Robust leadership for a bulked up economic transformation

February 25, 2022 | 08:00
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The government is making great efforts to revive the economy with the fresh promulgation of the Economic Recovery and Development Programme for 2022-2023. Nguyen Dinh Cung, former director of the Central Institute for Economic Management, talked with VIR’s Tuyet Anh about these efforts, which can lay the groundwork for a robust economic and trade resurgence.

The government is concentrating on the implementation of the Economic Recovery and Development Programme for this year and next year. Can you explain the rationale behind this strategy?

Robust leadership for a bulked up economic transformation
Nguyen Dinh Cung, former director of the Central Institute for Economic Management

The top priorities for economic recovery are reopening and boosting public investment. Three-quarters of the programme focuses on the two points, which are also the directives that the government and the prime minister have emphasised firmly and directed thoroughly and consistently.

Resolutions such as tax reduction and interest rate compensation will have an effect only if business activities are resumed, thus generating income for residents and boosting consumption.

Currently, Vietnam has started to reopen flights, schools, and entertainment activities in green areas. With the increasing vaccination rollouts, the pandemic will no longer pose a significant threat to the country if new variants do not emerge.

In terms of public investment, the PM has directed the focus on national strategic infrastructure projects, particularly transportation infrastructure projects in the Southeast Asian region. This is an area with high traffic congestion that requires action to alleviate it. In order to increase public investment, effective capital allocation, disbursement and implementation needs to be prioritised.

Regarding social welfare packages, apart from capital financing, it is necessary to develop an ecosystem that provides training and technical support for citizens.

Currently, there is a lack of specific instructions on how enterprises can access support packages. What are the major areas of concern in developing these packages?

There are two major considerations regarding interest rate compensation packages. Firstly, enterprises must be capable of repaying debts in accordance with market principles and commercial bank regulations. Another concern is the motivation for commercial banks to adopt the package.

Currently, the State Bank of Vietnam is setting a credit ceiling for each credit institution. The existing problem is to identify the advantages and disadvantages associated with commercial bank policy implementation.

It is a fact that firms, including commercial banks, are mostly risk-averse. While designing and implementing policies, state management agencies need to collaborate with enterprises in order to define their current needs and difficulties.

What factors should the government and state agencies consider in order to extend enterprise trust and confidence?

State management agencies need to understand the risks confronting enterprises and market principles. Many domestic enterprises, particularly those engaged in import and export with overseas partners from Europe, Japan, and the US are sensitive to the execution of legal regulations.

This is because foreign partners will immediately suspend orders and require Vietnamese enterprises to provide explanations if they are examined during overtime hours, or the management agency works to clarify whether they have violated the regulations.

Albeit foreign enterprises are law-abiding, they cannot afford to wait months, if not years, for the conclusion of relevant management agencies. The mindset of accompanying enterprises should be reflected in reasonable documents and actions.

What do you think are the implications for enterprises under the prime minister’s directives on strengthening the review and implementation of regulations?

I believe that major improvements will be seen in the business environment under the determined and straightforward leadership of the prime minister.

Recently, at the online national online conference which summarised the implementation of Resolution No.13-NQ/TW on the collective economy and the Law on Cooperatives, the prime minister mentioned the heads of several localities who did not attend the full conference to show how their lack of concern might impede the success of other efforts. He also mandated frequent monitoring of the implementation of resolutions.

By doing so, the proposals of enterprises and business associations will be reviewed appropriately in order to remove bottlenecks, thereby creating motivation and confidence for new business strategies in Vietnam.

By Tuyet Anh

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