is gradually accelerating and having many opportunities to access big markets like the EC and the US.

Manufacturing is raising its important role in Vietnam's economy thanks to its robust growth and the significant decline of mining, quarrying, construction, real estate, agriculture and forestry sectors.

Although the recent international financial crisis affected Vietnam's economy to a certain extent, its impacts were not very clear because of Vietnam's small-scale capital market. Vietnam's economy maintained growth while quantitative easing (QE) programmes in developed countries also brought many positive benefits to developing countries.

The Government adopted a number of measures to tighten monetary and fiscal policies to cool its overheated economy, perfect financial system management capacity, started with bank classification, bad debt purchase, and growth obstacle assessment. Significantly declining domestic demand helped reduce imports and thus increase trade surplus. Inflation fell to a single-digit rate since May 2012. The exchange rate also steadied.

Manufacturing growth is definitely a positive sign, especially when foreign capital flows are strongly poured into this sector. According to economists, the manufacturing growth is expected to raise Vietnam's GDP growth from 5.4 percent in 2013 to 5.6 percent in 2014.

However, a competitiveness enhancement strategy for domestic enterprises is also important. Whether this strategy also helps increase relations of domestic enterprises with supply chains and improve added value to production in addition to cheap labour and materials or not requires the policy roadmap to ensure that local businesses are not being left behind. If it is not carried out seriously, economic development will not be stable, thus resulting in increasing labour costs.

(Source: VNA)