VietNamNet Bridge – According to the Ministry of Planning and Investment, the country’s economic recovery in the first quarter of the year has created momentum for stronger development in subsequent quarters. But many of the National Assembly’s deputies and economists do not share that view.

“The government seems to be too optimistic in assessing the current situation and predicting the future,” commented Phung Van Hung, a member of the National Assembly’s Economics Committee.

“What does it mean by ‘macroeconomic stability’?” Hung asked, referring to a point in the report presented by MPI at a committee meeting several days ago.

“Big difficulties still exist, especially in rural areas,” he continued. “The words ‘stability’ and ‘active achievements’ should not be used to describe the current state of the economy”.

According to Le Nam, a National Assembly deputy, the current plight of farmers in Vietnam serves as one measure of the fragile state of the economy. The phenomenon of farmers giving up farming is occurring in nearly all the localities recently visited by the National Assembly’s deputies.

“Rice fields are being abandoned because farming them brings no profits. Farmers now live in poverty,” Nam said.

Agreeing with Nam, Dr. Le Dang Doanh, a prominent economist, said signals of an economic recovery are “very slim” and any optimism about a recovery is unfounded. He went on to say that agriculture sector is facing significant difficulties, while he cannot see any feasible solutions to settle bad debts.   

Problems exist not only in agriculture, but also in many other fields of the national economy. “Seventy percent of Vietnamese economic growth relies on credit growth. But we hear that capital flow is getting stuck. How can the economy continue developing, then?” questioned Deputy Chair of the Economics Committee Nguyen Van Phuc.

Phuc said the statistics released by government’s agencies puzzle the National Assembly’s members. How high is the bad debt ratio of the banking system: 3.86 percent as reported by commercial banks or 9.71 percent as announced by the central bank’s inspectors?

Regarding the bad debts now plaguing the banking sector, the Head of the Economics Institute, Tran Dinh Thien, warns that the Vietnam Asset Management Company (VAMC), a “super company” set up by the State Bank, does not have the capability to settle bad debts quickly.

Thien has also rung an alarm bell over the public debt, emphasizing that both banking’s bad debts and the high public debt are serious. Meanwhile, the credit-worthiness of both the government and businesses is “problematic”.

Thien, who affirmed that the Vietnam’s economy is still pale, said that he can see an unusual phenomenon which happens regularly.

While the achievements gained in the fourth quarters of the last few years have been relatively good, the economic indexes of the first quarters of the subsequent years have shown sharp downturns. This means that the strong growth has been followed by a plunge, which forces Vietnam to make every effort to climb up. But after it recovers, it continues falling down again.

VietNamNet/TBKTVN