Sky is the limit for Vietnam’s growth

January 01, 2021 | 08:00
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The positive outcomes of 2020 can become a strong foundation for development in the new year. Talking with VIR’s Nguyen Huong, Deputy Minister of Planning and Investment Tran Quoc Phuong explains why growth in 2021 could even exceed the current goals set forth.

What has Vietnam achieved in socioeconomic development over the past year, with the ongoing pandemic hindering global progress?

sky is the limit for vietnams growth
Deputy Minister of Planning and Investment Tran Quoc Phuong

While the pandemic has wide-based economic implications for countries all over the world and major economies are falling into deep recession, Vietnam has reported positive growth.

This confirms the timeliness, accuracy, and efficiency of the government’s directions and administration in disease prevention, as well as the efforts of all levels, agencies, people, and businesses to carry out the dual targets of pandemic control and socioeconomic development.

Accelerating the disbursement of investment has been one of the solutions to boost economic growth in 2020. What have been the highlights of investment into the economy this year, especially in terms of public funding?

Such investment is the foundation for the development of manufacturing and business. However, the economic crisis caused by COVID-19 and other global events has significantly decreased investment on a worldwide scale.

The pandemic has reduced all investment activities from the private sector, as well as in foreign direct investment (FDI). Therefore, strengthening the disbursement of public investment is the best solution to stimulate investment demand, boost production, create more jobs, and maintain economic growth momentum.

Public investment usually pours into major socioeconomic infrastructure. So if disbursed, this would be “initial capital” to attract capital from the private sector and FDI, increase total investment, and maintain economic growth.

Numerous socioeconomic sectors will benefit from the strengthened disbursement of public investment, especially sectors like construction, and the manufacturing of cement, steel, iron, bricks, tiles, and ceramics. This will also allow more businesses and employees to gain more and pour more into investment and manufacturing.

sky is the limit for vietnams growth
Sky is the limit for Vietnam’s growth

In 2021, the government has set a GDP growth target of about 6 per cent. Do you think this will be possible as economies around the globe are facing a tough year ahead?

We see a lot of difficulties ahead to achieve the target, with a lot of unexpected turns, and opportunities that are not straightforward to seize. We can, however, expect COVID-19 to be controlled in 2021, and tourism should rise sharply after a whole year of being held back.

However, we cannot be sure about anything without a tried and tested coronavirus vaccine that is produced by numerous countries. Accessing these vaccines could be a great financial burden on some developing countries, which could mean they will be unable to completely lift travel restrictions.

Businesses are far more agile in seizing opportunities than entire economies. So it would be imperative to spot the chances among the challenges in advance, and position the country for success by crafting judicious policies.

Based on the good results Vietnam has achieved in 2020 and the upcoming driving forces, ultimately, the GDP target of 6 per cent is feasible.

This is thanks to the industrial sector, which is recovering with positive growth over the last months, along with agriculture and services. Additionally, export growth, which often equals GDP growth, remained high even during the pandemic outbreak, and is expected to be a driving force for GDP growth next year. Moreover, domestic consumption is recovering too, and FDI is being maintained.

Agriculture, meanwhile, is reporting positive growth since the third quarter, thanks to bringing the African swine fever under control, while maintaining the consumption market of rice and agricultural products. So agriculture is expected to be a key economic pillar for the country in the new year.

The country has various propellants, including public investment disbursement, export, manufacturing, agriculture, and services. Besides all that, the numerous free trade agreements signed recently and in previous years will take hold and create new prospects for domestic production and export market expansion, as well as lend new momentum for the country’s economic growth.

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