There is no sustainable growth if investment efficiency can not be inproved

What do you think about the results of economic growth in the first half of 2017? Do you think we can achieve the economic growth target of 6.7% as the National Assembly and the government have set out?

We have passed the first quarter in 2017 with the growth rate of 5.1%. This is a surprising result, as before the end of 2016 the economy will get better when it comes to 2017. The growth target for 2017 is 6.7%, the growth of the first quarter is 5.1.% and the second quarter - according to the General Statistics Office has just announced - is 6.17%. Accordingly, the average growth of the two-quarters reached about 5.73%. If the GDP growth in the third and the fourth quarter increased sharply, the economic growth in the whole year will reach 6.4-6.5%. With this result, we will not achieve the annual growth target of 6.7%.

I think we should understand the difference between growth forecast and growth target. The goal is to conquer, to strive and to be the basis for operating the policy, trying to put pressure on ministries, branches, and localities to achieve that number. But the forecast is different, the forecast of the economic growth with the current economic situation and context, with the policy moves, has not changed much, the forecast growth in 2017 will also only about 6.3-6.4%, the most optimistic can reach 6.5% if the conditions are very good and convenient.

Looking at the second quarter growth and comparing with the first quarter, there is a very strong growth improvement, which is a positive sign, from 5.1% to over 6% as the biggest motivation is that we can reverse the decline in the mining sector, including crude oil extracting. However, crude oil extraction is difficult to sustain, even when it can be increased. The problem here is not only looking at the second quarter but also the third and fourth quarters, if in 2017 alone. If you look at absolute numbers mechanically and want the crude oil to make a positive contribution to the growth, this quarter must extract higher than the previous quarter, and then the next quarter must be higher. And if the growth target in 2017 is achieved, then 2018 wants to grow again, it must increase production and it is an as impossible task for the oil industry.

Sir, should it be necessary to set the growth targets? And are the forecasts of economic experts on the GDP growth in 2017 reasonable?

As I said, we set a goal but we must not achieve that goal by anyway. It is important that we run the policy, in which macroeconomic stability remains a top priority. In the medium term, efforts to speed up the economic restructuring to improve efficiency can guarantee for the sustainable growth. Another point, with the forecast growth rate of 6.3-6.4% currently, Vietnam is still a high growth economy in the region, still attractive country for businesses, direct investors and indirect foreign investors recently.

So as your view, what are solutions to ensure both short-term as well as medium and long-term that will help Vietnam’s economy to develop sustainably?

In the short term, we must sustain the macroeconomic stability and should not promote by expanding fiscal and monetary policies. Moreover, it is necessary to focus on stabilizing the investment environment, ensuring a stable investment environment. Looking at a survey data on collecting enterprises and consumers’ comments show that the confidence is improving and certainly not bad despite many difficulties. The highlight of business investment environment is the most important thing.

Next, the economic structural weaknesses need to be resolved. Firstly, in the banking sector, the Resolution on dealing with bad debt approved by the National Assembly is a positive step, which should be done sooner under the direction of increasing the rights of credit institutions to settle debts and deal with them, creating a more liberal mechanism in debt trading and having an secondary debt trading market operating effectively. These are institutional reforms that help to handle bad debt faster. However, the solution must still be accompanied by a new resource search solution to restructure without using the budget and it is also impossible to restructure banks without resources. If the source of the money does not come from the State, it must come from private investors to deal with bad debt, along with the banks will increase their equity and on that basis, the credit growth will actually push the economy, not just feed the current bad debt.

Secondly, the resources for economic growth in the medium term are public investment. The growth still needs the public investment. In investment, the private investment is important, and investment by the state in infrastructure is necessary. We do not want the private investment to crush the private investment but we do not want to invest because it will cause infrastructure bottlenecks. However, the barrier now is that the State can no longer borrow due to the public debt ceiling, which means it will not be able to invest anymore. The more dangerous is that without extensive institutional reform to improve efficiency, the driving force of growth is to open the public investment valve is the problem of overflowing investment, the public debt is tight but can not bank as it is opened. If the problem of investment efficiency does not solve, the problem of sustainable growth will be not resolved. In the short-term, the public debt is unable to increase, it only increases the public debt if we focus on improving efficiency firstly.