Autumn Economic Forum 2013: “Vietnam’s Economy in 2013 and Prospects for 2014: Implementing Three Strategic Breakthroughs”

Within the framework of the United Nations Development Program (UNDP), the Economic Committee of National Assembly (ECNA) in collaboration with Vietnam Academy of Social Sciences (VASS) and Vietnam Chamber of Commerce and Industry (VCCI) organized the Autumn Economic Forum 2013 on “Vietnam’s Economy in 2013 and Prospects for 2014: Implementing Three Strategic Breakthroughs” on 26-27 September 2013 in Hue City.

The forum received more than 120 participants: Mme. Nguyen Thi Kim Ngan, Member of the Politburo, Secretary of the CPV Central Committee, Vice Chairman of the National Assembly; Dr. Nguyen Van Giau, Member of the CPV Central Committee, Member of the Standing Committee of the National Assembly, Chairman of the Economic Committee of the National Assembly; Vice Chairman and members of the Economic Committee of the National Assembly; Prof.Dr. Nguyen Xuan Thang, Member of the CPV Central Committee, President of VASS; Prof.Dr. Nguyen Quang Thuan, Vice President of VASS; Experts from VASS; Vice Chairman of the Central Economic Commission, Deputy Minister of Planning and Investment, Deputy Minister of Construction, Deputy Governor of the State Bank of Vietnam; Representatives from the Central Economic Commission, the Office of the President, the Government Office, Ministry of Planning and Investment, Ministry of Finance, Ministry of Foreign Affairs, Ministry of Agriculture and Rural Development, the State Bank of Vietnam, National Financial Supervisory Committee; Mr. Nguyen Ngoc Thien, Member of the CPV Central Committee, Secretary of Provincial Party Committee of Thua Thien-Hue; Mr. Nguyen Van Cao, Chairman of the Provincial People’s Committee of Thua Thien-Hue; Representatives from provincial departments of Thua Thien-Hue; Representatives from the agencies of the National Assembly; Representatives of the National Assembly delegations of Khanh Hoa and Nghe An provinces; Economic experts from VCCI, Vietnam Economic Science Association, research institutes, universities, Fulbright Economics Teaching Program; independent economic experts; Mr. Sanjay Kalra, IMF Resident Representative in Vietnam; Mr. Bakhodir Burkhanov, UNDP Deputy Country Director; Mr. Sandeep Mahajan, Chief Economist of World BankVietnam; Representatives from commercial banks, state economic groups, state coporations, and news agencies and press.

Chairpersons at the Forum included Dr. Nguyen Van Giau, Member of the CPV Central Committee, Member of the Standing Committee of the National Assembly, Chairman of the Economic Committee of the National Assembly; Prof.Dr. Nguyen Xuan Thang, Member of the CPV Central Committee, Chairman of VASS; Mr. Nguyen Ngoc Thien, Member of the CPV Central Committee, Secretary of Provincial Party Committee of Thua Thien-Hue; Dr. Vu Tien Loc, Chairman of VCCI; Mr. Bakhodir Burkhanov, UNDP Country Deputy Director.

There were 31 papers and commentaries by managers, researchers, economic experts and 36 opinions raised for the discussion at the Forum, focusing on two main themes of (i) Vietnam’s economy in 2013 and prospects for 2014 and (ii) complementing three strategic breakthroughs.

According to Assoc.Prof.Dr. Tran Dinh Thien, Director of Vietnam Institute of Economics, Vietnam’s economy was still on the way down to “the bottom” despite its stable momentum and the decrease in growth rate obstructed. The economy was suffering a heavy “congestion of growth”. Only FDI enterprises, among the four growth dynamics (i.e. state-owned enterprises, private sector, FDI enterprises, and the agricultural sector), produced a good performance which, however, brought to existence the trend of “FDI-tizing” the economy. Assoc.Prof.Dr. Thien criticized the weak economic foundations, the application of heavily-administrative and short-term measures, the non-market-based pricing, and insignificant progress in reforming state-owned enterprises and agricultural sector.

Showing sympathy with the views of Assoc.Prof.Dr. Thien, Dr. Tran Du Lich from the National Assembly delegation of Hochiminh City emphasized the consequence of macroeconomic instability in the last six years was exposed most clearly in 2013. The economy was thus not yet on the track out of depression.

Meanwhile, Prof.Dr. Nguyen Xuan Thang argued that the economy should be seen from the bright side also, such as the improvement of the competitiveness index, instead of pointing out only the dark spots. He added, however, the agricultural sector was stable but grew at low level while farmers kept returning land. To create stability, capital investment in agriculture should be increased. Prof.Dr. Nguyen Xuan Thang and Dr. Vu Viet Ngoan, Chairman of National Financial Supervisory Committee, agreed that tightening credit due to the potential collapse of the commercial banking system in 2011 was the right policy but a little beyond measure, which limited the access to the credit sources of enterprises and exhausted them.

