​Not satisfactory yet undeniable

Professor Nguyen Quang Thai – Secretary General of Vietnam Economic Association; Photographer: VGP

Secretary of Vietnam Economic Association was giving his analysis focusing on the missions of economic development.

Right after the 11^th National Congress, the Government term XII promulgated Decree 11-CP dated 24^th February, 2011 on “inflation restraint, marcroeconomics stabilization and social security.” The Decree has recieved positive responses from abroad and local experts and approved by Misnistry of Polictics in Conclusion 02-KL dated March16^th, 2011. The new term Goverment has been in charge since July 2011 and inherited achievements in management of the former government.

Undeniable

The first mission of the new term Goverment is to properly implement Decree 11-NQ, especially to halt inflation rate which increased to 13% for the first 6 months. Though there are a lot of new members including important branches of economy such as: banking, finance and planning… the Government has quickly started to implement the decisions of Congress XI, Resolutions of Parliament and especially Resolution 11-CP. Due to strictly following fiscal policies, limiting montary supply, flexibly adjusting interest rate and other serial decisive solutions to improve production, export, investment restructuring and public expenditure saving… the economy is gradually coming to stabilization.

For the first 6 months of year 2012, CPI increased by 2.5 percent (by half compared to that for the last 6 months of 2011 – which was 5 percent), facilitating exchange rate stabilization and macro-economic balance maintainance. Generally, in the first year of the new Government’s term, CPI of June 2012 increased by 6.9 percent compared to the same period last year, and compared to the index of 13 percent by the former Government for the last six motnhs of term.

This is a result of careful leadership, creating favorable conditions to reach the target of keeping inflation rate under 10 percent of year 2012 eventhough global economy remains unpredictable, especially changes in energy price and victuals price which might be fluctuating, putting the economy under a cost pressure. For the last two months, inflation rate turned negative, prices of most important commodities decreased, espcially victuals, creating favorable conditions to lower interest and carry out policies on economy restructuring as well as growth model reform.

Generally speaking, as for the mission of inflation restrain, the Government has undertaken well its mission mostly by synchronous macro-economics policies in the first year of its term.

As for the target of macroeconomics stabilization, in the new term and a difficult phase of global economy, the Government has provided direction to branches and locals for improving their strengths and potentials to ensure proper growth rate.

Although the industry is in difficulty, for the first 6 months of 2012, it witnessed an increase of only 4.5 percent over the same period last year, contruction – production value had a light decrease (0.4 percent over the same period last year) while service still maintained its growth rate, total retail revenue and consumer service revenue increased pretty much, especially trading, restaurant and service. If price rise factor is excluded, the total revenue would be 6.5 percent for the first 6 months of year 2012, compared to 5.7 percent for the first half of 2011.

Although investment capital scale was adjusted, it still increased by 10.1 percent over the same period last year, especially in non- stated sectors.

Export was continuously promoted in difficult situations, which helped trade deficit equal to 1.3 percent of export revenue (trade deficit of the same period of 2011 was equal to 15.7 percent of export revenue). Inventory rate gradually decreased from over 30 percent for 2011 to 26 percent.

Therefore, the economy growth rate increased by 4.38 percent for the first 6 months of 2012, in which the rate in second quarter prevailed that in first quarter (4.66 percent compared to 4 percent).

Together with economic growth, macroeconomic balances also gained some good results, such as deficit trade was 10.7 percent compared to the same period of last year, much lower than last years. Foreign-exchange reserves increased 10 bil USD, which was a good sign. Budget defict decreased of not only scale but also ratio,under 5 percent of GDP. 

Those are very important targets which insure long-term development of the economy, facilitating economy restructure and renew development model reform oriented towards productivity, quality, effectiveness and competiveness.

As for the target of social security, the Government focused on directing the work of substainable poverty reduction and supporting policy benificiaries. Creating more jobs and ensuring labours’salary also caught its attention.

