Big challenges to continue for Vietnam in 2010: EU

Vietnam achieved strong economic resilience in 2009 and early 2010, but its big challenges are expected to continue this year, says the “2010 EU Trade Counsellors Report,” or Green Book 2010, which was launched on Wednesday.

The annual report is jointly produced by Delegation of the European Union to Vietnam and the Hanoi-based embassies of EU member states. It says Vietnam successfully weathered the global economic crisis whose negative impact, albeit partially mitigated by appropriate government action, will continue to be felt throughout the year 2010.

In 2009 and early 2010, Vietnam’s biggest challenges were seen to be imbalance of national accounts, inflation and trade deficit.

“The government of Vietnam deserves credit for the country’s relatively successful economic performance in 2009 and early 2010. In the context of world trade contraction and economic crises, GDP growth in Vietnam was maintained and export performance, although declining, remained above the regional average partly as a result of bold policy measures taken by the authorities,” said head of the European Union Delegation to Vietnam Sean Doyle.

Despite 5.32 percent GDP growth in 2009 and improvements in certain sectors and regions, the country’s weaknesses, however, are exposed by the global economic crisis, says the report.

Therefore, there’s a need for swift re-structuring, in particular, of SOEs, to bring about sustainable growth and increased competitiveness.

The “2010 EU Trade Counsellors Report” also concurs with other analysts that Vietnam might have missed the opportunity to restructure its public sector, which continued to produce less, export less and create less employment than private companies and foreign-invested enterprises in 2009.

In addition, the stimulus measures, while necessary to maintain growth, is said to have gone a bit too far, as they appear to have provided a cushion to uncompetitive SOEs and stoked inflationary pressures for 2010 and beyond.

Detailed analyses of the regulatory environment as well as main developments, challenges and opportunities of the country’s key economic sectors such as garments and textiles, footwear, fisheries, pharmaceuticals and banking are also provided in the report.

For the year 2010, Vietnam is suggested to focus on spurring its competitiveness, requiring vision and commitment from authorities for a massive overhaul of its state industrial sector and a resumption of the privatisation process.

Besides, in order to narrow trade deficit, the country is recommended to invest more resources in facilitating the establishment of a local supply chains for its export-oriented industries, instead of focusing on reducing imports of consumer products.

Tags: Vietnam economic, Vietnam economy

Posted by VBN on Jul 13 2010. Filed under Economy News. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry