Seeking ways to speed up VN economic train

19-Oct-2021 Intellasia | Vietnamnet | 5:02 AM Print This Post

Policymakers and economists are looking for resources to speed up the Vietnamese economic train that has stalled for the past three months.

At a recent meeting with voters in District 12, National Assembly deputy Tran Hoang Ngan said the prolonged epidemic had forced many businesses to close and dissolve. HCM City’s Gross regional domestic product (GRDP) in the third quarter of 2021 decreased by more than 24.39%, and for the January-September 2021, it reduced by 4.98%.

“The city’s economy has never declined to such an extent, which is an unprecedented record. HCM City contributes about 22 percent of the country’s GDP, 27 percent of the country’s total budget revenue. If the city has difficulties, the whole country will suffer,” he said.

In Hanoi, where strict social distancing measures were implemented for two months, the GRDP in the third quarter of 2021 is estimated to decrease by 7.02 percent year-on-year.

If the two biggest cities which are compared to the two engines of the national economic train that account for 42 percent of the country’s GDP are in difficulty, then the speed of the train will be affected, not to mention 21 other provinces that have also been under lockdown for the last 2-3 months.

In HCM City, a few businesses implemented the models called “3 on-site”, “1 road, 2 destinations” or “4 green”, maintaining operations, while the rest had to stop production during the time of social distancing.

The labour index at processing and manufacturing enterprises decreased by 63.3 percent over the same period in 2021. In January-September 2021, the labour force decreased by 22.1 percent over the same period of last year.

Industries with a decrease in labour index included: beverage with a reduction of 44.3%; leather and related products 32.9%; motor vehicle manufacturing 31.3%; production of prefabricated metal products (except for machinery and equipment) 26.8%.

In January-September 2021, the production index of industry in HCM City decreased by 12.9 percent year-on-year, particularly 13.1 percent for the processing and manufacturing industry.

In Hanoi, development investment capital in the third quarter was estimated at VND 82.9 trillion, down 12.4 percent from the previous quarter and 28.6 percent over the same period last year. Many businesses and people are in a difficult situation due to the prolonged lockdown.

Speed of train slows down

From a national perspective, the General Statistical Office said that GDP in the third quarter of 2021 was estimated to decrease by 6.17 percent compared to the same period last year, which is “the deepest decline since Vietnam calculated and announced the quarterly GDP.” GDP in January-September 2021 increased only 1.42 percent year-on-year.

Thus, GDP in the third quarter as well as in the first nine months of the year is the lowest since 1986.

The prolonged Covid-19 epidemic has pushed many businesses into a risk of bankruptcy while domestic and international supply chains are disrupted due to successive waves of social distancing.

The number of newly registered enterprises in September 2021 dropped dramatically in both quantity and registered capital. In September 2021, the number of newly registered enterprises only reached 3,899 enterprises, down 62.2 percent year-on-year, while registered capital was only VND62.4 trillion, down 69.3%.

In the first nine months of 2021, the total number of newly established enterprises was 85,500, down 13.6 percent over the same period of last year while the number of enterprises withdrawing from the market was 90,300, an increase of 15.3%.

Dr Tran Dinh Thien said that in the first 9 months of 2021, a decline in growth is inevitable. In the two years struggling with the covid-19 pandemic, it is still an encouraging result to maintain a positive GDP growth rate.

However, he noted that Vietnam should “pay special attention to the warning value of the sudden sharp drop in GDP growth rate in the third quarter. Although a series of reasonable and objective reasons can be given to explain this decline, the most important thing to pay attention to is the “subjective” aspect of the situation: Weakness in capacity and ability to operate and manage the situation is the reason that with a “shocking” event, the economy could easily fall into a dangerous situation.

Until the end of the second quarter, the economy still maintained an optimistic growth rate (5.6%). However, with the appearance of the delta variant, third-quarter growth rate reversed sharply. It should be noted that in the world, many economies also encountered the delta variant but perhaps few economies have experienced such a strong “growth reversal” like Vietnam.

Seeking resources for recovery

Seeking ways to speed up VN economic train

Dr Thien emphasized that a special “recovery” coordinate of the economy is promoting public investment. This trend is positive, but it is far from becoming a powerful and effective economic recovery engine as it could be.

According to him, this is the fastest and most effective “blood transfusion” channel for the weakened economic body. However, tangled up in the piles of procedures, the process of the “ask give” mechanism, it is impossible to get rid of that mess overnight.

However, the government has clearly identified the problem. The prime minister has set up a special working group to promote disbursement of public investment capital. This is a drastic solution. Accelerating this effort will not only help promote economic recovery, but more importantly, help uncover the irrationality of the current complicated public investment mechanism and process to find ways to reform and innovate it.

The government has issued Resolution No. 63/NQ-CP on key tasks and solutions to promote economic growth, disbursement of public investment and sustainable exports in the last months of 2021 and early 2022, aiming to disburse 90-95 percent of public investment capital this year.

The prime minister issued Official Dispatch No. 1082/CD-TTg on this issue while other resolutions and documents of the government and the prime minister also mentioned a lot about this content.

However, the disbursement is still slow. Only four ministries and 11 localities have a disbursement rate of more than 60%. There are 76 of 114 ministries, and central and local agencies with disbursement rate below the national average (47%), and some agencies have not yet disbursed any VND.


Category: Economy, Vietnam

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