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Dr. Can Van Luc

How do you evaluate the implementation of "dual goals" for the Vietnamese economy in the first months of the year?

Talking about the positives, although the pandemic is still complicated in the world and in Vietnam, the situation in our country is still under control. The vaccination policy is being promoted.

Moreover, the global commodity prices increased quickly but inflation was still well controlled.

In the first six months, inflation increased by 1.64% over the same period last year. At this rate, the annual average inflation is forecast to be around 3%.

In terms of trade, imports and exports grew well. Monetary policy to support businesses is also favorable when the exchange rate is stable and interest rates are on a positive downward trend. However, we cannot loosen interest rates too much because it is related to shifting investment channels and controlling inflation.

However, we need to cope with, identify, and control many challenges such as the pandemic, trade wars, natural disasters, floods, asset “bubbles”, and global financial instability. Regarding foreign direct investment (FDI), Vietnam always hopes for a shift in investment flows, but registered FDI in the first seven months decreased by 11% compared to the same period last year, while realized capital increased by nearly 4%.

Looking at the investment flows from China and Hong Kong to Vietnam, there was an increase over the same period last year, but the capital flow now is decreasing by nearly 50%.

Meanwhile, disbursement of public investment has been markedly slow. The number of newly established businesses in July increased by 0.7%, while the number of businesses shutting down was significant. Additionally, in banks, bad debts are at risk of increasing, and the restructuring of the economy has progressed slowly.

In your opinion, how can we flexibly overcome difficulties and achieve "dual goals" as planned?

The pandemic and its impact on the economy are still unpredictable to make an appropriate adjustment. Although GDP growth in the second quarter reached 6.61% and the first six months was estimated at 5.64%, much higher than the growth of 0.39% and 1.82% of the same period last year, but several socio-economic indicators already reflected the negative impact of the pandemic.

Therefore, Vietnam must persevere and flexibly implement the "dual goal" of both effective pandemic prevention and socio-economic recovery and development. Continuing to effectively prevent and control the pandemic, along with speeding up the vaccine progress, remains the top priority now.

The Government, ministries, branches, and localities need to urgently deploy support packages for people and businesses, as well as evaluate, research, and propose additional options and support packages.

Simultaneously, the Government should develop a strategy for socio-economic recovery and development in the "new normal" after the pandemic to actively take advantage of strong recovery opportunities as well as control arising risks, such as rising prices, inflation, and disruptions in supply and labor chains. Only then can we achieve the goals of socio-economic development for the 2021-2025 period and in the longer term.

Moreover, to meet the "dual goals", we need to look for alternative and complementary growth drivers and green recovery policies such as accelerating the disbursement of public investment; improving the business - investment environment; boosting domestic market demand; and accelerating the development of the digital economy. This requires strategic institutional breakthroughs, and consistency in human resources and infrastructure for implementation.

In addition to the existing support packages, what solutions do you suggest to support people and businesses at this time to increase economic recovery?

In my opinion, the Government should consider expanding the scope of beneficiaries to all informal workers (self-employed) with a subsidy of VND1 million/person with a scale of VND29,300 billion, excluding the specific support from localities according to Resolution 68/NQ-CP. Because the total number of employees in 2020 was 54.6 million people, of which about 29.3 million people (53.7%) are self-employed.

For the electricity bill support package, relevant agencies should continuously reduce electricity bills for people and businesses, equivalent to the first reduction in 2020 (about VND9,300 billion).

Accordingly, the Electricity of Vietnam (EVN) may consider expanding the beneficiaries, with an additional reduced budget of about VND6,800 billion. The telecommunications support package, announced with an estimated value of about VND10,000 billion, is mainly to increase benefits and incentives for customers, not directly reduce telecommunications charges. Therefore, this support package only affects certain customers. Thus, the best way to support is to reduce telecommunications charges by 20-30% for about three months (in the third quarter of 2021), so it will be included in the cost of businesses, making the support more practical.

Additionally, authorities need to urgently remove bottlenecks and disruptions in supply and production chains for people and businesses. For the people, to prevent disruption of the supply chain of essential goods and services, it is necessary to be more consistent in how the checkpoints and shippers operate in social distancing locations, to avoid the current lack of synchronization.

For businesses, the "two on-site, one green" model (eat and work at the business, live in another safe place, which can become an isolated place when needed, or businesses can arrange another quarantine place) is very effective and appropriate. It is being applied by Thailand under a program called "Factory Sandbox".

In particular, in addition to the VND20,000 billion support package proposed by the Ministry of Finance, the Government needs to increase access to liquidity support capital for businesses. Some basic conditions such as loan support interest rate of about 4%/year are implemented through commercial banks or business development funds, with the guarantee of credit guarantee funds. The total value of the above additional support packages will be about nearly VND40,000 billion (0.62% of GDP in 2021), not to mention that the value of support will increase when current policies are adjusted and extended.

Thank you, sir!