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Five highlights of Vietnam’s economy in 2015 and outlook for 2016

On the occasion of the 2016 New Year, Vuong Dinh Hue, head of the Party Central Committee’s Economic Commission, answered queries by a reporter of the Communist Party of Vietnam Online Newspaper at dangcongsan.vn on Vietnam’s economy in 2015

VietNamNet Bridge – On the occasion of the 2016 New Year, Vuong Dinh Hue, head of the Party Central Committee’s Economic Commission, answered queries by a reporter of the Communist Party of Vietnam Online Newspaper at dangcongsan.vn on Vietnam’s economy in 2015 and its outlook for 2016.


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Head of the Party Central Committee’s Economic Commission Vuong Dinh Hue

 

 

 

Could you please specify some highlights of the Vietnamese economy in 2015?

The economy of Vietnam still registered several notable highlights last year despite numerous difficulties.

First, the economy showed conspicuous recovery momentum, with gross domestic product (GDP) soaring over 6.6% - the highest level over the past five years and greater than the 6.2% growth targeted by the National Assembly. The consumer price index (CPI) posted a year-on-year rise of 0.63%, marking the lowest increase within 14 years. The figures indicated that the measures taken by the government to ensure macroeconomic stability and control inflation took effect and brought about efficiency on a large scale.

Second, the macroeconomy was basically stabilised in spite of declines in the world and Chinese economies, strong fluctuations in exchange rates of the yuan and other currencies in the region, the Fed’s interest rate increase in mid-December, and a slump in China’s shares.

Third, positive outcomes continued to be seen in growth model shifting and economic restructuring, even in key areas including restructuring of State-owned enterprises (SOEs), public investment, commercial banks, bad debt handling and agriculture. Breakthroughs were created in all socio-economic infrastructure in 2015, especially transport infrastructure, which saw all targets surpassed, only excluding the railway sector.

Fourth, drastic measures were taken by the government to improve the business and investment environment. Vietnam officially implemented the national one-stop-shop (OSS) customs mechanism and the technical connectivity with the ASEAN OSS mechanism, while simplifying administrative procedures in the tax and customs fields.

Fifth, Vietnam successfully concluded negotiations for the Trans-Pacific Partnership (TPP), signed a number of new-generation bilateral and multilateral free trade agreements (FTAs) with other countries and partners, and joined ASEAN member nations to establish the ASEAN Economic Community (AEC). The TPP is scheduled to be signed on February 4 in New Zealand.

In addition, social welfare and other issues were a focus, along with strengthened national defence and security, ensured social order and safety, traffic accidents declining in all the three criteria (the number of cases, deaths and injuries), and the movement of building new-style rural areas seeing a lot of encouraging results.

What was the reason for Vietnam’s five-year high growth?

There are four basic reasons, the first of which is the recovery of industrial production, with the manufacturing sector increasing 10.6% year on year. In addition, the FDI sector recorded high growth regarding both production and exports last year, hiking 18.3% compared to the same period of 2014. Also, Vietnam’s total retail sales of goods and consumer service revenues were estimated at VND3,242 trillion (US$146 billion) in 2015, rising 9.5% against the previous year.

Another reason was the effects of the revised Laws on Investment and Enterprises as well as the FTAs to which Vietnam is a signatory. As summarised by the Russian press, Vietnam saw the most bilateral and multilateral agreements in 2015, including the TPP and the FTAs with the European Union, the Republic of Korea and the Customs Union of Russia, Belarus and Kazakhstan. Positive effects also came from the establishment of the AEC and foreign affairs activities by Party and State leaders. Thanks to revisions of the Laws on Investment and Enterprises, the startup spirit seemed to be warmed up, with the number of newly-registere businesses and their registered capital increasing sharply.

These growth factors were not only the result of 2015 alone, but also of the whole process starting from 2011. Right after the 11th National Party Congress, as the global economic downturn was getting more serious than predicted and the domestic macroeconomy was facing numerous difficulties, the Party and State decided to shift the goal from rapid development to reasonable growth with priority given to stabilising the macroeconomy, controlling inflation and ensuring social welfare, as part of adaptation moves.

2016 is the first year to implement the Resolution of the 12th National Party Congress and the socio-economic development plan for the 2016-2020 period. What do you think about the outlook and the issues set out for Vietnamese economy in 2016?

For me, there are two things to focus on in the 2016-2020 period. First, we need to exert efforts to create a new wave of investment in Vietnam. The promulgation of the revised Laws on Investment and Enterprises with progressive principles and high transparency, and the signing of new-generation FTAs with partners, promise to bring about numerous advantages for trade and investment.

In order to create a new wave of investment in Vietnam with the “startup country” spirit, it is necessary to pay attention to developing both domestic and FDI enterprises and strengthening the combination between these two sectors; improving the business environment and imposing market discipline on all businesses, including SOEs; and enhancing administration capacity and boosting SOE financial restructuring in line with commitments in the TPP.

The draft document of the 12th National Party Congress has identified the private business sector as an important impetus for national development. To realise this issue, the Party Central Committee’s Economic Commission has also finalised a project specifying measures and policies to support small- and medium-sized enterprises (SMEs), which directly contributes to completing the draft document and the upcoming building of the Law on SME Support. I think today is an era for SMEs.

The national startup spirit is only formed when we raise responsibility and pride among Vietnamese businesses and support them in line with international commitments and practices. We need to issue policies to boost connection between domestic and FDI enterprises and attract risky investment funds into Vietnam to support startup businesses.

The second critical point, according to the spirit of the upcoming 12th National Party Congress’s Resolution, is to build a modern and internationally integrated socialist-oriented market economy operating synchronously and fully in line with principles and rules of the market economy.

 
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