Despite a global slowdown, Vietnam’s economic growth was impressive in the first quarter of this year.
GDP growth was steady, inflation was low, and price management was effective. To achieve this year’s growth targets, the government will continue to improve Vietnam’s business environment and administrative procedures and create better conditions for the private economic sector.
In the past few years, the private sector has become an important driver of the Vietnamese economy. Investment in the sector increased 18.5% last year and represented more than 43% of all social investment.
More than 28,000 new private businesses were started, the most in the past 5 years, thanks to an improved business and investment environment.
Nguyen Bich Lam, General Director of Vietnam’s General Statistics Office (GSO), attributed the achievements to the government’s flexible management and incentives to boost private sector growth.
Lam said, “In the first quarter, growth in agro-forestry-aquaculture was stable and the industry, construction, and service sectors enjoyed higher growth rates than last year. Vietnam’s GDP rose 6.79%, despite a global slowdown and declining global trade. Inflation was at its lowest level in 3 years.”
From now until the end of the year, the main drivers of economic growth will be private production, processing, and manufacturing and foreign direct investment.
Economist Dinh Tuan Minh said, “To achieve a high growth rate, we need to create breakthroughs by increasing demand through investment and government credit stimulus packages. But those measures could lead to inflation. If we don’t use stimulus packages, we must improve the business environment and state-owned enterprises, and speed up the equitization process to attract investment.”
The resolution of the 12th Party Central Committee pointed to private sector growth as an important driver of Vietnam's economy. Subsequently the Ministry of Planning and Investment has encouraged the government to issue a resolution on improving the investment environment and reducing business restrictions.
Ministries, sectors, and localities have been asked to reduce restrictions, procedures, and fees to allow private enterprises to operate more freely and increase their competitiveness.
Associate Professor Doctor To Trung Thanh of the National Economics University said administrative procedure reforms will stimulate private sector growth.
“We need to devise solutions and policies that will increase output. We must work harder to improve the business environment, particularly for the private sector. The transparency of the banking and financial sector must be improved and we must review the preferential treatment given to FDI enterprises, especially unqualified enterprises.
To adapt to external events, we must balance the state budget and maintain the consistency and transparency of the macro-economy,” said Thanh.
Despite the challenges confronting this year's economic goals, the Government has stabilized the macro-economy to give investors the confidence to invest in Vietnam in both the medium and long term.