After a challenging year with many trials and tribulations, Viet Nam ended 2012 with a quiet sense of optimism. President Truong Tan Sang discussed Viet Nam’s economic prospects for the next twelve months.

In 2012, Viet Nam further upheld new and important foreign policy undertakings, which provided not only economic integration but also a more extensive and comprehensive international political integration for Viet Nam.

Despite many difficulties in our economy in the past year, as well as complex developments in the region and the world, our friends around the globe continue to put their confidence in us and support our cause of national construction and defence, thanks to our correct foreign policy.

In general, ODA did not shrink against the previous year's figure. Although the amount of registered FDI looks lower, the disbursement rate remains the same. Thus we have maintained growth despite the difficulties, hence our firm international position and role. In the past year, more than 30 foreign delegations led by Heads of State and Government and legislative agencies came to Viet Nam with the great hope for short- and long-term co-operation with us. These relations are beneficial both bilaterally and multilaterally. Also, Viet Nam's position on the protection of our sovereignty over our islands and seas has received wide international understanding and support.

How do you see the position of Southeast Asian nations in Viet Nam's foreign policy?

Viet Nam has always understood that it must be an active and responsible member of ASEAN. Whether as the ASEAN Chair or as an ordinary member, Viet Nam always works or offers initiatives to consolidate ASEAN unity and promote the building of the ASEAN Community. Our contributions have received wide recognition and approval of other ASEAN members.

In their partnership with ASEAN, major powers also place importance on the relationship with Viet Nam. Many have decided to establish a strategic partnership with Viet Nam and express their desire to enhance relations with Southeast Asia through Viet Nam.

In the diversification of our external relations, we are developing our ties with major powers and attach special importance to our relationship with ASEAN. This is our constant policy (in our relations) with neighbouring countries.

The East Sea issue is now attracting much concern at domestic and international forums. Would you explain Vie`t Nam's position on this issue?

The East Sea is a matter of great concern to Viet Nam, ASEAN and many other countries in the world who have their interest linked to this area. Viet Nam has made statements to clarify its position that all sovereignty disputes in the East Sea must be settled by peaceful means on the basis of international law, including the 1982 UN Convention on the Law of the Sea (UNCLOS). ASEAN and China have signed the Declaration on the Conduct of Parties in the South China Sea/East Sea (DOC). The two sides have also agreed on the development of the Code of Conduct (COC) in the East Sea, upgrading these principles to a higher and more legally binding level. However, we insist that these matters must be settled peacefully and friendly without resorting to the use of force in order to make the East Sea a place of real peace, stability and ensuring maritime safety and security and the freedom of navigation.

China makes similar statements with ASEAN. In practice, things occur in general in accordance with those principles and guidelines. However, we have still seen certain clashes in the East Sea in past years. I would again underline that the settlement of these matters must comply with the principles of international law and in the spirit of peace and friendliness among the parties concerned. These principles are not only recognised by China and ASEAN but also by the international community at large, particularly countries that have concern and interest in the East Sea. Viet Nam always reiterates these principles at all forums and workshops.

Also making sovereignty claims in the Truong Sa (Spratly) Islands, would the Philippines and Brunei Darussalam agree with Viet Nam on the way to settle the East Sea issue?

There are not only the Philippines or Brunei Darussalam but we could also see Malaysia, Indonesia and many other ASEAN countries supporting this position, although some might not have direct interest in the East Sea. ASEAN takes consensus as an operational principle, i.e. all members find agreement in this matter. This is the common position and principle of all ASEAN members, thus serving as an important platform for Viet Nam and the ASEAN community at large to negotiate with China now and in the future.

We are for the protection of sovereignty over our islands and seas by peaceful diplomatic means but the developments in the East Sea recently caused certain uneasiness among the population. What is your message to the people on this matter, Mr President?

It is their right to be concerned over the situation in the East Sea. It reflects the patriotism and spirit of independence passed on for generations. Our Party and State must put the people at the root of all policies.

Viet Nam's interest in the East Sea has been recognised by international law and protected under the 1982 UNCLOS. We will take international law as the foundation and strength to protect our national interest and sovereignty. Though we take a soft approach, we should also prepare ourselves by strengthening the defence and security fronts, enhancing our vigilance over any regional developments and resolutely protecting our sacred territorial sovereignty of our Motherland.

Viet Nam takes part in the Trans-Pacific Partnership negotiations at a rather early stage. Has Viet Nam taken account of its future economic and political benefits in the TPP?

