Without a timely recovery support program, a historic opportunity will be lost

Dr. Tran Dinh Thien, former director of the Vietnam Economic Institute

For the first time in many years, Vietnam's GDP witnessed a decrease of 6.17% in the third quarter of 2021 compared to the same period last year, the deepest decline since Vietnam calculated and announced quarterly GDP. This poses extremely challenging tasks for the recovery in the year-end months. In your opinion, what are the recovery opportunities for Vietnam's economy?

The chances of economic recovery will be based on three foundations:

Firstly, our new anti-pandemic stance has changed from "Zero Covid" to "living with Covid" which creates space for us to reopen the economy, so that all resources can be promoted normally, especially labor resources after a period of interruption or lockdown.

Second, the world economy is bouncing back, even though the recovery trend in many parts of the world has been taking place throughout the year. Plans to reopen some key sectors such as tourism and aviation are being implemented in many countries around the world. Vietnam’s economy has expanded to access development as soon as the world reopens again.

Third, the State, including the Government and the National Assembly, has aimed for a more comprehensive, long-term recovery and development instead of "emergency" solutions. Such a rescue approach in case, by region, by short-term or by group is being eased. Instead, supporting policies, opening up and economic support packages will be designed to seize the opportunity in the right spirit. Although information about a long-term support package with great resources has not been announced and is still being discussed and considered, the spirit of resurgence has begun to spread throughout society.

Based on those three foundations, entrepreneurs are also preparing to put back which can be considered as the launch for the resilience and resurgence of the Vietnamese economy in the coming period.

As you just said above, Vietnam's economy has a very large openness, so in your opinion which industry has the largest room for recovery today?

Subjectively, I think opportunities are equal to all, the key point is to identify the right ones to obtain. In the short term, the areas with room are those with world orders, especially year-end orders such as apparel, shoes, clothing, gifts, which will benefit from clearer feedback so solutions targeting these areas must be stronger.

Next, is followed by industry groups related to opening up to create compression injury, also known as "Revenge Consumption". That is, when the economy opens up after a long period of restrictions, these sectors will boom, helping to accelerate the recovery like the tourism sector.

Currently, the domestic tourism industry is waiting for the resumption of flights and partly ensuring actual safety instead of the current "administrative prohibition". If the "administrative ban" is lifted along with the basis of vaccination and the pandemic adaptation, as soon as aviation opens, tourism can recover very quickly.

As mentioned above, a large-scale stimulus package is being studied and proposed. In your opinion, how much of GDP is needed for this support package and which sectors, industries or businesses should be prioritized?

In order for the economy to seize the opportunity, it is imperative for Vietnamese businesses to get up quickly. Without a timely recovery support program, the economy is not only to recapture, but the achievements accumulated over the years also decline seriously. What is more, we will lose the historic opportunity to change and catch up with the world. In terms of long-term strategy, we "get up" early, which means that the economy is able to "earn" a little chance.

The pandemic's toll on the economy is extremely heavy, especially for the private sector, which generates 40% of the country's GDP. Therefore, the Government needs to have very strong and breakthrough support policies and resources for this area. To do that, we must accept a strong solution, even budget deficit, borrowing from large and direct bailout packages.

Currently, there are many opinions around how much of GDP should be spent on the support package. In my opinion, this amount should not be as low as 2% last year. Although we can spend as high as 40-50% in Japan, it should not be too low. I think 10% of GDP in two years or more will be appropriate to both create momentum for recovery and seize the best opportunity.

Personally, if possible, the support package should be more than 10% of GDP, which is approximately US$40 - 45 billion and not only be used for 2 years but can last for 3 years. We not only spend on the old forces but also create opportunities to create new suitable ones for the new era such as new industries, new technologies, etc.

The world is transforming day by day, if we don’t adapt well, it is certain to fall behind because our level at all times is unchanged but other ones have moved forward.

Thank you very much!