VINACHEM

Vietnam is facing increasingly big economic woes, according to a Government report delivered at a session in Hanoi last Friday of the National Assembly Economic Committee.

Deputy Minister of Planning and Investment Dao Quang Thu, who read the report at the session, said natural disasters like storm, flood, drought, salinity intrusion and sea pollution caused by Formosa’s industrial waste were spelling trouble for the corporate sector and the public.

While Vietnam is intensifying its global integration, low labor productivity and poor competitiveness are placing Vietnam in a disadvantageous position, says the report.

The National Assembly Economic Committee session was held to get more inputs for the committee’s socio-economic performance assessment report which will be presented at the upcoming sitting of the National Assembly.

Thu said two major economic indicators are below expectations. This year GDP would grow 6.3-6.5% at best, below the 6.7% target, and export growth would be 6-7% compared to the target of 10%. The World Bank and the Asian Development Bank have revised down their Vietnam GDP growth forecasts to 6% this year.

Thu noted whether the economic growth goal is obtainable or not would have tremendous impact on other targets like the ratio of budget deficit to GDP, and public debt.

Vu Hong Thanh, head of the NA Economic Committee, called for a thorough analysis into the impact of lower GDP growth on budget deficit and public debt.

Speaking at the meeting, Deputy Minister of Finance Huynh Quang Hai said lower economic growth would affect budget collections.

In the first nine months of the year, budget revenues met 70.8% of the estimate, Hai said. “We’ve been working hard to meet the 2016 target set by the NA. We are determined to collect a little bit more than estimated.”

The Government report says the macro economy remained stable while inflation was put under control. However, NA Vice Chairman Phung Quoc Hien cast doubt on the report, saying “Regarding the macro economy, the Government says it is stable. Shall we agree with this?

“Deputy Minister of Finance Hai says it would be hard to rein in budget deficit and public debt if the GDP growth target is not achieved. Then, is the macro economy sustainable?”

Nguyen Thi Hong, Deputy Governor of the State Bank of Vietnam, said interest rates tend to go down but the consumer price index might grow over 5%, , Hien said, so the possibility of deposit rates declining would be low.

He said there are now nearly 980,000 enterprises registered, but only 480,000 of them are active.

Regarding unemployment, he said the report painted a good picture. “But in our meetings with voters, we found joblessness is no laughing matter.”

He cited a report by the NA Social Affairs Committee as saying that about 190,000 university and 110,000 college students are jobless. “The Government report does not fully reflect the reality.” - SGGP