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| Economists upbeat on inflation |
| 02/Jul/2009 Intellasia | Dien Dan Doanh Nghiep |
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| 2 Jul, 2009 - 11:37:40 AM |
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At present, 50 percent of Vietnamese economy relies on the world's economy. Statistics showed that Vietnam would need a long time to regain a growth impetus and improve the growth quality.
It would take 3-5 years for Vietnam to stabilise the economic growth orbit thus the government needs to publicise the strategies of developing eco-social infrastructure. Many economists said that the monetary fiscal policies are the blood line to solve Vietnam's economic problems.
Dr Pham Thi Thu Hang, head of Enterprise Development Institute cum director of SME Support Centre under Vietnam Chamber of Commerce and Industry (VCCI) stated that disadvantages of Vietnamese corporate have come to the fore in the current difficult context. They are short on strategic vision, especially private companies, much dependent on some commercial agents in Asia region and almost they have no special strategy selection have failed to launch new products. Secondly, revenue and labour size of many enterprises declined sharply. According to the business results of 2006-2008 of 630 enterprises in Hanoi, HCM City and neighbouring provinces, business turnover and workforce of these firms last year slumped against 2007.
Especially export oriented companies fell in more dangerous circumstance than domestic companies because of the effects of global economic slowdown. The volume of enterprises with a profit ratio of over 5 percent reduced from 61.7 percent in 2007 to 58.5 percent in 2008. Lastly, the renovation and adaptation capacity of Vietnamese enterprises remained low.
The global financial crisis attacked directly the speculation and the market monopolisation and stripped off the disadvantages of the financial system, which made the market become more competitive and effective, Dien Dan Doanh Nghiep quoted Dr Le Duy Hieu from Vietnam Economic Institute. State corporations withdrew from the stock market while banks limited and tightened up property and securities lending without any government's regulation on preventing the excessive investment in speculative markets. As a result, such an investment shift will not only help create a more healthy and competitive market but will also help in restructuring investment capital flows.
Overall, the global financial crisis hurt Vietnam's economic growth and it is expected to declined by 2-2.5 percent in 2009 but this made the speculation and monopolisation mechanism being narrowed and raised the quality of growth.
Today Ministry of Planning and Investment is actively drawing up a plan of restructuring the national economy after the crisis is over. Dr Pham Thi Thu Hang proposed that the government should have effective support policies in the technological renovation of enterprises and minimise the impacts of global economic crisis like human resources, capital, cost for administrative procedures, CIT exemption within 2-3 years, among other such things.
Factually, the positive signals of the finance, stock and property markets show an initial economic recovery but the inflation risk remains at high potential. Monetary fiscal policies are required to be flexible and synchronous.
To curb inflation, the government spent a huge volume of money for the demand stimulating packages that have been promoted effectively. In the near future, another money amount will be pumped into the market as well. All these moves pushed up prices of goods (typically petroleum prices), and led to the resurge of the stock and real estate markets. Meanwhile, deposit rates of banks jumped to the highest rate of 10.2 percent pa, closer to the allowable ceiling lending rate of 10.5 percent pa.
Up to $8 billion equalling to 144 trillion dong have been provided under the demand stimulating packages for different purposes in the first half of 2009 and if these steps not effective fully, the pressure on return of inflation will be heavier.
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