The Government still targets a gross domestic product (GDP) growth rate of 5.8% this year though economic challenges remain. Ha Quang Tuyen, head of the System of National Accounts Department under the General Statistics Office (GSO), talks about factors that will help the Government obtain the goal. Excerpts:

There are negative indicators about the economy, bankrupt firms and bad debt, but the Government still aims for a GDP growth rate of 5.8% this year. What do you think?

- Ha Quang Tuyen: Production and business have improved in 2014 and the economy has been back on the growth path. This year’s GDP is projected to grow 5.8% compared to the previous year, higher than the 5.25% in 2012 and 5.42% in 2013. I think this growth rate is obtainable.

Manufacturing and processing sector and foreign direct investment (FDI) enterprises are major contributors to the economic growth.

The manufacturing and processing sector has posted a growth rate of nearly 9% in the year to date versus 5.8% in 2012 and 7.44% last year. Industries with high growth rates include electronics, computers and fiber optic products, leather and related products, vehicles, paper, textiles and metal. In addition, some FDI giants with global brands and distribution networks such as Samsung and Nokia have continued production expansion in Vietnam. Some large firms in the fields of sport clothing and footwear such as Nike, Adidas and Puma have increased investments in Vietnam.

The Government has urged ministries, agencies, local authorities and state-owned business groups to do their utmost to fulfill their tasks and targets. For instance, national oil and gas group PetroVietnam has been told to exploit one million tons of crude oil higher than its earlier target and national coal group Vinacomin should increase coal exploitation by 500,000 tons compared to its target.

Could you clarify what are the main supportive factors for economic growth?

- They include development investment, which is estimated to grow 9.4% this year against last year to nearly VND1.2 trillion. Investments at the State-run and private sectors are expected to expand more than 10% and the FDI sector by 6.6%. In addition, the central bank is pinning high hopes that this year’s credit growth target of 12% is obtainable.

Besides, capital sources for production and business are diverse and come from different sources. Loans are not provided by commercial banks and credit funds only although these are key credit channels, as there is capital sourced from organizations and individuals. Last year, overseas remittances into Vietnam hit around US$11 billion and this is a supplemental capital source for production and business this year.

FDI enterprises have made big contribution to the country’s economic growth in 2014. As FDI firms can manage finance, material purchases and equipment imports on their own, they do not cause any pressure on capital supply.

How could the economy grow strongly when the number of enterprises going bust remains high?

- It is normal when there are new business startups and enterprises going bust, dissolved or halting operations in the revolving process of production and trade. But there is positive news in this situation. For example, over 60,000 enterprises were established but 54,300 firms were dissolved between January and October. The total registered and supplemental capital of newly-established and operational firms neared VND827 trillion, higher than VND456 trillion reported for dissolved businesses. Therefore, the number of newly-established enterprises still outnumbered bankruptcies.

SGT/VNN