Economists found contradictory goals in economic scenarios for 2011-2015

Commenting about the economic development plan for 2011-2015, which has been submitted by the government to the National Assembly’s Standing Committee, economists say that it will be very difficult to obtain the economic growth rates which are higher in the next years than previous years, if Vietnam still wants to force the inflation rate decrease gradually.

According to Dr Le Dang Doanh, a well known economist, former Head of the Central Institute for Economic Management (CIEM), the economic development plan shows that the government now keeps a more practical approach to the economic development issue than in the previous period.

Though the government still has not set up a reasonable economic growth rate, the fact that it accepted the targeted growth at 7 percent, lower than the goal mentioned at the Communist Party’s Politburo (7-7.5 percent), in an effort to maintain stability, is a recognizable signal.

Dr Nguyen Duc Kien, Deputy Chair of the National Assembly’s Economics Committee, also thinks that the growth rate of 7 percent is reasonable for the current development stage of Vietnam and the current conditions in the world.

“If Vietnam cannot obtain the growth rate of 6.5-7 percent per annum, it would not be able to ensure social security and maintain other macroeconomic balances,” Kien said.

However, he has warned that it would be not easy to achieve the 7 percent growth rate. “Of the two scenarios for growth rates, the government has decided to choose the more difficult one,” he commented.

Meanwhile, Pham Chi Lan, a well economist, has pointed out that the government still follows an ambitious plan of obtaining the growth rates which are higher in the next years than previous years (5.8-6 percent in 2011, 6.5 percent in 2012 and a higher rate in 2013-2015), while it also wants to force the inflation rates decrease gradually (to less than 7 percent by 2015).

According to Lan, who was Deputy Chair of the Vietnam Chamber of Commerce and Industry (VCCI), it would be very difficult to obtain the two goals at the same time.

“South Korea and Singapore can maintain high growth rates and keep the inflation rates low, because the economies develop based on technique and science. Meanwhile, Vietnam has been growing based on investment,” Lan said.

She went on to say that though the economic development plan submitted by the government has mentioned the priority in making investment in science and technology to develop a knowledge-based economy, it still cannot show the detailed investment solutions.

“If Vietnam continue using investment capital as the main driving force for the development, it will be very difficult to keep the inflation rate low,” Lan said.

Vietnamese economists also can see the problems in the plan to deal with the public debts in the next five years. The statements made recently by the government’s members show that the public debts would continue increasing in the coming years in order to serve the development, which may reach 65 percent of GDP in total, including the government’s debts, estimated at 55 percent of GDP.

The National Assembly’s Standing Committee has suggested reducing the figures to 60 percent and 50 percent of GDP, but economists still believe the two figures are still overly high.

“The story here is not how much we owe, but in the fact that how the public sector will use the loans,” Dr Doanh commented.

Meanwhile, Lan has pointed out that the plan to increase the public debt shows that the state economic sector has not got ready to cede the “playing field” to the private economic sector. “The State will still act as the main investor, which means that it will be difficult to restructure the investment, let alone the national economy restructuring,” she said.

“Vietnamese public debt has been increasing rapidly in recent years, while the GDP has not increased significantly. This shows that the loans would only put a heavier burden on the national economy, while they do not contribute to the development,” she said.

Source: VnExpress

Tags: Vietnam economic, Vietnam economic growth, Vietnam economy, Vietnam economy 2011