VINACHEM

Vietnam’s economic growth rate has seen a decline in every 10-year cycle despite significant achievements over the past 30 years, according to Tran Dinh Thien, director of the Vietnam Institute of Economics.

Speaking at a seminar on opportunities and challenges of the fourth industrial revolution in the Mekong Delta province of Tien Giang on November 24, Thien said economic growth of the country has slowed by nearly one percentage point every ten years.

According to Thien, the decline has resulted from internal weaknesses.

Thien pointed to several factors, especially credits.

The economist said compared to other ASEAN countries and China, Vietnam’s credit interest rate is the second highest after Indonesia, with an average of 6% per year over the past ten years. “The credit interest rate in Vietnam is more than twice higher than that of China, the Philippines and Malaysia,” Thien explained.

Besides, the country’s logistics cost is the highest in the world. “Logistics cost presents more than 20% of Vietnam’s gross domestic product (GDP), twice as high as the global average of nearly 12%,” Thien said.

The State budget deficit has widened although the country has called for the stronger participation of the private sector in investment projects.

Thien said Vietnam has increasingly depended on the foreign direct investment (FDI) sector. FDI firms have grown much faster than domestic firms.

According to Thien, FDI enterprises not only know how to make the most of Vietnam’s cheap labor and natural resources but also enjoy land and tax incentives from the Vietnamese government.

Meanwhile, domestic enterprises have to deal with a complicated investment mechanism, with a total of more than 5,700 kinds of certificates and business conditions managed by ministries and departments.

“The FDI sector now contributes a whopping 70% to the country’s total export revenue,” Thien said.

Integration is expected to boost the domestic sector but in fact, Vietnamese firms have faced many difficulties and are now left behind.

Source: thesaigontimes.vn