Vietnam is under growing pressure to stabilize the macro-economy without the presence of new engine for growth, while the driving force from the FDI sector is fading, stated a representative of the National Center for Socio-economic Information and Forecast (NCIF).
One of the key measures proposed by economists to stimulate economic growth in the remaining months of 2018 and subsequent years is the restructuring of state-run enterprises (SOEs), the Cong Thuong newspaper, run by the Ministry of Industry and Trade, cited experts as saying.
The restructuring of SOEs is considered a priority to stimulate economic growth, according to Nguyen Mai, chairman of the Vietnam Association of Foreign Invested Enterprises (VAFIE).
According to Mai, SOEs utilize large amount of capital and resources but remain the least efficient among economic groups. Moreover, the government's target of divestment and equitization of SOEs is lagging behind schedule, Mai added.
Pham Sy Thanh, director of the China Economic Research Program of the Vietnam Institute for Economic and Policy Research (VEPR), informed that among 1,000 largest corporate tax payers in Vietnam in 2017, the state sector accounted for 27.7%, while those of the private and FDI sectors were 34.1% and 36.7%, respectively.
In the first six months of 2018, equitization schemes of eight SOEs were approved with a total value of VND29.37 trillion (US$1.29 billion), making the target of equitizing at least 85 SOEs by the end of this year a real challenge, according to the Ministry of Finance (MoF).
Under the equitization plan approved by Prime Minister Nguyen Xuan Phuc, at least 85 SOEs must complete the equitization process by the end of this year.
Moreover, only five out of 181 state owned enterprises (SOEs) subject to divestment completed the process, bringing the total number of enterprises that had divested to 16 during the 2017 - 2018 period.
The progress is far behind expectation set in the list of SOEs marked for divestment during 2017 - 2020 under the PM's Decision No.1232, targeting the divestment in 135 SOEs in 2017 and 181 in 2018.
Additionally, Vietnam would need to step up effort in improving the business and investment environments, creating favorable conditions for private enterprises, especially small and medium enterprises (SMEs).
With regard to this matter, Vu Tien Loc, chairman of the Vietnam Chamber of Commerce and Industry (VCCI) said that 60% of SMEs have not had access to capital.
This is especially true for start-ups, as the majority are run by young people and lack of capital. Therefore, supports from banks and credit institutions would be vital for their developments, Loc continued.
Vietnam's GDP growth is projected to reach 6.83% in 2018, higher than the target set by National Assembly of 6.7%, according to a report by NCIF under the Ministry of Planning and Investment.
On breaking down, the agro-fishery-forestry sector is forecast to grow by 3.54%, industry and construction 7.89%, and service 7.36%.
Additionally, NCIF expected the inflation rate to be in the range of 4 - 4.2%, higher than the National Assembly's target of below 4%.
Notably, economic growth in the third quarter of 2018 is estimated at 6.72% and the fourth quarter of 6.56%, which is in line with previous projections of a weakening trend.
Dang Duc Anh, head of NCIF's Analysis and Forecast Division, pointed to several reasons behind a decline in growth in the remaining months of 2018, including unfavorable global and Vietnam's economic situations.
With regard to internal risks, Anh said Vietnam is under growing pressure to stabilize the macro-economy without the presence of new engine for growth, while the driving force from the FDI sector is fading.
Although Vietnam's manufacturing and processing sector is growing strongly, the sector remains at the lower end of the global value chain, in turn contributing modestly to economic growth.
In terms of external risks, the strengthening of the US dollar, the US protectionist policies towards other countries, especially China and price volatility of essential goods such as petroleum and gas would have negative impacts on Vietnam's economic growth in the remaining months of 2018 and subsequent years, Anh continued. - VNN -