Many challenges for economic policy after Covid-19

Difficulties without timely removal policies will slow down the development opportunities of the enterprise. Photo: collection

Needing flexible adjustment

Since the Covid-19 pandemic emerged, a series of fiscal policies have been introduced to support enterprises and people. The Ministry of Finance has also quickly implemented these policies with determination. Accordingly, tax exemptions, reductions, and extensions of payment deadlines, as well as state budget revenues, have been introduced with a total amount of money to support enterprises and individuals to restore and develop production and business, totaling around VND 140 trillion in 2021 and VND 144.5 trillion in the first 10 months of 2022. In addition, prioritizing resources for pandemic prevention and control and social security support for the people; advising the government to set up a Covid-19 vaccine fund to mobilize funding and support resources for the purchase and import of vaccines, research, and domestic vaccine production.

"The financial and state budget policy solutions applied in 2021 and especially in the years 2022-2023 under the program for socio-economic recovery and development are quite comprehensive and timely. This has contributed to promoting GDP growth of 8.83% in the first 9 months of 2022. Many international organizations continue to positively assess Vietnam's socio-economic situation and forecast optimistic growth rates for 2022 and 2023, with most predictions ranging from 7.5% to 8.2%," emphasized Deputy Minister of Finance Vo Thanh Hung.

However, the current context is rapidly changing and contains many unpredictable risks. With a very open economy like Vietnam, any fluctuations or changes in the external environment will have a significant impact on socio-economic development. At the same time, the economy itself also faces existing challenges such as unsustainable economic growth, weak infrastructure, limited human resources, especially high-quality human resources, unsustainable state budget collection, delayed investment disbursement, and recently there have been negative fluctuations in the real estate market, corporate bond market, and the commercial banking system, affecting the ability to mobilize capital for economic and social development.

According to experts, although Vietnam's economy has overcome a difficult period, it is still under great pressure from outside, which can adversely affect growth, reduce revenue and increase State budget expenditure. Besides, the trend of green and sustainable economic development; circular economy; digital economy; climate change response and the implementation of tasks in the resolutions of Central Committees, especially the 5th and 6th Central Committees on accelerating industrialization and modernization of the country, developing regions... so, financial policies must be adjusted flexibly and appropriately in order to promote strengths, effectively mobilize and allocate resources for socio-economic development.

Needing a long-term policy

Evaluating the support policies in the past time, Dr. Nguyen Dinh Cung, former Director of the Central Institute for Economic Management (CIEM), said that the policy needed a long-term vision because the current policy was solving specific problems. Therefore, from the perspective of enterprises, especially domestic private enterprises, they would not develop if they were following the case without creating long-term policies for the enterprises to develop. Meanwhile, the business community was strongly motivated to improve research, development, and technology transfer to improve productivity, and to make efforts to train and improve the quality of personnel. If there was a promotion policy, there would be a strong rise.

According to Dr. Nguyen Dinh Cung, Vietnam's economic growth rate decreased by 1% every 10 years and currently had not seen much motivation to promote business growth in particular and Vietnam's economy in general. Specifically, Vietnamese enterprises were currently suffering from a "double hit". Accordingly, enterprises were facing 3 pressures, which were credit ceilings, increased interest rates, and increased land use fees, causing enterprises to struggle to pay expenses in a difficult context.

In addition to the above difficulties, enterprises still bear many burdens of costs, including increased revenues unrelated to business activities such as 2% of union fees. In the ASEAN-5 region, in revenue of enterprises, Vietnam is second only to Malaysia. These difficulties reduce the motivation of enterprises, and if there is no removal policy, it will slow down development opportunities.

Proposing policies to create motivation for enterprises, Mr. Nguyen Dinh Cung said that there should be a sudden change, especially a change in the development philosophy because only such a change could have ideas to set up a policy system or else it would continue to reduce growth momentum.

Assoc. Prof. Dr. Tran Dinh Thien, an economic expert and a member of the Government's Advisory Group, said that in 2023, enterprises were still facing many difficulties and challenges due to high world interest rates, rising exchange rates, capital circuits of the Vietnamese economy were stagnant.

At this time, fiscal policy, and budget expenditure must support, and public investment disbursement must be better promoted. This required great efforts from the Ministry of Finance.

Regarding fiscal policy to support enterprises, and people, according to Assoc. Prof. Dr. Tran Dinh Thien, still needed to promote for the next period. In addition to the story of reducing general taxes and fees for the economy, there were areas that needed to be prioritized to help industries, enterprise lines, and areas jump up, thereby pulling the whole economy up. Now is the time to focus on helping enterprises more.