Economy confronts three key challenges as year-end nears: ministry

By Anh Minh   December 6, 2023 | 06:52 am PT
Economy confronts three key challenges as year-end nears: ministry
Prime Minister Pham Minh Chinh delivers opening remarks at the government's monthly meeting, Nov. 6, 2023. Photo by VGP
Obstacles in international trade, capital flow and administrative procedures still remain in the economy, said the Ministry of Planning and Investment at the monthly government meeting on Wednesday.

The ministry reported that for the year to date, Vietnam’s economy has regained growth momentum and adapted better to the current global and local conditions.

The consumer price index (CPI) was up 3.46% year-on-year in November while the average year-to-date CPI was up 3.22% from the same period last year.

Net exports reached US$25.83 billion, 2.5 times the figure in 2022.

Registered FDI totaled nearly $28.85 billion, up 15% year-on-year, with new investments accounting for 42.4% of total FDI.

Over 65% of the planned public investment fund was disbursed.

Compared to the same period last year, retail sales value of goods and services were up 10% and industrial production was up 5.8%, with the manufacturing and processing industry attaining a notable 6.3% growth in production.

Nonetheless, the economy faces difficulties, particularly in its international trade, capital flows and administrative procedures.

Even though net exports are up, the total value of exports and imports for the year to date has declined from the same period last year.

Exports declined by almost 6% year-on-year, with key products like phones and parts down 11%, and machinery and equipment down 6.2%.

Exports to China increased by 6.2% while exports to the U.S., ASEAN, EU and Japan fell by 6-13%.

Imports saw an 11% drop from the same period last year, with raw material imports down 10.6%.

Utilization of credit is still limited as clunky administrative procedures prevent businesses and people from accessing it.

As of November 28, total credit to the entire economy increased by 8.8%, less than the 12% growth during the same period last year.

Bad debts climbed to 4.93% by the end of September, compared to the 3% target.

Restructuring underperforming banks with negative net equity has also been slow.

The real estate and corporate bond markets are making positive progress, but should still be monitored carefully.

Certain demographics are suffering from financial difficulties, resulting in more social security one-time withdrawals, and a lack of medicine and medical equipment.

These problems arise not just from complicated and unpredictable changes in the global market, but also from ineffective forecasts leading to slow government reaction, the planning ministry assessed.

"We need to come up with both short-term and long-term solutions, take any opportunity to make a breakthrough in the three engines driving economic growth, namely investment, consumption and exports, and promote new engines [for economic growth] such as green economy and green growth to recover [economically] quickly and sustainably," the MPI stressed.

It also recommended that monetary policy should be more active and flexible while fiscal policy should be expanded appropriately and the government should make any necessary changes to relevant industries, such as electricity, healthcare and education, to minimize negative impacts on the people.

"[Domestic] Businesses should take advantage of the shift in the [global] supply chain to persuade multinationals to invest in new industries like chip, semiconductor and components, and promote innovation, especially in human resources in the fields of chip and semiconductor manufacturing," the MPI said.

Regarding growing unemployment, it asked the Ministry of Labor - Invalids and Social Affairs to have solutions to ensure workers have stable lives and transition to new jobs.

Simultaneously, government agencies need to remove any unnecessary requirements when starting a business to not inconvenience enterprises and the people.

Prime Minister Pham Minh Chinh, who chaired the meeting, emphasized that the approach to addressing problems is to face the facts, put the interests of the nation and the people above all else, be willing to learn and listen to the people, and not be afraid that regulations might need to be amended right after enactment.

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