As a chairman of the Forum, Prof.Dr. Nguyen Xuan Thang proposed to clarify the specific solutions to restore opportunities for enterprises after blocking the recession; it was necessary to specify whether the inflation slowing down was due to right policies or weak domestic demand; how to restore aggregate demand; solutions to corporate debt; identifying a reasonable rate of the budget deficit to have more funds for restructuring the economy without re-creating the underlying inflation.

In general, the participants agreed that there were not yet major changes in the process of restructuring the economy in 2013. Unless synchronized and persevere solutions were introduced in 2014, there would be still unmarked results in 2015.

Three strategic breakthroughs outlined in the socio-economic development strategy in 2011-2020 of the Eleventh National Party Congress includes: i) Perfecting institutions of socialist-oriented market economy, with the concentration on creating an equal competition environment and administrative reform; ii) Accelerating the development of human resources, particularly the high-quality human resources with a comprehensive renovation of the national education; iii) Developing a synchronized system of infrastructure with several modern works, with focus on transportation system and infrastructure in large urban areas.

The three strategic breakthroughs were admitted as the right direction. However, despite a drastic deployment, the desired results have been not yet produced. The institutional and administrative reforms were not modeled and compliant with international practices. There were not yet polices for the development of human resources that favoured talented people. The training of human resources was not tailored to the multi-layered society and to market demands. Despite the priority of investment in infrastructure, the system remained weak, backward, and limited capability of providing traffic links regionally and internationally.

According to Assoc.Prof.Dr. Nguyen Hong Son, Principal of Economics School (Hanoi National University), to improve the effectiveness of these three strategic breakthroughs, it is necessary to focus on realizing a number of specific issues and objectives for each breakthrough, as well as to link and associate these breakthroughs with particular industries and sectors.

Despite the relatively high consensus on the view of the economic situation in 2013, opposite opinions during the discussion on the solutions for the years 2014 and 2015 were observed.

Dr. Vo Tri Thanh, Deputy Director of the Central Institute for Economic Management, and some of participants suggested not to hasten the goal of rehabilitation, but to persevere in and be consistent with the objective of macroeconomic stability and, concurrently, push up the reform and restructuring process.

Meanwhile, in the opinions of Dr. Vu Viet Ngoan and a number of other participants, achieving the macroeconomic stability should not be forced in the short term to avoid future pressure. There should be certain flexibility in the implementation of policies and preservation of aggregate demand to maintain a reasonable growth.

Prof.Dr. Nguyen Quang Thuan, Vice President of VASS, represented the views of the research team of VASS when proposing to raise the budget deficit ceiling to 5.5% in order to enhance the funds for restructuring the economy, settle bad debts, particularly the bad debt (up to 30%) in construction, as well as to finish the half-done works. By doing this, the aggregate demand will increase and the majority of enterprises facing difficulties and bankruptcy will be able to survive, which helps to solve the problem of unemployment.

Some others appeared to be more cautious when raising the need of quantifying the growth targets to preserve a reasonable inflation rate. The inflation targeting in the medium term, swapping an acceptable inflation for growth and the growth potential should be also considered. It is necessary to increase aggregate demand, possibly by stimulating the demand, not widely but in selected fields.

To conclude, Mme. Nguyen Kim Ngan highly appreciated the collaboration of the ECNA, VASS and VCCI for a resounding success of the Autumn Economic Forum 2013, which drew great attention of the media and the society. Mme. Ngan noted that besides dissecting the weaknesses and limitations, there should be also an objective assessment of the bright side of the economy, as well as the efforts in operating macroeconomic policies of the Government. She acknowledged the high consistency at the Forum in reviewing the economic difficulties, though different opinions about the causes as well as the opposite views on giving solutions were also presented.

Mme. Vice Chairman of the National Assembly tasked the researchers and experts from the ECNA, VASS and VCCI with receiving the suggestions of the participants selectively to study and analyze carefully, in order to provide a clearer interpretation of causes for the limitations of the economy in the passing time. The solutions to be proposed should have high uniformity and be more specific to introduce a synchronized system of solutions as well as key missions for 2014. It is necessary to quantify particular targets, identify the policy roadmap and predict potential impacts. For the three strategic breakthroughs, there should be indication of implementation methods and specific direction, also in-depth discussion on the organization of operation associated with implementation responsibilities to ensure fundamental and synchronous changes.

The outcomes of the Autumn Economic Forum 2013 served as an important input document for the 6^th Session of the 13^th National Assembly. /.

Vu Hung Cuong (Ph.D)