Forum seeks to tackle bottlenecks to boost growth in Vietnam

Wednesday, 2017-10-25 11:41:54
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NDO/VNA – Experts and policy makers gathered at a forum held by the Central Institute for Economic Management (CIEM) in Hanoi on October 24, to discuss policy solutions for 2018-2020 in order to boost growth model reform in Vietnam.

The forum took place as part of the macroeconomic reforms/green growth programme in Vietnam funded by the German Government via the German agency for international cooperation GIZ.

CIEM Director Nguyen Dinh Cung said that it is necessary to immediately remove any obstacles that may impede the disbursement of state investment capital, from the beginning of 2018, to avoid a recurrence of the sluggishness encountered in the last two years. He also called for an improved use of State-owned and private enterprises’ capital.

“The efficiency of foreign invested firms in Vietnam is very high, even three times higher than State-owned and private firms in terms of the return on invested capital. Therefore, it is crucial to improve the competitiveness of domestic businesses,” he analysed.

He suggested creating “pressure” for the elimination of at least one-third or half of the business conditions, and at least half of the number of goods that are subject to specialised export-import examination, while reforming management methodology.

Another factor expected to promote the competitiveness of Vietnamese goods in domestic and foreign markets is slashing logistics costs, which will help to improve the country’s export value chains, Cung noted, adding that the relevant agencies also need to instruct and assist businesses to comply with regulations instead of fining them.

Nguyen Tham, former Vice Chairman of the Vietnam Logistics Business Association, said that without positive changes and stronger solutions, the burden of unofficial expenses and logistics costs will greatly affect the cost price of goods. This will directly impact the goods value chains within the country and the competitiveness of Vietnamese commodities, both at home and abroad.

Meanwhile, Dr Pham The Anh from the National Economics University said that the exchange rate policy should be flexible in order to enhance the competitiveness of Vietnamese goods.

He elaborated that the State Bank of Vietnam began setting the daily reference VND/USD exchange rate in 2016 based on a currency basket of the country’s biggest economic partners, but this mechanism is not enough to support foreign trade activities. Vietnam’s exchange rate policy is still in a dilemma as it has to ensure inflation control along with public debt stability and trade promotion.

A floating exchange rate mechanism under management will bring about more benefits than the current fixed one. However, this mechanism still needs certain conditions to be applied and prove effective, Anh added.

Only when bottlenecks are removed and new growth momentum is created can sustainable development be promoted, according to participants in the forum.