'If public investment disbursement is still slow, this resource should be transferred to the private sector'

(VNF) – it is suggested by Dr. Vu Tien Loc, the President of Vietnam International Arbitration Center (VIAC), a delegate of the National Assembly in Hanoi at the 3rd session of the 15th National Assembly.

The most urgent issue is the public investment disbursement

Said Delegate Vu Tien Loc, the macroeconomic data in the first 5 months of this year showed that the economy is recovering. Starting from the second quarter, the situation of production and consumption has improved monthly. If, in the first 3 months of the year, the industrial production index of the whole industry only increased by 7.1% over the same period, it is increased by 8.3% in 5 months.

More over, total retail sales of consumer goods and services also increased by 9.7% in the first five months of the year, beyond 4.4% of the first quarter of this year. Meanwhile, export activities still maintained a double-digit growth rate. This shows that the economic outlook for the whole year is relatively positive.

Said Mr. Loc, even if this year's growth is above 7%, the GDP in the period of 2020 - 2022 is just over 4%. This is the minimum rate ever and far below potential. This implies that the Government still has a lot of task, in which the most urgent task is to strengthen the public investment disbursement - a classic and very effective solution to rescue and activate the economy during the difficult times. The current disbursement of public investment at a "crawling" speed is, however, disappointing us.

"The pain of owning money but it can't be spent has been going on for a long time and there has been no specific cure. If the situation does not improve in the coming time, I suggest to transfer this resource to the private sector through the support packages. Thus, we hope to gain the growth target of 6.5% - 7% for the whole term", suggested Delegate Vu Tien Loc.

Proposal to reduce tax on gasoline

For inflation, although we are subject to the great pressure due to the high price of petrol and raw materials and supplies, we cannot help being worried, Mr. Loc says that inflation is still under control. In the first 5 months of this year, the new CPI is increased by 2.25% on average, much lower than the set target, even lower than the period of 2017-2020. Therefore, it will not be too difficult for the Government to gain the goal of controlling inflation below 4%, even though gasoline prices may still be anchored at the current high level.

Mr. Loc also suggested that the National Assembly considers continuing to reduce taxes on gasoline to support people and enterprises, because their income has been greatly eroded after 2 years of struggling against the epidemic.

Looking at other macro-economic indices, Mr. Loc assessed that it is temporarily stable. Although the input interest rate is increased slightly due to increased credit demand, the output interest rate is still controlled thanks to the support package of VND 40,000 billion. Therefore, production and business investment activities are still guaranteed. In addition, notwithstanding the sharp increase of the US dollar in the international market, the exchange rate of Vietnamese dong against the US dollar is basically maintained by the State Bank at a stable rate, facilitate import inflation control and partly support exports although it is increased.

The enterpirses are in difficulties that should be cared and resolved

For the enterprise situation, Delegate Loc said that in the first 5 months of the year, up to 98,000 enterprises were newly incorporated and returned to operation, around 72,000 enterprises, however, withdrew from the market, 20% increased over the same period last year. This is the highest increase ever. Total foreign investment registered in Vietnam decreased by 16% over the same period, while overseas investment of Vietnamese enterprises increased by 2 times. Those indices show that enterprises carrying out business in Vietnam are in difficulties. Besides market difficulties, legal barriers along with troublesome administrative procedures and insecurity are the major impediments to their recovery efforts, and they are necessary to be cared and resolved.

The delegate also expressed his concern about the capital market and real estate market hotspots. Said Mr. Loc, just for the reason of dealing with a number of violating enterprises, the more tightly the capital source for real estate business is being controlled, the more serious the supply shortage is. This will cause the real estate prices to continue to increase, not decrease, resulting in the input costs of the economy soar and the house purchase dream of the poor and middle-income people will become increasingly remote.

Therefore, he suggested that the Government and the Ministry of Finance should quickly complete the legal basis and rectify the management so that the stock market and corporate bond market can "land safely", continue to develop sustainably, play the role of a medium and long-term capital channel for investment, rather than relying mainly on short-term capital source from banks as it has been.

Source : VietNamFinance