Real reform a growth imperative

VietNamNet Bridge – Genuine reforms are a must for recovery in 2014, Dr Nguyen Duc Thanh, member of the PM's Policy Advisory Council, tells the Viet Nam va The gioi (Viet Nam and the World) Newspaper.

Viet Nam, economic policy, restoring production, real estate prices

You say the economy has showed positive signs in 2014, compared with the previous two years. What has made you say that?

My confidence is based on the statistics we have gathered in the last four months. For example indicators of the production and business activities have increased slightly.

These are the signals we pin our hopes on. If we look at the figures, some of them still show decline.

However, in the short term, there are some positive signs. Indicators of procurement management or consumption have increased slightly. As a result, we believe these are positive signs for our economy.

These signals are very important as they help us to come up with appropriate economic policy.

You've talked about some signals of economic recovery. But the slow pace of this may erode the comparative advantages we have over our neighbors. Why?

We already failed to capitalise on some opportunities in the last two years. Following the economic crisis, other countries in the region have sped up economic reforms.

They were willing to accept the temporary economic slow down.

They made efforts to restore production at a much faster pace than us. In my opinion, the present positive signs in our economy should have happened more than two years ago.

However, I'm confident, if we speed up economic reform, particularly in core sectors, we will achieve our goals.

What are the bases for saying that there are signs the economy is recovering?

The signs are in the short term only. But the short term cycle is an opportunity to improve the long term cycles.

In the short term, Viet Nam should consider it an opportunity to renew itself, find a better way to improve economic performance and adjust its policies.

For example, the government's decision to pump thousands of billions of dong into the real estate market is not suitable. It is high time for the government to pump money into restoring production as production is the skeleton of the national economy, not the stock market or the real estate market.

Some people have said foreign investment capital is being moved out of developing countries, including Viet Nam. Is it true?

The withdrawing of foreign investment from developing countries is a governance policy of the big economies in the world. In our case, the direct foreign investment flow is not much.

I don't know if this is lucky for us or not, as in recent years our business environment has not been attractive enough to investors.

That was the key reason why we didn't have much foreign direct investment (FDI) projects.

Therefore, if the world's big economies decide to withdraw money from developing nations, I don't think that it will affect us much. However, if we consider that FDI is an opportunity for us to develop our economy, we have missed that opportunity.

Right from early this year, Viet Nam vowed to speed up its equitisation process of State owned enterprises (SOEs). Do you think the decision will some how impact the country's economic development?

In his new year message, Prime Minister Nguyen Tan Dung has stated clearly that in 2014 and 2015 the government has vowed to speed up the equitisation of SOEs.

The government's policy is totally correct. However, to make the policy a reality is another story. It is very difficult!

There are various reasons for me to say so. The first reason is that real estate prices in our country are very low. That's why interest groups standing behind SOEs will strongly oppose the PM's SOE equitisation plan. They don't want their benefits washed away.

It is very important that the government stands firm against obstacles hindering the equitisation process. This is the key concern as to whether the two year program set up by the government will be smoothly implemented or not.

Source: VNS

Viet Nam, economic policy, restoring production, real estate prices