Vietnam targets GDP growth of 7 percent over next 5 years

The National Assembly underlined that the average economic growth from 2011 to 2015 was only 5.9 percent, much lower than the targeted 7 percent.

The country expects economic momentum to pick up in the next five years, which will greatly improve the average annual income to $3,500 in 2020, equivalent to a 70 percent increase from the average income of $2,109 in 2015, according to the plan.

Vietnam will also try to keep its budget deficit under 4 percent of GDP by 2020.

The country’s lawmakers have tried to place a cap on the budget deficit, however state budget expenditure has consistently remained higher than targeted in the past few years. Official figures show the budget deficit rose from 4.4 percent in 2011 to 6.34 percent in 2015.

The plan also outlines measures to achieve the above targets, of which developing a fully-grown market-oriented economy tops the list of priorities. The government will create a level playing field with a proper legal framework for all market participants.

It highlights the importance of empowering the private sector to give Vietnamese businesses the chance to become more competitive in both the domestic and global markets. A stronger private sector will contribute to Vietnam’s economic development.

In addition to the ongoing privatization of state-owned enterprises, the government will create a favorable environment for domestic private enterprises in terms of fair allocation of land resources and credit funds; and adequate support for small and medium-sized companies and household businesses.

According to the World Bank, Vietnam has “too many” state-owned enterprises (SOEs), more than 3,000 of them “continue to inhale too much oxygen out of the business environment, undermining economy-wide efficiency and crowding out the productive parts of the private sector”. Statistics show that SOEs currently take up nearly 40 percent of total investment but contribute only a third of Vietnam’s GDP.

The socio-economic initiatives stress the importance of flexibly utilizing monetary and fiscal policies to stabilize the macro-economy, ensuring the value of the Vietnam dong and keeping inflation under 4 percent in the next four years.

“The government will manage monetary policy flexibly and issue fiscal policies to control inflation, the value of the Vietnamese dong, foreign currency reserves and other key factors that affect the economy,” said Prime Minister Nguyen Xuan Phuc in a speech before the National Assembly.

Vietnam expects to maintain its ranking as one of the four best performers in the Southeast Asian region.