While the Covid-19 pandemic is forcing Vietnam to revise its growth target, a shift in investment capital from China is an opportunity Vietnam must seize with all the country has, according to Prime Minister Nguyen Xuan Phuc.

Prime Minister Nguyen Xuan Phuc urged Vietnam to be ready for investment capital shifted from China. Source: VGP.

Vietnam’s GDP growth target of 6.8%, along with other key economic indicators, including fiscal deficit, public debt, state budget revenue, among others, are hard to be achieved and should be revised in line with the actual situation, Phuc said at the opening of the National Assembly (NA)’s session on May 20.

During this difficult period, Vietnam is becoming a potential destination for investors looking to exit China and diversify their global supply chains, Phuc said.

Phuc said Vietnam needs to quickly adapt to a new normalcy in the post-pandemic period, including a change in production and doing business methods to absorb the new capital inflows.

According to Phuc, the government is committed to preparing all necessary conditions, particularly infrastructure and human resources, to meet demands of multinationals, integrate into the value chains and transfer modern technologies.

Overview of the meeting. Source: VGP.

At the same time, Vietnam would continue to form domestic production chains and diversify products with greater competitiveness, which could be done by utilizing the strength of a 100-million-people market.

Step by step, the move would help Vietnam form a new production system with high resilience against any external shocks.

Phuc also noted the government is working on appropriate measures to prevent domestic enterprises from being acquired by foreign investors at cheap prices.

In addition to a domestic supply chain, Phuc considered public investment a key solution to boost economic growth.

Major infrastructure projects such as the North-South expressway and Long Thanh International Airport are the government’s priorities to create spillover effects to other economic sectors.

Chairman of the NA’s Committee for Economic Affairs Vu Hong Thanh said the government should step up efforts in administrative reform to aid economic recovery, while domestic consumption is essential to support the business community and boost production.

Thanh requested the government to address bottlenecks in administrative procedures, especially in projects suffering delayed disbursement.

Regarding this issue, Phuc suggested the NA to change the financing mechanism of projects, including the Eastern North-South expressway and the My Thuan – Can Tho expressway, from the public-private partnership (PPP) to public investment, citing difficulties in mobilizing capital for these projects as the main reason.

Phuc said the government is seeking the NA’s approval to waive and reduce tax for sectors severely hit by the Covid-19 pandemic, including a reduction of corporate income tax for small and micro-sized enterprises.

New economic stimulus packages are needed to help economic recovery at a time when the Covid-19 is set to persist for a longer period globally, Phuc asserted.