Reforms urged to increase growth

Hanoi (VNA) - Vietnam should enact large macroeconomic reforms in order to lift growth and catch up with other economies, Christine Largarde, Managing Director of the International Monetary Fund (IMF), said on March 17 at a meeting with students of the National Economics University.

The country should ensure its macroeconomics are stable by using flexible exchange rates to minimise the shocks created by global financial markets, and by using inflation as a decisive factor to develop monetary policies, she said.

Vietnam must increase the Government’s income to reduce public debt, which currently stands at about 60 percent of the GDP, and to boost investment in critical areas such as infrastructure, health and education, she said.

The Government should also assist banks in resolving non-performing loans and bolster their balance sheets, which will support better credit growth for a more sustainable development of the economy in the medium term, she said.

In addition, the Government should also accelerate the restructuring of State-owned enterprises (SOEs) and boost labour productivity by reforming corporate governance, making divestments from non-core activities and allowing more foreign ownership in the SOEs, she said.

Christine also noted that local SOEs and private companies currently have very low productivity, only about one-fifth that of the foreign-invested firms, she said. She added that this explained why foreign direct investment (FDI) companies accounted for 70 percent of the country’s total exports.

Vietnam should also invest more in research and development (R&D) for technological innovation, where the country lags behind other nations, she said. Christine also mentioned that Vietnam needs to boost the quality of education, especially vocational training, to meet international requirements to reduce the high youth unemployment rate.

The IMF’s Managing Director suggested that Vietnamese students lift their creativity and innovation, while trying to build good knowledge and skills in economics related subjects such as math, engineering and finance.

“You will also have a chance to create sustainable ventures that are firmly grounded in mutual trust and strong ethical behavior,” she said, as unethical behavior sometimes appears in highly-competitive industries.

Additionally, Vietnam also has to reduce its poverty rate of 13.5 percent, and promote gender equality, which aims to provide more opportunities and power for women in the workforce, she said.

Such methods are expected to help Vietnam cope with a slowdown in global economic growth, attract more foreign direct investment, cope with shocks from global financial markets and catch up with other economies, Christine said.

She said that the country has become one of the world’s most open economies in the past 30 years, which benefits from international trade and FDI to drive up growth and reduce poverty.

She said that there will be more opportunities for Vietnam given the current status of the global economy, including the slowdown of China’s economy, the stronger US dollar and the signed Trans-Pacific Partnership (TPP).

Those economic events will help Vietnam win market share at the lower end of the value chain, sell more final goods to overseas markets, boost its GDP to 8 percent and its exports by 30 percent during the next 15 years, she said.-VNA