In order to curb inflation, one of the measures the Government will apply is to pick up foreign currencies and reduce the VND in circulation, Minister of Finance Vu Van Ninh said on the morning of July 25 when answering questions from the press on the sideline of the National Assembly’s session.
Could you please tell us about the measures the Government will take in order to maintain the high economic growth rate, while ensuring the control of prices as the CPI in the first half of the year was higher than that in the previous year?
The Government will take more drastic measures in order to control prices. We will buy foreign currencies to increase the foreign currency reserve. We will issue Government bonds, push up investment. Meanwhile, the tools of the open market will be used to control prices and avoid shocks.
Strengthening society’s investment is one of the most important tasks. We have been mobilising sources from society at a high level through direct and indirect investment. The capital market has been developing well so the harmonisation of supply and demand on the market will bring efficiency in developing the economy and curbing inflation.
Regarding the harmonisation of supply and demand of goods, the Government will allow imports to meet domestic demand if necessary.
As for the monetary policy, the Government will pick up foreign currencies, while withdrawing VND from circulation
Do you think that prices have been escalating because Vietnam heavily relies on material imports?
The imports were really big in the first six months of the year, mostly the materials for domestic production. In the second half of the year, we should think of measures that allow for the balance of material supplies. Measures will be taken in harmonisation, including the tax policies, in order to prevent prices from increasing sharply. For example, if the world’s petrol price increases, we will have to lower the import tax to keep the petrol market in normal operation.
The excess of imports over exports remained high. Enterprises still cannot take full advantage of the opportunities to boost exports due to low competitiveness. How should the problems be tackled?
The Government has a programme on supporting enterprises to renovate equipment and technologies, which will help improve the quality of products. Moreover, the Government is choosing the products Vietnam has advantages in for export and pushing up the export of these products. We will balance exports and imports on that basis. It is forecast that exports will grow towards the year’s end.
Could you please talk about budget overspending?
The overspending remains within control. Though revenue was lower from oil exports, the Government has taken measures to offset the loss. Besides, the Government will use the provision fund more effectively, so as to ensure the budget collection even if the turnover from oil decreases.
What is your comment about the newly released report by Merrill Lynch, which said that Vietnam does not deserve to be a good investment place?
Corporations assess things differently based on different interests and from different perspectives. From the Government, we think that the most important thing now is to ensure the supply and demand balance on the market. The Government’s equitisation programme is running in order to bring more high-quality commodities to the market. The Ministry of Finance will have solutions to harmonise supply and demand, avoiding shocks to the market. It is also very necessary to control all the capital flow on the stock market.
Will the report have negative impacts on the investment decisions by foreign investors, as Merrill Lynch is a big financial group in the world?
I think there will be psychological impacts. However, there still needs to be further studies to make a sufficient assessment about possible impacts.
Some experts said that Merrill Lynch released the report in order to exert influence on Vietnam’s macroeconomic policies. Will the Government fulfill the commitments on expanding the market or keep stricter control over the market?
In principle, we have to create the most favourable conditions for the market to develop in a healthy and safe way. In the market economy, the Government should not deeply interfere in the market with administrative orders. The Government should apply measures that ensure macroeconomic balance while controlling capital flows, ensuring the legal benefit of investors, including small investors.
Do you think investors will worry about Instruction No 03 (on limiting loaning to securities investors – reporter) about the tax policies and the management over the capital transfer abroad?
We are trying step by step to perfect the legal framework. All markets in the world must be put under strict control so that they can develop in a healthy way. Regarding the measures, they must not cause shocks to the market. The measures are being taken, including ones on controlling speculation and controlling the information on the market
Investors are also worried that the income from securities investments will be taxed. What would you say to them?
It is the international practice to tax the earnings from securities investments. However, it is still necessary to think over when and how to tax.
What is your viewpoint about the State Bank of Vietnam’s decision that commercial banks’ outstanding loans for securities investments must not be higher than 3% of total outstanding loans?
In principle, it is necessary to control the flow in and out between banks and the stock market. If banks give big loans to fund securities investments, they would face risks. Regarding the proportion of 3%, I think this is a suitable figure
Source: VNE
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