According to local reports, total funding for social security and poverty reduction for the first 6 months of 2012 was 2.7 thousand bil. In rural area, pre-harvest hunger period occuring at the beginning of the year was improved expressly. As for salaried wokers, the minimum salary amount increase from 830.000VND/ month to 1.05 mil VND/month which has been applied for officials, and public servants, peoples working for armed forces and workers working for state units, organisations since May 1^st, 2012, helping improve labours’ lives.

In general, the targets of inflation restraint, macroeconomics stabilization and social security, as well as the directive contents of Resolution of the Parliament and Party’s Plenary Session were carefully implemented by the new term Goverment and gained certain achievements via the Resolution 01/NQ-CP issued at the beginning of year 2012 and following Resolutions on solving problems for production and supporting the market.

With policies to motivate credit market, disburse public investment as planned, continue to promote export and business support… It is promising there will be proper and gradual development for the last 6 months of year 2012.

Moreover, while conducting urgent and short-term missions, the Government has provided instruction to its branches for preparing projects of economic restructuring, including the overall project of economic restructuring to report to the Parliament; considering all of instructions and projects relating to state-owned business renewal, restructuring public investment and banking, credit, especially commercial banks.

Together with instructing the implementation of economic targets, last year the new term Goverment aslo paid attention to performing the missions of social – economics development in terms of health, education, culture, society, environment protection and missions of national defense, security, as well as policies on diplomacy of the Party and the Government.

The Government’s and Prime Minister’s concerns about East Ocean issues and the spirit of firmly protecting the national sovereignty over islands were highly appreciated by voters all over the nation. The government continues to strictly follow the agreements on the administrative structure reform, preventing and fighting against corruption and waste. It also considered and issued a series of sector and region plannings to make it more synchronorous, sticking to growth model reform and economy restructure to conduct three stages of strategic breakthroughs, aiming at sustainable development, enhancing effectiveness and competitive capability in the condition of intergration. Vietnam actively took part in Rio+20 Conference on stable development, performing a seires of solutions to deal with global climate changes. The establishment of National Council of stable development and competitiveness enhancement showed that the Government had paid attention to linking short term and long term missions in the aspect of management.

Not satisfactory

At the same time, in the first year of the new term, beside its attemps and achievements, there were drawbacks of instruction, management which need to be overcome.

Economic management in such a difficult situation of global and local economics, operational instructions among national agencies, departments and sectors or even the Governmental management were somehow not very timely and stringent. Some urgent matters raised by people and enterprises for a long time were not rightly settled, which was part of operating agencies’ responsibilities.

For instance, 70 percent of people’s complaints were related to land issues, but it took lots time to fix or make reports to the Party and the Parliament to reconsider the regulations of land policy.

Information system and preliminary investigation to get insights on people’s and enterprises’ difficulties, especially stagnated production, business and officials’ lives… somehow were biased to administrative profession, which was the reason for insufficient data on people’s lives and enterprises’ status, therefore, the solutions have not met the demands.

Eventhough some policies on interest rate reduction and relaxation and gold bar management… were focused on, they were slowly carried out and prone to commercial banks and big enterprises’ benefits, excluding legitimate aspirations of other enterprises, especially small and medium-scaled enterprises which can create more jobs for people in general.

More flexible management, better combination between fiscal policy and monetary policy also need considering to support the market, quickly decrease production stagnation without increasing inflation from this year on.

Management over State – owned compannies and economic coporations were slowly reformed either. Too many information sources caused unclear insights on the situation and low effectiveness; some incidents even caused huge loss and people dissactifaction.

Corruption and waste were still serious but slowly settled. There have not been suggestions to the Party and the Parliament to timely solve those problems, raising complaints from officials, Party’s members and people’s.

Generally, institutional innovations such as breakthrough part in explaining the major missions of the Government have not properly deployed, although some important issues are pending to be approved by the Party and Parliament.    

Although there are still weaknesses, even mistakes but to speak about performance, in the first year of its term, it is a great effort of the Government as well as its members and the Prime Minister with undeniable results. On assessing strengths and improvement, people also want to give critics and evaluations on weaknesses and expect their Government to try it best to complete its missions assigned by the Party and the Parliament to gain more trust from the people, create strong consensus among the society, and create new status and force in the progress of innovation and international integration.

Source: Government Infomation  Portal