Reforms rev up economic growth

January 02, 2007 | 17:39
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Legal and administrative reforms and improved business policies contributed to high economic growth, higher export revenues and a flourishing in foreign investment during 2006, the government concluded in its year-end cabinet meeting last week.

Legal and administrative reforms were the fuel for the economy’s high performance in 2006

Public administration continued to be reformed during the past year to meet the demands of a developing market economy and international integration.
The building of institutional capacity, laws and regulations proceeded in line with the actual social development of the country. New laws on enterprises, investment, bidding, and real estate transactions helped create a comprehensive legal framework for all business sectors.
GDP grew at 8.17 per cent in 2006 over the previous year, the government reported, with the industrial sector growing at 10.37 per cent, the services sector at 8.29 per cent and agriculture at 3.4 per cent.
Efforts to seek new markets and diversify products helped boost the nation’s exports in 2006, particularly in the later months of the year. Export turnover reached $39.6 billion, a 22.1 per cent increase year-on-year. Leading generators of export turnover included coffee, rubber, crude oil, textiles and apparel, shoes, seafood, wood products, electronic components and rice with major markets including the US, EU and Japan.
Foreign investors recognised Vietnam’s persistent efforts to make the business climate more attractive with the implementation of new laws on enterprises and investment and more favourable and equitable policies for foreign investors.
Inflows of foreign investment from the US, EU, Japan, Taiwan, Hong Kong, South Korea, and Thailand grew in 2006, particularly as the impact of Vietnam’s admission to the WTO was being felt towards the end of the year and permanent normal trade relations were granted by the US, promising a new wave of foreign direct investment (FDI) in Vietnam.
The country attracted a record amount of foreign investment in 2006, at $10.2 billion, representing a 49.1 per cent increase over 2005 and surpassing the year’s targets by 57 per cent. Newly licensed foreign-invested projects worth a total of $7.83 billion focused mostly on the industrial and services sectors. Existing projects increased their registered capital by a combined $2.63 billion during the year.
Sound economic performance, institutional reforms, and the battle against corruption during the past year were also recognised by international donors, who disbursed $2.66 billion in official development assistance (ODA) and promised a whopping $4.45 billion in 2007.
To ensure sustainable growth during 2007, Prime Minister Nguyen Tan Dung told the cabinet meeting that government would prioritise the construction of infrastructure, education and training, the battle against corruption, and narrowing the economic gap among urban, rural and remote areas.
Vietnam needed to focus on coping with unsustainable growth, low competitiveness due to the shortage of a knowledgeable and skilled workforce and insufficient infrastructure, all of which hindered growth in 2006, Dung said.
Administrative reform would be advanced from central to local levels in order to create momentum for business development and the fight against corruption, he said. Many governmental administrative functions and responsibilities would be decentralised and transferred to local authorities, helping the government focus efforts on regulating socio-economic development.
Dung instructed the Ministry of Planning and Investment to identify and eliminate all unnecessary licence and sub-licence requirements in order to help build more favourable conditions for enterprises.
Representatives from Ministry of Home Affairs admitted that the existence of many cumbersome administrative procedures and licence requirements as well as the harassing attitude of many State cadres continued to cause problems and dissatisfaction among the people and businesses.
The ministry reported that 181 kinds of licences were eliminated last year, but more than 100 new licences and sub-licences were introduced at the same time, undercutting efforts at administrative reform.
The nation would target GDP growth of 8.5 per cent in 2007, Dung said, for a total of around $70 billion. The industrial sector would grow at about 10.5-10.7 per cent, services 8-8.5 per cent, and agriculture 3.5-3.8 per cent. Export turnover would also grow by 17.4 percent year-on-year, reaching $45.2 billion

No. 794/January 1-7, 2007

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