Positive signal for a promising development cycle

Associate Professor, PhD. Nguyen Thuong Lang

How do you evaluate the positive signs of the economy in the first 2 months of the year?

From 2023, in a difficult economic context, Vietnam's economy will still achieve positive growth of more than 5% compared to 2022. This shows that the resilience of the Vietnamese economy is great. From such a foundation in 2023, not only production indicators but also Vietnam's trade and investment indicators in 2024 will have many developments. This is a sign that we are preparing to enter a new and promising development cycle. The possibility that Vietnam will achieve growth of 6-6.5%, even higher, is entirely possible.

What are the drivers for this year's growth outlook, sir?

Currently, Vietnam has introduced many important reforms. For example, the passage of the Land Law (amended) is expected to help the real estate market become more positive; Wage policies and salary increases for officials also create strong demand stimulation. In addition, although foreign partners set many green standards or net emission standards, Vietnamese businesses are prepared and able to adapt. Therefore, it is certain that during this time and in future, businesses will connect many orders and connect many partners to create motivation for import-export growth.

On the other hand, foreign investment (FDI) into Vietnam from 2023 has been at a high level, estimated to reach USD 23.18 billion, up 3.5% compared to 2022, 2 months of 2024 has increased by 38.6% compared to the same period in 2023. Therefore, in 2024, FDI into Vietnam is expected to reach a higher number than last year, thereby creating a spillover impact on the domestic business sector. This is because Vietnam's investment environment is expected to be more likely to bring high profits to foreign investors.

Thus, in just the first 2 months of the year, Vietnam's economic dynamics in 2024 are very clear. I think that all this motivation will create a machine to help the economy grow more steadily in the coming years.

In economic indicators in the past 2 months, Vietnam's trade surplus was more than USD 4.7 billion. Although it is a good sign, in your opinion, what should we pay attention to this number?

A high trade surplus demonstrates the ability of businesses in Vietnam to compete in the international market as well as to make good use of opportunities and incentives offered by the market.

However, it is worth noting which business sector this trade surplus comes from, because currently, the majority of turnover comes from the foreign-invested business sector. Accordingly, in the past 2 months, the domestic economic sector was estimated to reach USD 16.14 billion, but the foreign invested sector (including crude oil) reached USD 43.2 billion, which is 2.6 times higher than the domestic area...

Therefore, I think the problem here is to ensure a surplus trade balance but need to allocate appropriate benefits to economic sectors. In addition, Vietnam always promotes and diversifies integration, but integration must be real, sustainable and must transform external factors into internal strength. We must aim for the Vietnamese business sector to be the master, to be the trump card of this international "game". Otherwise, Vietnam exports a lot to the world, but in fact the benefit to the domestic economy is very modest.

In addition, the large gap between exports and imports is also an issue that needs attention, because it is a sign that businesses are limiting production and must reduce the import of raw materials. But we don't have to worry about that. Because many times importing at low prices is an advantage, helping to increase price competitiveness for businesses; or businesses that have been proactive in domestic raw material sources. The issue of concern is that when large imports cause domestic production to stagnate, innovation in management and business restructuring is needed.

With the above issues of import and export turnover, I think it also creates pressure, even motivation for businesses as well as domestic management agencies to adjust their economic structure and business models to catch up with the market. In addition, domestic businesses will have to increase learning from experience, promote information about integration, build strong brands... to increase trade turnover in the future.

To create opportunities for the private business sector to develop further, what are the solutions, sir?

The issue of promoting the strength of economic sectors is necessary. Because the economy is an organic unified body, including the private economy, collective economy, state economy and foreign-invested economy. The state economy must play the leading role; the foreign-invested economy is an important additional resource. In the long term, I think that the private economy must be a direct, persistent and fundamental driving force for the Vietnamese economy if it wants to achieve development goals.

Therefore, promoting private economic development needs to be based on drastically improving the business environment. These must be solutions aimed at reducing operating costs for businesses, simplifying administrative procedures, creating conditions for businesses to develop through land, human resources, and infrastructure...

Thank you!