Vietnam persistent with reforms in volatile world hinh anh 1Illustrative image (Photo: VNA)

Hanoi (VNA) -
According to experts, the economy is likely to follow the growth momentum of the previous year to record a breakthrough in 2019. However, many difficulties and challenges still lie ahead in the realisation of this goal. 

In the context of global economic uncertainties, the Government will continue to prioritise the maintenance of macro-economic stability, improving the business environment and economic resilience. Economic growth and inflation continue to be closely monitored with the regular management of the Government during the first quarter of 2019.

The remarks were made by Nguyen Anh Duong, director of the general research department under the Central Institute for Economic Management (CIEM) at a recent workshop entitled “Vietnam’s economy in a volatile world: Making reforms work for sustainable growth”, held by the CIEM with the support from the Australia-Vietnam Economic Reform (Aus4Reform) Programme.

Vietnam persistent with reforms in volatile world hinh anh 2Participants at the workshop entitled “Vietnam’s economy in a volatile world: Making reforms work for sustainable growth” held by the CIEM (Photo: VietnamPlus)

GDP in QI lower than initial estimates

According to Duong, the gross domestic product (GDP) growth in the first quarter reached 6.79 percent, lower than that of the same period in 2018 and the Government’s initial prediction.

However, this figure is still higher than that of the 2009-2017 period, he said, adding that on the way to realise the 2019 target, Vietnam will encounter a number of challenges in the remaining months as the GDP growth rate is forecast to decline. 

“The growth recovery in recent years is attributed to the economic institutional reforms in general and the improvement of the business environment in particular,” he said. In addition to achievements, the CIEM’s report identifies numerous challenges in the economic sectors.

Businesses are pushing ahead with structure adjustments. The production of processing and manufacturing enterprises in the first quarter reduced optimism. 

The business community will always face difficulties in entering the market.

Currently, the biggest hurdle in improving the business environment is the burden of “post-enterprise registration” and transparent information access. 

Price control restricted by bureaucracy  

While outlining some of the reasons for the rising CPI of 2.63 percent in the first quarter, the CIEM group pointed out factors such as the price index reduction in food and the adjustment of electricity price hike from the end of March. 

Furthermore, the method to control prices in the market remains “heavily bureaucratic”. 

That the average basic inflation index increased by 1.83 percent proved the stable adjustment of the monetary policy, hence not putting pressure on prices. After analysing macro-economic indicators in January-March, the CIEM group forecast that the 2019 economic growth is likely to reach 6.88 percent.

Export growth is projected at 9.02 percent, trade surplus around 3.1 billion USD, and consumer price index up about 3.71 percent.

Equitisation quality needs improving

While evaluating the equitisation of state-owned enterprises in the 2017-2018 period, the report highlighted further challenges ahead.

The CIEM group emphasised that the sale of shares through initial public offerings will encounter further difficulties, while the quality of equitisation still requires some improvement. It is clear that the implementation of equitisation regulations and policies has many shortcomings, specifically the settlement of land and financial issues.

Some of the key factors behind this include poor management in implementing equitisation plans, a lack of strict administrative discipline, and unclear mechanisms for handling violations. 

“Vietnam will have to deal with many challenges, mainly from the macro-economy, and the backlog of legal documents leads to the slow implementation of new policies”, Duong said.

While much is expected from the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) by senior officials and businesses, the guidance and amendment of law implementing the deal remains slow and unimproved, he said.

Prime Minister Nguyen Xuan Phuc regularly reminds key groups of possible solutions to improve socio-economic development. However, ministries and relevant departments and localities have not grasped enough information on these solutions and thus not implementing them effectively, Duong added. –VNA