Before we joined the ASEAN Free Trade Area (AFTA), many also showed their concerns over possible losses for Viet Nam. Facts prove otherwise. What is important here is that we have prepared our strength to win in the course of integration. Nurturing our strength along with integration is the key. As such, the Vietnamese economy has been growing strongly and comprehensively for a long time. It was the same when we joined the World Trade Organisation (WTO). On the global scale, we might be concerned over the strength of major economies that could smash ours. Yet, after WTO accession, the Vietnamese economy enjoys better conditions for development. The recent economic slowdown is not a result of WTO accession but rather of our own weaknesses and subjective reasons. Therefore we must restructure our economy and adjust our policies for macro-economic stability.

To develop, we must open our doors to the world. The participation in TPP negotiations falls under this policy. The important thing is that we must draw the lessons from AFTA and WTO participation to be prepared. Otherwise, it would be hard to win and equally hard to avoid failure. I believe that victories or failures are all the outcomes of our own subjective strength. Each enterprise, each locality, each ministry and the entire country at large must prepare at best for the integration and participation in the TPP in the future.

Viet Nam's ranking has recently been lowered as against the previous year. Would it be possible that the country has been unable to maximise all of its advantages during international integration?

Generally speaking, to have economic development and GDP growth, it is necessary to invest. There is a relationship between investment capital and growth rate. The higher this ratio, the worse is investment efficiency. In Viet Nam, this ratio is between 5-6, i.e. our country spends up to two times higher than other countries of the same development level. This situation has been there for years, hence the low efficiency despite a huge amount of investment. The Party's XI National Congress advocates that it is now time to renew our growth model, restructure the economy and rearrange the State-owned enterprises (SOE) and banking system, etc. Many other works have also been listed to handle those weaknesses and improve investment efficiency to get rapid and sustainable growth. But that is just a policy. What really occurs depends on the strong efforts of all levels, branches, localities and enterprises. I hope and call for everyone to make such efforts.

The successes of other countries around Viet Nam are mostly based on the three key areas: infrastructure, companys' international competitiveness and the efficiency of the State machinery. What is Viet Nam's choice for development?

We have to perform well in all three areas of infrastructure development, human resources improvement and economic institutional completion. The point here is how to perform at best?

As for infrastructure, we have made quite a few achievements after 25 years of doi moi (renewal). Yet to get higher growth in the next phases, we cannot be satisfied with the existing infrastructure.

Take roads for instance. We must have a freeway system in its real meaning. Similarly, we must have a real seaport system. Looking around to advanced countries in ASEAN, the current cost per unit in our ports is on average twice theirs. How to compete then? As such, it is necessary to accelerate the pace of infrastructure development. We have the policy and we have already talked a great deal about it. It is now time to act.

International competition by enterprises must receive more attention. It is not that opening the doors makes our companies less competitive. Rather it's our own weaknesses that cause it. Why is it that when they open the door for us to sell, we cannot do it well? So when they offer the very same product with a better competitiveness, we blame the "open-door policy". That is unfair. Our weaknesses could be partly a result of poor human resources. This is not just a fault of the enterprises. It is also the fault of people like us, the managers and leaders of the country, who have not been able to create a sound business environment and help develop a high quality pool of human resources to assist enterprises.

In terms of institution, we are supplementing and amending the 1992 Constitution. Once the amendments are adopted by the National Assembly at the end of 2013, a series of legislations will be amended accordingly to implement the newly amended Constitution. The most important thing then is to further perfect the institutions of the socialist-oriented market economy. Much remains to be done. We should not forget that by 2015, trade liberalisation, not only with ASEAN but also with giant China, the second largest economy of the world, will take place. By 2017-18, there will be a complete trade liberalisation between Viet Nam and other WTO members. By then, the relations between enterprises from all nations will be equal under the commitments made during WTO accession and we can no longer put up "barriers" at will. The subjective factor should be urgently reviewed to enhance competitiveness in each and every enterprise and locality as well as at the national level and the entire economy. Leaders from the centre to the locality must look back to see what do they have in hand in order to ensure effective integration that could bring about tangible outcomes.

Our industrial products are yet to have the desired competitiveness. Are we facing problems in controlling and allocating our resources?

Controlling and allocating resources is a must, not only in the industries but also in services and agriculture. How to avoid wastefulness and losses in terms of capital, resources and manpower is a question. There are instances where much better results would be possible if the resources were well allocated and vice versa.

