Government resolute to maintain development targets

“We must be resolute in striving for the success of our initial major development targets set early this year,” confirmed Prime Minister Nguyen Tan Dung at a government meeting in June.

According to the Ministry of Planning and Investment (MPI), China’s illegal placement of the HS 981 oil rig in Vietnam’s waters and the resultant riots that damaged several foreign-invested businesses have cast a shadow over the export sector.

Vietnam’s export value fell 5.28 per cent in May and 2.5 per cent in June, with exports to China plunging 6.9 per cent and 2.5 per cent, respectively.

MPI figures also show a fast rising number of businesses facing dissolution or suspension of operations.

In the first half of this year, around 33,500 companies declared bankruptcy or suspension of business, a 16.3 per cent jump on-year.

Also, the number of suspended businesses that revived operations slid 10.7 per cent in the first half against the same period last year.

Credit expansion of only 2.3 per cent as of June 25 is another area of concern to economic experts.

“Capital is not making its way into the economy and therefore trade and production are likely to stay stalled,” said economist Le Dinh An.

The on-going tensions in the East Sea and their impact on Vietnam’s socio-economic development dominated the agenda of last month’s government meetings.

Minister of Planning and Investment Bui Quang Vinh, however, said the tensions were only affecting businesses’ production and exports in specific areas, and therefore “the consequences are not major.”

The disadvantages referred to above contrast certain positive economic signs. GDP has grown by an estimated 5.18 per cent in the year’s first half against 4.9 per cent last year.

“Despite the riots back in May, Vietnam’s economy has continued to rebound with accelerating growth,” Vinh said.

Another uplifting indicator is the consumer price index (CPI) being held to just 1.38 per cent in the year’s first half compared to the end of 2013, the lowest in 13 years.

Export value has totalled $70.8 billion so far, up 15 per cent on-year and Vietnam has a $1.32 billion trade surplus.

Industrial production, particularly manufacturing and processing industries, has made a strong come-back.

The index of industrial production (IIP) jumped 7.3 per cent in the first quarter and 8.3 per cent in the second quarter against 5 per cent and 5.5 per cent in the same periods last year.