Recalibrating economic model an urgent task

Building the nation’s infrastructure network into a road to prosperous trade
is a key government task

The task was highlighted at the 13th National Assembly’s second session, which opened last week in Hanoi and is expected to approve five laws, one resolution and make socio-economic development targets for 2012 and  2011-2015.

The 46-day session will concentrate on economic restructuring pertaining to the renewal of Vietnam’s economic growth model. Prime Minister Nguyen Tan Dung said Vietnam’s economic restructuring would be in step with improvements in state investment, state-run enterprises’ operations and financial markets. Dung said improved state investment capital usage was “an urgent task” as over the past years “many localities have been in a race to expand industrial parks and economic zones without weighing their ability to lure investment capital.”

“Besides, local authorities have approved too many projects without taking their financial health into account. Thus, projects have failed to be implemented, while more notably, the state has been unable to rally sufficient capital for key projects,” the premier said.

For example, Vietnam had 267 industrial parks and 650 industrial complexes, but only 40 per cent of them were occupied by projects, said Vietnam Economics Institute’s head Tran Dinh Thien.
In another case, the country had 266 sea ports, but only nine of which could be upgraded to receive 50,000 dead weight tonnage ships, he said.  “Capital from the state coffers, government bond issuances and credits will be used exclusively for national and urgent projects,” Dung said. “Mechanisms for state investment management and use will also be revised.” The government also underscored an urgent need to restructure state-run enterprises, as many of which were holding many state assets, but were unable to operate efficiently.

For example, it was reported that during this year’s first eight months, Electricity of Vietnam’s losses were $562.5 million, Vinashin $148.6 million, Petrolimex $57.6 million and Vinalines $29.4 million.

“We will comprehensively and thoroughly revise state-run groups and corporations’ operations and effectiveness. Their operational results must be publicized. We will also continue renewing and equitising these firms, while withdrawing state capital at already equitised ones not controlled by the state,” Dung said.  

Restructuring of the country’s financial markets, particularly commercial banks will also an imperative task for the government until 2015. “We will gradually limit the mobilisation of capital from banks, but from other more effective channels like the stock market and financial institutions. The quantity of banks will be trimmed,” the premier said.

Thien said Vietnam had about 100 commercial banks, many of which, were managed and answered to state-run groups and corporations. “It is quite irrational when these banks don’t serve private enterprises,” he said. National Assembly chairman Nguyen Sinh Hung underscored that big efforts must be made to effectively implement these measures.

The government reported that its prime priorities for 2012 would be to curb inflation, stabilise the macroeconomy and keep reasonable economic growth closely pertaining to economic restructuring. The overall economic target for 2011-2015 will be “stable and rapid economic development in association with growth model renewal and economic restructuring in a way that economic quality, effectiveness and competitiveness will be improved.”
 
Particularly, in 2011 and 2012, bridling inflation and keeping reasonable economic growth are stressed to create a firm foundation for the economy to develop more stably from 2013. The gross domestic product is expected to rise 6-6.5 per cent in 2012 and by 6.5-7 per cent on average during 2011-2015.