We need recalculation. How to correctly apply the rules of the market economy under State management so that resources could run into the right places to create the highest efficiency is most important. It is the responsibility of the State in the management, implementation and regulation of resources. I particularly underline the issue of administrative procedures reform and the effective combat against corruption and wastefulness to ensure the right allocation of resources.

Currently, Viet Nam's GDP is not high but the international public sees that Viet Nam is laying the foundation and preparing for a new stage of development. How will the Vietnamese economy look in the next few years once the policies we are carrying out bear fruit?

The clearest weaknesses of the Vietnamese economy today are high inflation, and trade deficit. Our growth quality in past years has been to a large extent horizontal, relying much on capital and not productivity or high-technology. This state of affairs must not be prolonged. We must adjust and restructure our economy, shifting to vertical growth, improving quality and productivity, employing advanced technology, etc. During the process of economic restructuring, we must accept a lower GDP growth but not under 5 per cent a year. A lower growth is dangerous since it will be accompanied by high unemployment. We will have to strive to bring average annual growth to 7-8 per cent and stabilise the micro-economy. If that could be done, we would be able to improve people's lives and maintain socio-political stability.

As a member of the National Assembly, how would you assess the people's confidence in our political regime?

The people of Viet Nam have displayed their trust and bonds with the Party and regime for the past 80 years, even in the hardest of times. This trust is challenged and eroded by corruption, wastefulness and the degradation of a section of our cadres and Party members. Yet, I believe that our people are still putting lots of their aspirations and confidence in the Party if it makes timely corrections over its apparatus weaknesses and mistakes. However, we should never abuse the people's trust. Each official should understand that the higher position he or she might hold, the bigger their responsibility for the eroding of trust of the people in the Party. The correction of these weaknesses is to confirm the Party's role and responsibility over the future of this country and the survival of this nation as it has done for nearly a century.

The open and democratic nature has been clearly shown in various forums on the most important issues of the country. How would you evaluate this observation?

I am quite clear that the people are more and more interested in the activities of all agencies of the Party and State. From my meetings with voters, I can see that the people really value the National Assembly's performance. As the top seat of power of the country, the National Assembly has been playing its role and implementing its functions better, especially in the representation of the people's will and aspirations.

The Resolution of the 4th Meeting of the Party Central Committee has been in place for nearly a year now. The resolution confirms that a not-so-small section of Party members is degrading, but the implementation of the resolution has not been as desired. How would you assess this situation?

Many have put this question to me. There are as many commendations as criticism. On this matter, I must say that we need to be preserved without stepping back. We must understand that we cannot afford to avoid it and that we cannot do it overnight. That is life and we should not be pessimistic. We have to get the correct view and have patience to constantly perform this task in the course of Party building. The National Assembly has adopted a resolution on an annual confidence vote. This is democratisation. The important thing is to really do it and develop a mechanism of oversight to prevent "lobbying" or "buying" votes. The Party Central Committee will also apply a similar confidence vote regime and the Motherland Front will have a monitoring mechanism for the cadre pool.

Do you regularly receive letters from citizens?

Every day, I receive many letters covering all aspects of life, from the very small daily stories to the country's major issues. I put my special interest in the most constructive, frank and sharing letters. Many are really moving and helpful, sometimes directly talking about the State's policies. I cannot say more than to sincerely thank them all.

After a year being the Head of State, do you have any cases where the people's particularburning issues have occupied your mind more than others?

There are so many burning issues, but all are directed to one destination: in the new year, how can we better deal with economic and welfare issues?

Whenever I come to an enterprise, I hear complaints about capital shortage and too many hurdles. When I met with workers, the common issues are lack of jobs, corruption or social vices, etc.

The question is how to better handle economic and welfare issues while at the same time addressing better the issue of national defence and security, national sovereignty and the comprehensive implementation of our foreign policy and activities under the resolutions of the 11th National Party Congress.

I want the people to have confidence in the Party but how can that come when they are still losing their jobs and living in poverty while corruption and wastefulness are not effectively fought against? There are so many puzzles and worries.

Mr President, what is your message to the people in the new year?

We are now entering the third year of this five-year plan set out by the 11th National Party Congress. We are resolved to change and restructure our economy, stabilise our macro-economy for more sustained, qualitative and effective development so our country could become a fundamentally modern and industrialised nation by 2020. In the past two years, and in 2013, we are going through a stage of economic restructuring, accepting a lower growth and changing the growth quality of the economy to lay the foundation for the next stages of development. As such, I call on all comrades and and entire people in the country to make every effort in their individual positions to successfully meet the set goals. I strongly desire for our people's wealth, happiness and our country's peace and prosperity.

VNS