A garment factory in Hanoi. Vietnam's economy has seen a slow recovery in the first quarter of this year and is still facing a lot difficulties and challenges, according to a report at a National Assembly session Tuesday. PHOTO: NGOC THANG
Vietnam saw a modest recovery in the first quarter of the year and will continue focusing on trying to right its economic ship despite lingering signs of instability, a deputy prime minister told legislators Tuesday.
The GDP increased 4.96 percent in the first quarter of this year, exceeding first-quarter growth during the two previous years, Deputy Prime Minister Nguyen Xuan Phuc reported during the 7th session of the 13th National Assembly (NA) in Hanoi.
The number of enterprises established between January and April increased 8.1 percent, and registered capital rose 16.2 percent over the same period last year. Over 5,800 firms have resumed business and operations after shutdowns, Phuc said.
“Our economy is recovering, albeit slowly, and continues to face a lot of difficulties and challenges,” he said.
Capital demands remain high for infrastructure development, social welfare programs, national defense, and the mitigation of natural disasters and diseases, while the country's financial capacity remains limited, he said.
While Vietnam's participation in a number of free trade agreements has opened opportunities for economic expansion, it has also increased competition on the domestic market, Phuc said.
Political security, social order and the protection of national sovereignty and territorial integrity are big challenges, he noted.
To overcome difficulties, and boost economic growth, the government will focus on macroeconomic stabilization. To do so, it will implement flexible monetary and exchange rate policies, increase credit quality, and raise foreign currency reserves, he said.
The government will also improve its use of foreign loans, and maintain public debts at a safe level. It will continue improving Vietnam's business environment, increase bad debt settlement, accelerate administrative reform, Phuc said.
Assessing the government’s report, Chairman of the NA Economic Commission Nguyen Van Giau said the recent good news isn't stable, as domestic demand remains weak. The country’s retail and consumption service revenues rose 12.6 percent in 2013, much lower than an average growth of 20 percent during 2011, and 16 percent during 2012.
The number of enterprises going bankrupt, being dissolved, or shutting down increased 11.9 percent last year over 2012. Moreover, the nation's bad debt problems remain fundamentally unsolved while public debt continues to rise, Giau said.
Although the trade balance has improved, export growth was mainly contributed by the foreign-invested sector. Stockpiled goods increased, slightly, over last year and local production remains heavily reliant on imported materials, showing that the development of local support industries hasn't kept pace with the increase in manufacturing.
The country’s economic restructuring and developmental reboot have yet to yield significant results, he said.
The commission has asked the government to assess these issues and take reasonable measures to deal with them, Giau said.
The government should bring domestic demand up to a reasonable level, achieve real macroeconomic stability, ensure reasonable economic growth, effectively disburse state investment, and facilitate access to bank loans, he noted.
The government should also address stockpiled goods and bad debt more effectively, and help the money, stock and property markets soundly develop.
He also stressed the importance of accelerating the equitization of state-owned enterprises.
Given the complications created by China’s deployment of the HD-981 oil rig into Vietnam’s exclusive economic zone earlier this month Giau said the government should actively take measures to cope with the incident's economic impact.
The government should also guarantee order and security, he said.
It should call on local residents to express their patriotism by remaining vigilant against incitement to spontaneous acts by bad elements to ensure the country remains an attractive destination for investment, Giau added.
During the 28-day session, the NA will consider and approve 11 draft laws, including the Public Investment Law, the amended Health Insurance Law, the Environmental Protection Law, and the Bankruptcy Law, and 3 draft resolutions, and give opinions 16 other draft laws, including the amended Enterprise Law, the amended Investment Law.