Government’s first resolution of the year sets remarkable targets

GDP is expected to grow by 6.7 per cent in 2018

Maintaining macroeconomic stability and socioeconomic development

According to Resolution No.01/NQ-CP dated January 1, 2018, the government directed strengthening economic stability, controlling inflation, ensuring the balance of the economy, improving the business climate, and accelerating sustainable economic growth.

To this effect, the government stressed the importance of the synchronous implementation of macroeconomic policies, the combination of proactive, flexible, and prudent monetary policies with strict, disciplined fiscal and other policies. Additionally, the government will strive to reach 6.7 per cent of gross domestic product (GDP) growth and maintain the average increase of the consumer price index (CPI) at 4 per cent.

The increase of productivity should be maintained at over 6 per cent, while the contribution of total factor productivity to the 2018 GDP at around 46 per cent.

Agricultural development should go along with higher value-added industry development, strengthening science-technology application and safe agricultural production. Agricultural restructuring needs to be spurred in line with the new rural development initiatives. The government aims to help at least 52 districts and 37 per cent of wards to reach new standards of rural development. GDP growth of the agricultural, forestry and fisheries sector is expected at 3 per cent, with export turnover at $36-37 billion.

The industrial sector needs to be developed sharply, focusing on the processing and manufacturing industry, supporting agriculture and the value chains of multinational corporations. The GDP growth of the industrial and construction sector is targeted to reach 7.7 per cent (7.7 per cent for industry and 9.2 per cent for construction).

The government will also prioritise developing high added-value services, striving to receive 15 million international tourist arrivals and grow this sector by 7.4 per cent.

Managing state budget and developing investment expenditures

It is necessary to strengthen financial discipline, manage the budget tightly, reduce tax debts to less than 5 per cent of the total state revenue, and increase budget revenue by 3 per cent compared to the estimate assigned by the National Assembly.

The state’s budgetary overspending will be controlled at 3.7 per cent of the GDP. Regular budgetary expenditures allocated from the beginning of the year but not disbursed until the end of June 2018 will be cancelled.

Public assets, public debt, and off-budget funds need to be managed and used effectively. Loans, the usage of loans, and payments need to be reviewed and controlled vigilantly. At the end of 2018, the outstanding public balance is expected at 63.9 per cent of the GDP, the government debt at 52.5 per cent, and national foreign debt at 47.6 per cent.

The management and supervision of public investment needs to be improved to fight against group benefits, corruption, and wastefulness. In this regard, the government intends to treat violations of public investment with a heavy hand and fix public-private partnership (PPP) projects in general and BOT projects in particular. The government will also strive to disburse 100 per cent of projects under development and all investment expenditure approved by the National Assembly as well as the prime minister.

The export market needs to evolve and export-import administration procedures need to be simplified. A positive export-import balance needs to be ensured. The growth of export turnover is expected at 8-10 per cent compared to 2017. Trade deficit needs to be controlled at under 3 per cent of the total export turnover. The domestic market needs to be developed sharply, with the total retail sales of consumer goods and services rising by 10 per cent.

Administrative procedures related to land, tax, customs, agriculture, rural, information technology application, and startups, among others, need to be reformed along with developing tourism and extending credit and social insurance coverage. The lists of goods, products, and special examination procedures will be cut down by 50 per cent. The conditions for investment and business will be cut or simplified by about 50 per cent.

In 2018, Vietnam’s international standing needs to be improved, targeting the level of ASEAN-4 (Singapore, Malaysia, Thailand, and the Philippines) countries in terms of competitiveness and business climate. It is necessary to develop enterprises, support small- and medium-sized enterprises, and develop co-operatives and individual business households in order to create a level business environment compliant to market mechanisms.

The state budget needs to be restructured towards increasing the proportion of domestic revenue. The expenditure for development investment will be at 26 per cent and regular expenditure at 64.1 per cent of the total state expenditure.

The investment capital for social development is expected to make up 33-34 per cent of the GDP. The proportion of private investment capital needs to be raised to 41 per cent. Incremental capital-output ratio (ICOR) is expected at 6.0 in 2018.

FDI capital must be attracted to high-tech and environmentally friendly projects. The National FDI Portal should be deployed and strengthen linkages between domestic and FDI enterprises.

State capital management committees at enterprises need to be established and spur equitisation. Startup and enterprise development should be strengthened, attracting investment into agricultural and rural development. The guiding documents of the Law on SMEs Support will be issued soon. There are expected to be 135,000 newly-established enterprises in 2018.