As the global economy is gradually reopening, National Assembly Deputy and Vice President of National Economics University Hoang Van Cuong told The Hanoi Times the significant role of local enterprises in Vietnam’s economic recovery process.

Vice President of National Economics University Hoang Van Cuong.

How do you assess the economic performance in the first six months of this year?

For the January-June period, Vietnam’s GDP growth expanded by 5.64%, which has been seen as positive amid the severe Covid-19 situation. Looking back to the 0.39% growth in the second quarter of last year, the economy has been on the upward trend with an expansion of 4.48% in the first quarter and 6.64% in the second one.

This showed Vietnam has been effective in pursuing the twin goal of containing the pandemic and boosting growth.

However, for the first six months, the two recent outbreaks coincided with two sensitive periods of the economy. The first was in the Tet (Lunar New Year) holiday, the country’s largest festival, and the second took place in major economic hubs of Ho Chi Minh City, Hanoi, Danang, and southern provinces/cities.

The consumer price index (CPI), a gauge of inflation, expanded at a 6-year low of 1.47%, despite a sharp rise in input materials and petroleum products. This pointed to the fact that the aggregate demand on services and products remains low as a result of weak consumer spending and enterprises scaling down their operations.

In this context, the Government should take measures to stimulate consumer demand and ultimately the economy.

Could you be more specific on supporting measures?

Current support programs including freezing and waiving of taxes and fees could only relieve part of the burden on enterprises, but not enough for them to fully recover.

Meanwhile, the Government should enhance support for workers by helping enterprises access preferential loans to cover salary payments. In other words, this is expected to boost demand.

For enterprises to recover, a large-scale support package is needed to enable them to buy input materials and expand production activities.

The global economy is gradually reopening as many countries have achieved herd immunity. In this process, some economies in the region and all over the world are growing at a faster pace than that of Vietnam.

Given the low CPI expansion, the Government may consider adopting expansionary monetary policy while focusing its support on enterprises with high potential to grow.

The banking sector should provide loans for enterprises that are looking to scale up with lower interest rates, or even at 0% so that they are able to grasp market opportunities.

Are there opportunities for enterprises in this current difficult economic climate?

For Vietnam to stay on the same wavelength with the global recovery pace, we have to speed up the vaccination program to achieve herd immunity as soon as possible.

The Government should create favorable conditions for enterprises to change their business lines and shift to new fields. At present, those with good financial conditions may even acquire others and gain greater market share.

In this regard, enterprises may form partnerships and reduce their reliance on foreign supply chains.

From my point of view, the Government could provide support in form of contract orders for enterprises and support them acquiring technologies from foreign peers affected by the pandemic.

In this way, we could turn hardships into opportunities for domestic corporations, in turn laying the foundation to foster growth in supporting industries, logistics, and the manufacturing sector.

This would help Vietnam move towards the goal of realizing a prosperous Vietnam by 2045.

The 13th National Party Congress stated the goal of forming strong economic corporations. What solutions are required in this regard?

For the 2021-2025 period, Vietnam should take drastic steps in restructuring State-owned enterprises (SOEs) if we are to achieve the prosperity goal set forth in the 13th National Party Congress.

At present, the State sector is holding huge resources and operates in fields that their local peers from the private sector can step in.

The Government should carry out a screening process to select state firms with high potential for growth, while those that are ineffective should be privatized and leave the playground for private firms.

A strong will would help Vietnam complete the process of restructuring SOEs right in the government’s 2021-2025 term and foster strong economic corporations.

Thank you for your time!