Besides the economic recovery programme being drafted by the Ministry of Planning and Investment, there are also proposals of other economic research organisations, regarding the size of and resources for this programme.
A research group of the National Assembly Economic Committee proposed a support programme of nearly 446 trillion VND, equivalent to 5.41% of GDP, with resources from fiscal and monetary policies, in which fiscal policy is the main pillar.
Under this programme, budget deficits can increase by one percentage point each year and resources can come from cost-saving measures, promoting equitisation and disinvestment of state capital, issuing government bonds, reviewing non-budget funds and using part of the foreign reserves.
Economist Can Van Luc at the research group said that the world is recovering in a V shape, while Vietnam’s recovery is U-shaped, so the country might miss the recovery momentum and fail to realise the targets of the 2021-2025 socio-economic development plan.
In the meantime, the research group of the Vietnam Academy of Social Sciences (VASS) proposed a package of 666 trillion, equivalent to 8% of GDP. The package will include 76 trillion VND for healthcare, 58 trillion VND for social security, 244 trillion VND for non-financial enterprises and 288 trillion VND for public investments.
Associate Professor Bui Quang Tuan, Director of the Vietnam Institute of Economics, said that Vietnam is now in a low area of economic growth, so it needs a support policy that is both large enough and can go directly into the economy.
According to economist Nguyen Minh Cuong at the Asian Development Bank in Vietnam, the policy should allow Vietnam to increase the size of its support package to 5-7% of GDP, in order to meet the criteria of being timely, targeted, long and inclusive enough to bring about the desired results.
In the short term, the goal of the fiscal support package is to control the pandemic, minimise the impact on healthcare and the economy, so that spending will be prioritised for healthcare and social security. In the longer term, Vietnam should switch from direct support to indirect support, from financial support to economic support and support those facing long-term impacts of the pandemic rather than the masses.
One of the most important factors to consider is the absorptive capacity of the economy and enterprises.
Dr Phan Duc Hieu at the National Assembly Economic Committee stated that in the past two years, the government has promptly introduced many policies to support the people and enterprises, but some policies were not fully implemented and largely inaccessible towards their intended beneficiaries, due to administrative obstacles.
He stated that this is a lesson to learn from, so that upcoming support policies will be implemented effectively. The expert noted that the absorptive capacity depends on the resource allocation and reception mechanisms, the selection of targets, the capacity of beneficiaries and the institutional environment.
According to Dau Anh Tuan at the Vietnam Chamber of Commerce and Industry, the duration during which enterprises can withstand the impact of the pandemic is relatively short, which requires programmes to support enterprises in order to recover promptly and effectively.
When there are support policies, access of information on policies and regulations is highly important to the business community. Government agencies should make information more widely accessible and publicly available to facilitate information access for enterprises, cooperatives and household businesses. Another matter that needs attention is enhancing the implementation effectiveness of the government apparatus.
