Total support programs provided by the Government to individuals and businesses affected by the Covid-19 pandemic this year are estimated at around US$10.45 billion, or 2.85% of the GDP.
|Minister of Planning and Investment Nguyen Chi Dung. Source: MPI|
Minister of Planning and Investment (MPI) Nguyen Chi Dung gave the remarks at a consultation conference on economic recovery in the 2022-2023 period on October 1.
While the figure remains low compared to neighboring countries, such as 11.4% of the GDP in Thailand, or 5.3% in Malaysia, Dung expected the Government to continue providing more support to the economy.
According to Dung, Vietnam has been facing severe economic consequences due to the pandemic, especially the fourth outbreak. This resulted in a contraction of 6.17% in GDP growth in the third quarter and a growth of 1.42% in the nine-month period.
“Disruption of supply chains are causing high production expenses, while economic resilience has been hit hard with both businesses and people struggling with the pandemic impacts,” Dung said.
The minister acknowledged the fact that most supporting policies provided by the authorities are still focusing on addressing the short-term financial concerns of businesses and people, or from the aggregate supply side of the economy.
“There is a lack of long-term and comprehensive solutions with sufficient resources to boost economic recovery along with restructuring efforts so that the economy is better equipped against future shocks,” Dung said.
International experience and recommendations from foreign experts suggested it is imperative for Vietnam to start working on a recovery program to avoid lagging behind as the world is entering the new normalcy period.
Dung stressed the necessity for Vietnam to soon accelerate the transition of the existing growth model towards a green economy, which can be achieved through the digital transformation process and active integration into global value chains.
“Vietnam should not stay outside the global trend in taking finance, trade, education or healthcare to online platforms,” Dung said.
For the time being, Vietnam has gradually shifted its Covid-19 response approach towards safe adaptation to the pandemic, which remains part of the ongoing efforts for both effective Covid-19 containment and boosting growth.
8 solutions to support economic recovery in 2022-2023
The MPI proposed eight solutions to support the economic recovery process with the goal of providing utmost support to enterprises, people and realizing the average growth of 6.5-7% in the 2021-2025 period.
Firstly, Vietnam should continue to focus on containing the pandemic and enhancing the capabilities of the healthcare system, which should be the priority right in early 2022 for the country to better adapt to the pandemic situation and create the foundation for economic recovery.
A safe and flexible adaptation to the Covid-19 pandemic would be the key task to ensure economic recovery.
Secondly, maintaining stable macro-economic conditions and expanding monetary, fiscal policies on an appropriate scale to ensure national financial security; containing inflation and keeping prices of input material for production at affordable levels.
Thirdly, finalizing the legal framework and improving the business environment.
Fourthly, promoting tourism development and stimulating domestic consumption. In this regard, the tourism sector should be operated in a safe manner in the pandemic context, while domestic consumption should be prioritized via market stabilization programs, trade promotion campaigns, lowering taxes and fees.
Fifthly, supporting enterprises in priority fields to recover in terms of credit, finance, production, and developing sustainable supply chains.
Sixthly, mobilizing resources for development by further attracting foreign direct investment. The Government would continue to address concerns of the foreign-invested sectors and encourage investment in housing projects for workers in industrial parks or economic zones.
Seventhly, developing provincial and urban economic zones, along with perfecting legal framework for greater development of major cities in Vietnam.
Eighthly, expanding labor market and workforce; improving quality of human resources to meet requirements of Industry 4.0.