February 10, 2023 | 14:00 GMT+7

Business support the priority

Minister of Planning and Investment Nguyen Chi Dung tells VnEconomy / VET that businesses face a raft of pressing issues and so need ongoing assistance from the government.

Minister of Planning and Investment Nguyen Chi Dung
Minister of Planning and Investment Nguyen Chi Dung

Vietnam’s economy will continue to be “besieged” in 2023 by difficulties from geopolitical conflict, escalating inflation, and global economic recession. Can its economy overcome the headwinds and become a bright spot for economic growth in the region?

The global situation changed very quickly last year and was complicated and unpredictable. Many problems were unprecedented and impossible to predict, such as Covid-19 and its impact on the socio-economic situation. The global economy has only just begun to recover from the pandemic but continues to be affected by the Russia-Ukraine conflict, high inflation, and sharp fluctuations in the price of some goods and services, especially gasoline. Policy management in many countries has changed and reversed quickly, with recessionary signs becoming increasingly clear globally and in many major countries.

In such a context, however, Vietnam still recorded outstanding achievements in 2022: macro-economic stability was maintained, inflation was controlled, major balances were ensured, the CPI was estimated at less than 4 per cent, and GDP growth was estimated at 8 per cent.

Such achievements are due to the determination and unanimity of the entire political system. Right from the beginning of the year, closely following resolutions and conclusions from the Party, the National Assembly (NA), and the government, the Prime Minister directed all levels, branches, and localities to implement proposed tasks and solutions synchronously, accurately, timely, and effectively in all fields.

The economy in 2023 is forecast to continue to face many unfavorable factors. What should Vietnam do in response?

The global economic situation this year is forecast to continue to fluctuate in a complex and unpredictable manner, even more so than in 2022. This includes high inflation, tight monetary policy, prolonged interest rate rises accompanied by loss of currency value and sharply falling consumer demand in many countries; the real estate market in many countries becoming more troublesome; and the business sector being severely affected, with rising unemployment leading to a risk of social and political instability in some countries.

This context and global situation was summarized and advised upon by the Ministry of Planning and Investment (MPI) in the process of developing the socio-economic development plan for 2023, which was submitted to the government and the Prime Minister for reporting to the NA at its fourth meeting.

MPI has actively analyzed and updated forecasts, closely coordinated with ministries and sectors, promptly advised and proposed to the government and the Prime Minister solutions and operating policies in the short, medium, and long terms to adapt to the situation, maintained macro-economic stability, supported businesses, and promoted economic growth.

It has also continued to improve institutions, especially the development of the Law on Bidding (amended); completed the development orientation of six economic zones, speeding up planning work and creating space and new development motivation for regions and localities; accelerated the implementation of the socio-economic recovery and development program and the disbursement of public investment capital; removed bottlenecks in resources and improved the competitiveness and internal capacity of the economy; and promoted entrepreneurship and innovation.

These are the tasks and solutions that need to be focused on, along with promoting three strategic breakthroughs and 12 groups of key solutions in the ten-year strategy. It is not only a problem of resolving immediate difficulties and challenges, but also of improving domestic production capacity, workplace productivity, operational efficiency, competitiveness, and economic resilience in the face of new external factors and challenges in the medium and long terms.

The economy is under major pressure from the race to tighten currencies around the world. What are your thoughts on Vietnam’s policy direction?

Many economies around the world adjusted their policy management perspective last year, moving from easing to tightening monetary policy and raising interest rates to prioritize inflation control instead of economic recovery. This trend is forecast to continue in 2023, especially as the US Fed and many other central banks are still being relatively cautious about inflation, even accepting the risk of economic recession until inflation is under control.

In such conditions, the pressure on macro-economic policy management in Vietnam is significant, and it is necessary to strike a reasonable balance between exchange rates and interest rates and between growth and inflation control. But it is also important to pay attention to the characteristics of Vietnam as a developing country, so it is necessary to pay attention to maintaining a reasonable economic growth rate.

To overcome the economic difficulties, policies must be closely and harmoniously coordinated and promote overall policy effectiveness, especially when the space for policy management is narrowing.

At the same time, it is necessary to study, review, and remove “knots” between monetary policy and fiscal policy, creating the conditions needed for policies to operate and coordinate synchronously and effectively. It is also necessary to continue promoting the effectiveness of coordination and information exchange mechanisms between ministries and branches to serve the formulation and administration of macro-development objectives, improve the capacity to analyze and evaluate macroeconomic developments in the world and in the country, and promptly advise and propose appropriate policies and solutions.

Recent reports from business and industry associations show that capital is the biggest challenge facing businesses across different industries. As the focal point for providing policy advice to the government, what recommendations does MPI have?

Enterprises have been facing difficulties in accessing capital to maintain production and business, expand investment, and recover business. To help them overcome this situation, MPI has implemented a range of solutions, such as coordinating with other ministries and sectors to promote the implementation of the 2 per cent interest rate support policy under the Economic Recovery Program; promptly handling short-term difficulties relating to corporate bonds and promoting healthy, efficient, and sustainable market development in the medium and long terms; and strengthening financial management capacity and access to capital for enterprises, especially small and medium-sized enterprises (SMEs).

The opening few months of 2023 will continue to be a difficult time for the business community, especially local private enterprises, with production and business activities likely to continue to shrink due to pressure on short-term cash flows, loan interest rates, and falling export markets.

In implementing the motto “Government accompanies businesses”, to remove difficulties in capital facing businesses in particular and the economy in general, MPI will continue to propose the government assign relevant ministries and branches to implement solutions to support businesses, such as effectively conducting the socio-economic recovery and development program, including a group of tasks and solutions to support the recovery of enterprises, cooperatives, and business households; continue to develop a healthy stock market and corporate bond market into important and safe capital mobilization channels for enterprises; continue to develop and diversify new capital mobilization channels for enterprises; develop new types of financial intermediaries; and consider allowing the pilot implementation of the sandbox model to create choice for investors and a capital attraction channel for businesses.

 

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