|At the conference “Vietnam's economy in the medium term 2021-2025: Recovery and growth accelerates” (Photo: baotainguyenmoitruong.vn)
Two scenarios for Vietnam’s economic growth this year were introduced at a conference called “Vietnam's economy in the medium term, 2021-2025: Recovery and growth accelerates”, held last month.
The base-line scenario forecasts the economy to grow at about 6.3% in the next 5 years. This scenario assumes the coronavirus epidemic will remain a factor but the government’s economic supports will prove moderately effective.
In the best-case scenario, GDP growth could reach nearly 6.8%. Under this scenario, the economy will decrease slightly following a high growth rate this year, but will then recover steadily.
Phan Duc Hieu, Deputy Director of the Central Institute for Economic Management, said that Vietnam will continue to control the COVID-19 epidemic, maintain growth, accelerate institutional reforms, and improve the business environment.
“In the new context, we must quickly restructure businesses and seize new business opportunities. Institutions will be improved to promote businesses’ development. We must restructure institutions in order to create a dynamic business community,” said Hieu.
The international community has praised Vietnam’s fight against COVID-19 and its quick roll-out of solutions to help the economy survive a difficult period and achieve a GDP growth of more than 2.9% last year thus bolstering hopes of higher economic growth this year.
97% of Vietnam’s economy is made up of small and medium sized enterprises and millions of household businesses. The COVID-19 pandemic has impacted all of them, and they all still need support from the Government.
|Dr. Nguyen Dinh Cung (Photo: dantri.com.vn)
Economist Dr. Nguyen Dinh Cung, a member of the Prime Minister’s Economic Advisory Group, suggests that instead of giving them cash subsidies, the Government should initiate tax and credit incentives.
“Tax and credit incentives would drive strong growth in the coming years. The National Assembly should promptly adjust relevant policies so that all the incentives will reach businesses in the second half of this year,” said Cung.
The enforcement of the Law on Enterprises, the Law on Investment, and the Law on Public-Private Partnership are expected to create full, favorable legal frameworks to help Vietnamese business grow.
He said, “The 13th National Party Congress emphasized institutional reform need to focus on promoting production market, land use rights, and making markets the key to mobilizing, allocating, and using resources. By so doing, I strongly believe resources will be used effectively and a growth rate of 8 to 9% per year could be within reach.”
Vietnam was among the countries with the highest GDP growth in 2020, said Ly Dai Hung of the Vietnam Institute of Economics. To continue that growth, he said, Vietnam needs to adopt a new way of thinking, reform institutions and policies, and involve the non-state sector.
He underscored the importance of mobilizing resources for science, technology, and innovations, adding, “2021 is the year Vietnam begins to implement its new 5-year and 10-year economic development strategy. This will be very important for our economy.”
“The Vietnam Institute of Economics has suggested three scenarios. The base-line scenario in which Vietnam grows 5.49% this year is the most likely result,” said Hung.
The Government is promoting e-Government apps and creating more favorable conditions for businesses. E-commerce, digital transformation, and new business models based on connecting platforms will be pushed to carry Vietnam toward its ambitious economic targets.