Such is the view delivered by Nguyen Duy Hung, President of Saigon Securities Inc. (SSI) and Chairman of the PAN Group, in an interview granted to the Thoi Nay (Today), a publication of Nhan Dan Newspaper, on the issue.
Q: What are the most conspicuous changes in 2017, a transitional year of a new cabinet term?
A: Since the 12th Congress of the Communist Party of Vietnam, a new Government has been formed with a strong message delivered by the cabinet leader to the business community and investors, both at home and abroad, on the determination to build a “facilitative Government of integrity and action.” At the annual Vietnam Business Forum (VBF 2017), PM Nguyen Xuan Phuc stated that every dollar invested in the economy not only brings benefits to businesses and investors, but is also a “vote of support” for the Government’s efforts in reforming and developing a helpful and dedicated administrative system, and a source of encouragement for the Government and the business community to jointly develop the common house of Vietnam. It is the business community that shape the image of the economy, and they will also serve as a vital impetus to realising Vietnam’s aspirations of prosperity, with the Government playing the role of an implemental guiding hand.
Particularly, with the capital market, the Government does not focus on mobilising resources but rather directs those resources through policies, while enterprises proactively mobilise and allocate resources. This is a very new change and a fundamental reform in the thinking of economic management.
Q: Could you please clarify your point?
A: In the past, the Government was involved in all stages. By this I mean, the Government both mobilised and allocated resources, resulting in the “ask – give” situation and the low investment efficiency of mobilised resources. This is an issue as Vietnam’s risk index is quite high. These are potential risks from “suspended” projects, bad debts, and the danger of collapse in many large enterprises which have been allocated funds with State capital.
When enterprises proactively mobilise capital, they will be responsible for the efficiency of the capital raised from various economic sectors to disburse among their projects. Currently, businesses can absolutely do that because the Government is striving to create a healthy competitive environment between all economic sectors.
Entering the new term, the Government has been confronted with more difficulties compared to the previous term. All of the backlogs from the previous period still remain; bad debt and public debt remain high, and the State sector investment has been reduced due to a lack of sources. Yet the growth in gross domestic product (GDP) has still exceeded expectations, reaching 6.81%, which suggests that the healthy development section of the market is still much better and sufficient to offset the old public investment, plus the new one, in order to ensure the country’s GDP keeps on a track of healthy growth.
It has yet to reach one year under the leadership of the new-term Government, but Vietnam has initially reaped positive results. International financial institutions are putting their faith in the country’s outlook, as both the Asian Development Bank (ADB) and the World Bank (WB) have upwardly revised Vietnam’s growth forecasts for 2017 and 2018.
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Vietnam is becoming an attractive destination for foreign investors.
Q: With such radical changes, do you think the Government has won the trust of the business community?
A: The stock market is a “thermometer” for the economy, and it only functions well if the economy has a good confidence index. The growth of the VN-Index over the past year has demonstrated a significant improvement in both business and personal confidence in the economy, as well as in the reform efforts made by the Government. Moreover, with the capital market, what’s important is not so much the stock market indices, but rather the emergence of billion-dollar deals, such as the divestment of State capital from the Saigon Beer - Alcohol - Beverage Corporation (Sabeco).
At the beginning of 2017, there were doubts among businesses. But up to now, enterprises have already put their faith in the Government’s actions and have followed its directions. Confidence is growing day by day among businesses and people. That trust cannot be built in only one or two days, it is the result of a process of facilitation and action. From early this year, the confidence of companies and people in the Government has become greater and is still on the rise.
Q: What are your forecasts for the Vietnamese economy in the new year of 2018?
A: The Vietnamese economy has improved greatly over the last year but is still facing difficulties. There remains a lot of work to do to bring the country forward. What has been achieved in the past year is the evidence that we are on the right track. For any country, the Government is like a captain, and businesses are like the ship’s crew. Without job creation and tax revenues, there will be no budget for the Government to work. Enterprises are always the “engine of growth” for the country. Enterprises need a favourable environment to develop, and it is the responsibility of the Government to create the healthiest and most transparent environment for business. The interaction between enterprises and the Government for mutual development is very important.
In my opinion, with the current internal factors, Vietnam has become a trusted destination for foreign investors due to the confidence it has built among international friends. Foreign investors are very interested in the banking sector, which is like the blood of the body and is always a prerequisite for the economy to grow. 2018 promises to be a good year for the Vietnamese economy!
Thank you very much!
