Identify the challenge of 2018 economic growth

	Economic growth in 2018 estimated to achieve 6.58%
	VN Index expected to surpass 1,300 points in 2018
	2017 economic growth exceeds set target

Improving business environment is still a challenge for economic growth and sustainability. Picture: H.Phuong.

2018 GDP growth is expected to be lower than 2017

2017 witnessed new efforts to implement major policies on reforming the growth model, restructuring the economy and effectively implementing the process of international economic integration. Thanks to those efforts, the 2017 economy has achieved many records in the difficult conditions. The growth rate in 2017 is 6.81%, with significant improvement in quality when not relying heavily on quantitative factors. Specifically, in terms of the mining sector down to 7.1%, credit growth is not over from previous years, investment of the state sector has not increased dramatically etc., but the results of GDP growth exceeded the assigned target.

According to Mr. Nguyen Anh Duong, Head of Macroeconomic Policy Department, Central Institute for Economic Management (CIEM), Vietnam enters 2018 with some enthusiasm. The impressive socio-economic performance in 2017 has helped to consolidate confidence in the reform of economic institutions in general and in the business environment in particular. However, on economic growth in 2018, representatives of CIEM said that the agency's forecast results show that in 2018 economic growth is estimated at 6.58%, export growth is forecast at 9,4%, a trade surplus of 1.1 billion USD, and an increase in consumer prices (average 2018 compared to 2017) is about 3.74%.

The 2018 economic growth is forecast to be lower than 2017, according to CIEM's representative, as macroeconomic developments in 2018 may be influenced by a number of unfavorable factors such as the recovery of growth; the problem of multilateral trade liberalization faces many challenges, as the protection trend and the bilateral trade approach are becoming more common. The big economy can evolve complexly. In addition, Vietnam may have to prevent the risk of foreign capital inflows reversing, exerting pressure on the exchange rate and balance of payments. And the risk of technology lag will be greater if Vietnam does not have the specific actions aimed at anticipating and responding to challenges from science and technology 4.0. Also, resilience to adverse macroeconomic stability shocks depend mainly on the monetary policy balance, the drastic response of Vietnam, coupled with forecasting capacity and behavior in specific scenarios.

In addition to external challenges, many concerns about the internal constraints in the economy have not been completely overcome in the past and considered as a key task to achieve high growth in the coming time, especially in 2018, the hinge year for 2016-2020. According to Dr. Nguyen Dinh Cung, Director of CIEM, Vietnam's economy is still uneven, has no framework. Labor productivity, spillover effects in institutional reform, the importance of public investment and dependence on foreign investment, some hot issues in 2017 such as BOT projects, land disputes, and it is noteworthy that the land use market is a distortion in the distribution of resources etc., are the bottlenecks for Vietnam, requiring more reform, leading the economy towards a market economy, more competitive, stronger and fairer.

Need to continue to reform vigorously

Regarding the business environment, many important indicators related to the business environment and competitiveness of Vietnam have been recorded in the past. For example, in 2017, Vietnam’s business environment index increased by 14 levels, and if calculated for two consecutive years it increased by 23 levels, the strongest increase in a decade. Competitiveness also improved both scores and rankings. In 2017, national competitiveness increased to 60/138 from 55/137. However, many experts say that in practice, there are many barriers to the business environment and therefore a lack sustainability.

Some difficulties and challenges for improving the business environment have been pointed out by Ms. Nguyen Minh Thao, Head of Business Environment and Competitiveness (CIEM). Specifically, the start of business, due to the number of procedures, led to the low starting rank of business and continuous decline in the last three years. 2017 is ranked 123nd, down 2 levels compared to 2016. It is known that enterprises take up to 22 days, go through 9 steps to complete the start of business. In addition, the improvement of the two indices related to the judiciary, including the resolution of contractual disputes and the bankruptcy of businesses, is slow, including bankruptcy which has for many years been in a low position (currently ranked 129/190). According to Ms. Nguyen Minh Thao, cross border trade has been improved on customs procedures, but the reform of specialized management is slow and uneven, so the level of improvement of the index is still limited. Remarkably, over the years, the World Bank has not documented any reforms in Vietnam regarding property registration and use. In the past 10 years, the index has continuously decreased from 40th in 2010 to 63th in 2018. Not to mention, the specialized management for export goods still has many inadequacies. There are more than 400 documents in the field of specialized management and inspection, the scope of which is subject to extensive examination.

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In this regard, according to business expert Le Dang Doanh, many enterprises still say that the unofficial fees that businesses have to spend has not reduced, but has increase. Along with that, the process of reforming the SOE sector and restructuring of public investment is still limited. "2018 is Vietnam's "turning point" in international economic integration. This is an opportunity, but also a great challenge for Vietnam. 2018 has many opportunities but also challenges, in which the challenge is to reform the bottlenecks that we have long been doing but not done. In order to achieve high and sustainable growth in 2018, Vietnam needs to be more aggressive in improving its business environment by reducing informal sector costs. Along with that, we need to promote the market economy and encourage the business sector to invest in science and technology, taking advantage of the opportunity from the fourth industrial revolution", said expert Le Dang Doanh.