Opportunity for a high open economy like Vietnam

Mr. Nguyen Bich Lam

The General Statistics Office has just announced the numbers on the socio-economic situation in the first quarter. How do you evaluate these numbers?

A prominent highlight, with important significance, improving capacity, creating a foundation for rapid and sustainable development of the economy in the first quarter of 2024 is the disbursement of public investment capital along with attraction and disbursement. Foreign direct investment flourished. In the first quarter, the Prime Minister urgently directed and urged the disbursement of public investment capital for key national projects to promote the leading role and activate social resources for development, creating new development space for the economy.

The economy recovered and developed stably, with inflation being controlled below the target level, clearly demonstrating the internal strength of the economy and demonstrating the level of success in the Government's management work to maintain macroeconomic stability, creating motivation to promote economic development. In particular, with deep and wide integration into the region and the world, Vietnam has signed and implemented many free trade agreements with more than 60 partners covering all continents; speed up the level of liberalization closer to Vietnam's market is on par with Singapore's. Our country's economy increasingly affirms and strengthens its important role in the supply chain diversification strategy of multinational corporations.

In addition, the dynamism in reforming the institutional environment, removing barriers in business and investment, creating an open and transparent environment is considered open and friendly by foreign investors. These strengths have turned Vietnam into an attractive market for foreign investors, and the most worthy investment destination.

With the economic growth results of the first quarter of this year, for the GDP growth rate of the whole year 2024 to reach 6% or more, the GDP growth rate of the remaining 3 quarters of the year must reach over 6.2%, this is the level increase is not easy to achieve.

With the results achieved, what difficulties will the target of controlling inflation at 4-4.5% face, sir?

In 2024, the National Assembly sets a target of controlling inflation at 4-4.5%, however this is not an easy goal in the context of inflationary pressure still being very large. Right from the beginning of the year, the State Bank implemented an expansionary monetary policy, lowered deposit and lending interest rates, and assigned the entire credit limit in 2024 with a system-wide growth orientation of 15% to create Favorable for credit institutions providing capital to the economy in the context of the USD increasing in value after the FED announced to keep interest rates unchanged within a range of 5.25%-5.5%.

In the term of domestic market, the average USD price index in the first quarter increased by 3.97% over the same period last year. Along with that, the FED delayed lowering operating interest rates, the interest rate difference between VND and USD on the interbank market continued to maintain a negative value and the demand for foreign currency used to import raw materials for production was quite large, creating pressure increases among VND/USD exchange rate.

Considering domestic and foreign factors causing price fluctuations in consumer goods and services in the remaining 3 quarters, the ability to control inflation in 2024 as set target is feasible.

What do you think needs to be done to successfully achieve the goal of economic growth and inflation control in 2024 and what will be the new growth driver for the Vietnamese economy this year?

Public investment is still an important driving force, promoting growth in the context of slow recovery of global and domestic aggregate demand. This year the whole country spent VND 657 trillion for public investment; if disbursement reaches 95%, it will only be equivalent to the amount of public investment capital implemented in 2023; if all VND 657 trillion is disbursed, GDP will increase by 0.3%. In particular, it is necessary to quickly allocate detailed state budget capital investment plans for 2024 in accordance with regulations without further delay; the detailed allocation of capital plans must ensure concentration, not spread out, consistent with implementation and disbursement capacity and in accordance with legal regulations on public investment.

In addition, the Government needs to issue solutions to enhance the competitiveness of the investment and business environment and develop infrastructure, focusing on improving the capacity of transport infrastructure and industrial infrastructure. Technology, information and logistics are synchronized. At the same time, implementing an export-based growth strategy plays an important role in the context of globalization and reshaping supply chains. Along with loosening monetary policy, the Government considers continuing to implement counter-cyclical fiscal policies to support businesses such as: extending or postponing payment deadlines for some taxes and fees for businesses; continue to remove barriers in the legal environment, create an open production and business environment, and create trust for the business sector.

Notably, the application of high technology, artificial intelligence, and green development is rapidly changing the world economic structure, leading to the arrangement of the global supply chain. This is also a great opportunity for a highly open economy like Vietnam. Therefore, in my opinion, the Government needs to seize the opportunity, create new driving forces for development, urgently build a strategy, with comprehensive and synchronous solutions, detailed and specific plans and implementation roadmaps to create and develop a number of industries and fields that will act as new growth engines of the economy such as: high technology, semiconductor chips, artificial intelligence; circular economy; recycled energy.

Vietnam has the fourth highest high-tech export potential in the world. Therefore, the Government needs to determine specifically what to do; focus on investing and developing which industries in the high-tech field; have appropriate solutions and effective implementation to turn potential into reality, becoming a powerhouse in high-tech export.