Government officials have been ordered to stay at home and focus on steering the economy towards achieving 9.3 per cent economic growth for the second half of 2005, in a bid to achieve the year’s targeted 8.5 per cent growth rate.
Prime Minister Phan Van Khai last week ordered all cabinet members to minimise their attendance at ceremonial events to free them up to manage government works. Ministers and people’s committees chairpeople were also told to limit missions abroad to allow them to focus on directing the implementation of social and economic development activities at home.
“The workload is going to be very heavy in the remaining six months,” Khai warned in an official communication to ministries, state agencies, people’s committees chairpeople and corporations managed by the government.
The official directive, which also requested weekly meetings of government officials to address unsolved works, aimed at the realisation of the ambitious target given the outcome of the first six months was only 7.6 per cent.
“This [the 9.3 per cent target] is a very difficult and heavy job which requires the best efforts from all authorities,” the PM stated.
Despite positive indices in the foreign direct investment (FDI) sector, which accounted for 14.8 per cent of Vietnam’s GDP in 2004 and is estimated to reach 15 per cent this year, economists share the view that a 9.3 per cent economic growth actualisation for the upcoming months is a big challenge.
The Ministry of Planning and Investment (MPI) estimated that the FDI sector disbursed $1.84 billion from their registered capital in the first seven months to July 20, up 11.3 per cent from a year earlier and fulfilling 61 per cent of the year’s target. Newly committed FDI capital in the period, including additional capital to operating projects, also rose by 66.6 per cent to $3.2 billion, raising hopes for a possible excess of the targeted $4.5 billion registered by foreign investors over the year.
“Investments play a vital role in the overall growth,” said Le Manh Hung, head of the MPI’s General Statistical Office (GSO). The GSO announced that total disbursed capital for socio-economic development, including the state and private sector financing sources, amounted to VND139.4 trillion ($8.82 billion) in the first six months of 2005, representing a 19.2 per cent rise from the corresponding period last year.
Yet Hung pointed to potential negative effects on economic growth due to uncertain weather, pandemic threats and price hikes associated with the high oil price.
Despite being a crude oil exporter, Vietnam still has to import fuel, which, following the recent price hikes is putting heavy pressure on the input costs of virtually all production and business activities.
A senior MPI official observed that the increasing consumer price was pressuring the government’s aim of controlling inflation below 6.5 per cent in 2005. The GSO indicated that after the first six months of 2005, inflation had already hit 5.2 per cent.
Export earnings, another pillar of Vietnam’s economic growth, is also facing a challenge as trade deficit widened to $3.5 billion by the end of June, equivalent to 24.7 per cent of the total export volume, according to the GSO.
“Export growth was on a decreasing trend in the first six months of 2005 and the trade deficit is high and rising,” the PM stressed in his communication.
“The actualisation of an average monthly export earning of over $2.7 billion in the remaining six months is a very high [target] level,” he said.
He ordered concerned authorities to pay particular attention to his directive on the regulation of the pricing of key products in the market.