Wise words articulate fresh growth mantra

Prime Minister Nguyen Tan Dung (standing) wins donor applause for driving the economy forward

At last week’s Mid-Term Consultative Group (CG) Meeting in Kien Giang province, World Bank country director Victoria Kwakwa said while Vietnam was successfully keeping itself afloat after the global financial crisis, it needed to take more action to overcome big challenges to ensure its sustainable development.

Participants at the meeting pointed out the challenges included the possible return of high inflation, made-in-Vietnam products’ weak competitiveness, difficulties in Vietnam’s export markets, macro imbalances and natural calamities.

The donors recommended that in the short term macro economy, financial and banking system stability was crucial for the country’s further economic growth in 2010. “The primary challenge is to consolidate recent gains in macroeconomic stability,” said Benedict Bingham, International Monetary Fund’s (IMF) senior resident representative in Vietnam.

“This will require a steady course in monetary policy and clear communication from the State Bank that monetary conditions will not be eased further until inflation is on a downward trajectory, sentiment towards the dong is firmly established, and external reserves are rebuilt to more comfortable levels,” he said.

He underscored that safeguarding the financial system remained vital to the future stability of the economy. “This has become an increasing challenge in view of the rapid expansion of the banking system in recent years,” he said.

Specifically, IMF statistics showed that over the past five years, private sector credit had doubled to 120 per cent of the country’s gross domestic product (GDP), increasing in real terms by 150 per cent. He said it was more necessary for the country to improve its supervision and legal frameworks.

Sharing the IMF’s view, the United Nations country team in Vietnam stressed that at present, the challenges were for Vietnam to continue its existing macroeconomic policy, revise monetary, financial and foreign exchange policies in a way suitable to changing conditions at home and internationally.

In the long term, the donors said, Vietnam needed to more effectively restructure its economy to turn it into a centre of the global value chain. This problem closely linked with the perfection of the country’s Socio-Economic Development Strategy 2011-2020 and Socio-Economic Development Plan 2011-2015, which are being paid special attention to by international donors.

Asian Development Bank country director Ayumi Konishi said: “What will Vietnam produce by 2020?”. It coincided with the Ministry of Planning and Investment’s “What is the global position of Vietnam by 2020?” question highlighted in its report entitled “Vietnam’s Economic Vision to 2020”.

International development partners also suggested Vietnam introduce more policies to lure investments from the private sector into the infrastructure sector via the cooperation model of public private partnership (PPP), develop skilled human resources, push back corruption and cope with global challenges like climate change.