Racing against time to achieve economic growth rate of 8.5%

To obtain the target for GDP growth rate of 8.5 percent set by the National Assembly and control the inflation rate, the Government and localities must make more effort and introduce stronger measures.

Earlier August 2007, Doctor Vo Tri Thanh, head of the Department for International Economic Integration Policy under the Central Institute for Economic Management (CIEM), said the target for GDP growth rate of 8-8.5 percent is within reach. But many other economic experts said the annual GDP growth rate will be around 8.3 percent.

According to Doctor Nguyen Dinh Anh from the Financial Science Academy said if this year the target for GDP growth rate of 8.5 percent is not fulfilled it will be difficult to implement economic growth rates in the next three years.

Researcher Nguyen Trung said the annual GDP growth rate of 7-8 percent in the past years is one of the nation’s strengths. However, Vietnam should look at imbalanced issues during the development process, for example economic vision and strategy, development requirements and management capacity, infrastructure supply and demand, quality, quantity and supply and demand in human resources development.

In the past three years, it was not Vietnam (with an annual GDP growth rate of 8.13 percent), but Cambodia (with an annual GDP growth rate of 10.5 percent) trailing after “Giant” China. In Southern Asia, India ranks third with an annual GDP growth rate of 8.73 percent.

In 1986 – the first year of implementation of the Doi Moi (Renewal) process, Vietnam’s average per capita income was US$200 lower than China, US$997 lower than Thailand, US$1,950 lower than Malaysia and US$6,940 lower than the Republic of Korea. But the differences in 2006 were US$1,100, US$2,140, US$4,520 and US$17,000, respectively. These figures show big income gaps between Vietnam and these countries.

To obtain an economic growth rate of 8.5 percent, Mr Anh said Vietnam should consider growth related factors such as labour productivity and investment capital. In the past eight months, many industrial products achieved high growth, including air conditioners (70.2 percent), automobiles (65.5 percent), machine tools (60 percent), motorbikes (28.1 percent) and electric engines (26.3 percent). Exports in the first eight months of this year increased by 19 percent to nearly US$31.2 billion, but the real added values were not high as most products are manufactured under contract.

Imports seemed to reduce (Import in August decreased 0.4 percent compared to July) but imports in the eight months was still up by 30 percent compared to the same period last year. Many economists expect an increase in investment.

According to the Ministry of Finance, investment capital disbursement in the past eight months only reached around 40 percent of the yearly plan due to the low feasibility of big projects, for example a Dinh Vu DAP factory project. Dr Vo Chi Thanh said to ensure the economic growth rate, the Government and relevant ministries, departments and localities should pay more attention to the issue.

Many experts said factors affecting Vietnamese growth are mainly long-term development factors. In the past eight months, Vietnam attracted an additional US$8.3 billion foreign direct investment (FDI) capital. Thus, average FDI into Vietnam is more than US$1 billion a month, up nearly 40 percent compared to last year.

Mr Thanh said there are three main snags in long-term development: institutions, human resources and infrastructure. There is a lack of human resources, especially high-level human resources. The price of high-level human resources is higher than in Shanghai, China. Besides, infrastructure, such as roads and electricity is poor. These snags cannot be resolved in several months.

In addition to these three snags, Vietnam is likely to face an unstable macro economy and hunger in the central region. If these five issues are resolved, Vietnam will achieve a growth rate of 8.5 percent, creating a firm foundation for economic growth in next few years.

Source: VNE