Experts call for stronger prescription for economy

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SaigonTimes English - 71 month(s) ago 22 readings

DANANG – High-profile experts at a forum in Danang City on Monday called for stronger measures to restructure the economy, including suggestions to wipe off privileges for the State sector.

Experts call for stronger prescription for economy

By Nguyen Thanh and Phuong Lan - The Saigon Times Daily

DANANG – High-profile experts at a forum in Danang City on Monday called for stronger measures to restructure the economy, including suggestions to wipe off privileges for the State sector.

At the two-day Spring Economic Forum 2012, experts analyzed solutions given to the Government’s restructuring schemes of State-owned enterprises, public investments and the banking system for this year and the following years.

Tran Dinh Thien, director of the Vietnam Economic Research Institute, said that Vietnam’s economic reform was now facing more difficulties than it was in 1986 due to the persistent high inflation and economic instability in recent years and uncertainty of the global economy.

Therefore, specific solutions need to be adopted with the inflation control and macro economic stabilization as the top priority. If no strong measures are taken, the economy this year cannot be brighter.

“The key point is to lower the lending rate until enterprises can recover. The top-priority aim now should not be a softer inflation rate but the number of enterprises achieving recovery, and this is the final goal,” Thien said.

Many experts at the forum also stressed the need of quick implementation of strict policies on credit, interest rates and taxes for remove difficulties for enterprises.

If strong solutions to inflation control and economic growth are provided, the targets of obtaining the gross domestic product (GDP) growth of 5.5-5.8% and lowering the inflation rate to 8-9% are achievable, they said.

Speaking at the forum, Nguyen Duc Kien, deputy head of the National Assembly’s Economic Committee, proposed to set up an agency tasked with management of capital and assets in Vietnam that operates fairly independently of the Government.

Nguyen Dinh Cung, deputy head of the Central Institute for Economic Management (CIEM), pointed out five privileges of State-owned enterprises that need a rethink.

Specifically, such enterprises face little likelihood of bankruptcy despite suffering long-lasting losses, while in several cases they even turn State monopoly over certain industries into their own monopoly. These State-owned enterprises also have privileges when accessing credit loans, and are not subject to inspections as regularly as needed, he said.

Regarding the restructuring solutions for State-owned enterprises, Cung said that the imposition of the competitive market’s regulations on State conglomerates and corporations would help boost the restructuring.

However, experts said that there could not be fairness for State and non-State enterprises when there was still a separation between the two sectors as State enterprises not only hold the monopoly over certain industries but also are not put under the profit-making pressure.

Besides, experts agreed that State enterprises should not be regarded as a tool for the Government to manage the macro economy.

According to Tran Van Linh, vice chairman of the Vietnam Association of Seafood Exporters and Producers (VASEP) and director of Thuan Phuoc Seafoods and Trading Corporation, Vietnam’s economic growth in the 2001-2010 declined from the previous period due to increasing inflation and high lending rates which firms cannot bear.

Meanwhile, the labor productivity is declining with huge energy consumption as Vietnam is using outdated technologies. Besides, the low competitiveness of local enterprises, the low cost-effectiveness of State firms and the lack of new resources for the next-stage development have showed the weaknesses of Vietnam’s economy.

The forum was held for experts and officials to discuss economic restructuring and to look for the growth model for the coming years.

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