Wed. Feb 28th, 2024

Results of economic restructure fail to meet up to expectations

HA NOI (VNS)— The country’s macro-economy had not improved as much as expected after a year of restructuring and the process needed a strong boost, said economists at the Spring Economic Forum opened yesterday in the central city of Nha Trang.

The two-day forum was aimed at reviewing a year of the country’s economic restructuring and putting forward solutions.

Chairman of the National Assembly’s Economic Committee Nguyen Van Giau told the forum that restructuring the economy would take a long time. It was only in its early phases and initial progress had remained insignificant, he said.

Director of the Viet Nam Economics Institute Tran Dinh Thien said that no significant changes in the basic trend of the economy had been seen since 2007.

Thien said a slowdown in GDP growth had occurred over past years, adding that the volatility of the macro-economy remained high and there had been no signs of sustainable control.

Macro-economic management was still mainly based on administrative and short-term measures. These could be reasons for the lack of improvement in the economy in the first quarter of this year, Thien said.

He was pessimistic about the country’s economic growth and macro-economic stability this year. He said credit growth remained low, the number of firms which had stopped operations was high and it would take time to deal with non-performing loans and the frozen real estate market.

Thien recommended that instead of short-term and administrative measures, the Government should take long-term action to create real changes in restructuring the economy.

He said the Government should give priority to paying basic construction debts for enterprises and should not give priority to investment from State budget.

The payment could help deal with a part of the non-performing loans and recover business confidence, he said.

Deputy director of the Central Institute for Economic Management Nguyen Dinh Cung said there had been no significant reforms in market and integration mechanisms.

Cung said that for the past year, restructuring had failed to encourage businesses, let alone create favourable conditions for firms and investors, to make them take risks and try new ideas, to restructure their business and production and to make better use of their human and financial resources.

Bui Tat Thang, from the Ministry of Planning and Investment’s Institute for Development Strategies, said that confidence in the business and investment environment outlook had actually decreased as the economy faced a series of serious problems, including high non-performing loans and rising inventories. A number of firms had ceased or stopped operations.

Thang said the country’s economy would continue to be negatively affected if investors did not retrieve their business motivation.

“Investors will not pump capital into the country and consumers will not spend, so it will difficult to improve the country’s total supply and demand situation this year,” Thang said.

Rector of the Economics University Nguyen Hong Son said that measures taken to date to deal with non-performing loans and mergers and acquisitions of weak banks remained slow, while there was also no change in the restructuring of State-owned firms.

As for the real estate market, rector of the Banking Institute To Ngoc Hung said, the Government should look at whether to tax property assets in a move to prevent speculation.

Pumping capital into the real estate market would create a bubble, which would cause the number of non-performing loans to increase, Hung said. The State Bank of Viet Nam should maintain its tightened and cautious monetary policies to control inflation and stabilise the macro-economy.

The forum was jointly organised by the National Assembly’s Economic Committee, the Viet Nam Academy of Social Sciences and the Viet Nam Chamber of Commerce and Industry.

The assessments, analyses and proposals made by researchers and economists at the forum would be submitted to the National Assembly. — VNS

By vivian