Vietnam should continue support for vulnerable groups: IMF official

A corner of HCM City - the southern largest economic hub of Vietnam (Photo: VNA)

Vietnam will record positive economic growth in 2021, at around 6-7 percent, if the country continue support for vulnerable groups in the economy, as well as the freshly-rolled out vaccination campaign, said Jonathan Ostry, Deputy Director of the Asia and Pacific Department of the International Monetary Fund (IMF).

The Southeast Asian country needs to lay a foundation for strong growth in the mid-term, including ensuring sufficient revenue resources for infrastructure development and implementation of public investment, he stressed.

It is necessary for the nation to ensure a resilient financial system, and continue efforts to better the investment climate, Ostry added.

Regarding a plan that is being drafted by the Vietnamese Government to assist enterprises during the pandemic, the IMF official held that the country’s fiscal policy should be loosened to support economic activities, and limit negative impacts from the pandemic.

Policy adjustments depend largely on the speed of economic recovery at the global level, which is undergoing a lot of uncertainties, he said.

Pointing out weak uptake of tax deferrals in Vietnam, particularly in the hardest-hit sectors of the economy, the IMF recommended introduction of temporary corporate income tax (CIT) loss-carry backwards to improve firms’ cash flows, better targeting of temporary CIT reductions to benefit distressed but viable small-and medium-sized enterprises, and introduction of temporary provisions for accelerated depreciation or investment tax credits to lower to user cost of capital and encourage investment.

He moved to underscore that Vietnam’s economic growth story in the past three decades is notable since it is sustainable and inclusive growth that helps improve local livelihoods.

Thanks to market-oriented reforms which enable improvements in the business climate, and attraction of huge amount of FDI flows, Vietnam has risen from being in the group of the world’s poorest country to gaining the “middle-income” status.

The country should work more to better the business environment and ensure an equal playground, he said, adding this includes reforms geared towards simplifying and reducing the regulatory burden for domestic firms, easing entry costs for enterprises, continued reform of state-owned firms, and enhancing good governance.

Additionally, he suggested Vietnam enhance human capital and technology access to boost labour productivity, which facilitate investments in more complicated products that can gain better competitive edge in the international market./.