Speaking at a discussion session on supporting businesses to overcome difficulties, an event within the framework of the Vietnam Economic Forum 2023, on September 19, Dr Tran Dinh Thien, a respected economist, commented that paradoxes exist in Vietnam's economic development process.

Vietnam’s enterprises are good at resilience, but slow to grow. Vietnam’s economy is thirsty for capital, but finds it difficult to absorb capital. Its GDP growth rate is high, but the inflation rate is low. While the inflation rate is low, interest rates are high.

There is no other place in the world where businesses have to pay such high interest rates for loans like Vietnam. The lending interest rates in Vietnam are 2-3 times higher than other countries and the problem has existed for decades.

Thien said that the congestion of resources "immobilizes" resources, preventing them from being transformed into a "driving force for development", thus weakening the national economy.

Dau Anh Tuan, deputy secretary general of the Vietnam Confederation of Commerce and Industry (VCCI), pointed out a series of problems of the Vietnam’s economy, including high production and business costs which affect enterprises’ competitiveness; underdevelopment of domestic manufacturing enterprises and the lack of an effective mechanism to support enterprises. 

Meanwhile, domestic private enterprises are at a disadvantage compared with foreign ones.

Tuan believes that when investment attraction policies, including tax incentives, become different because of the new global minimum tax policy, a top priority will still be to attract capital to create jobs. 

Le Hong Thuy Tien, CEO of IPP Group, said businesses don’t want to grow slowly. In fact, many authentic businesses try to find ways to develop and always keep an inquiring mind, but they still cannot succeed. The problem lies in the lack of reasonable mechanisms for strategic sustainable development. 

She said it is necessary to design specific tax, financial and interest rate support policies for each group of enterprises. There should be an independent agency that appraises the effectiveness of the support given to enterprises, so as to adjust the policies if necessary and help businesses develop sustainably.

She suggested reviewing the current legal documents, and amending insignificant and unpractical regulations. It would be better not to set requirements which are higher and stricter than those in other countries in the region and the world, or higher than needed, so as to avoid wasting enterprises’ resources.

Tien said she hopes agencies will soon set up reasonable policies for the establishment of a financial center in HCM City. The center, once operational, will bring great benefits, including attracting capital and promoting the development of relevant business fields.

Interest rate policy

Deputy Governor of the State Bank of Vietnam (SBV) Dao Minh Tu said regulating the monetary policy has never been as difficult.

He said the monetary policies being pursued by other countries have significantly influenced Vietnam’s monetary policy, especially after the 2-year pandemic.

Interest rate management has been the most difficult task of economic management in the banking and monetary sectors. Since the beginning of the year, the monetary management agency has cut operating interest rates four times, creating space and liquidity for the market and the economy.

“In 2023, the monetary policy is being loosened to send a message that credit is ready for disbursement to support enterprises,” Tu said.

He said that the central bank will continue to maintain the view in the time to come, adding that it is necessary to ensure strict and reasonable management.

Regarding the fiscal policy, Deputy Minister of Finance Vo Thanh Hung said that the ministry has applied policies on exempting and reducing taxes and fees, extending tax payment deadlines, and applying e-invoices in some fields.

At the same time, Vietnam is carrying out wage reform in the public sector, increasing expenditures to stimulate demand, which aims at helping enterprises overcome difficulties and stabilize the economy.

Thien said to bring all resources into full play, it is necessary to restrict allocation of resources under the ‘ask and give’ scheme. The allocation must be made based on the market economy rules.

Manh Ha