Vietnamese lawmakers backed a plan that aims for annual economic growth of as much as 7 percent through 2015 and seeks to quell Asia's highest inflation.
The National Assembly approved an objective of 6.5 percent to 7 percent annual economic expansion from 2011 to 2015 and a goal of reducing inflation to 5 percent to 7 percent by the end of that period, Nguyen Thi Kim Ngan, the deputy chairwoman of the legislative body, said in Hanoi Tuesday. The proposals were listed in a socioeconomic plan presented to the assembly.
Vietnam has struggled this year with an inflation rate of more than 20 percent, a trade deficit and slowing growth. The nation's banking sector is also experiencing a deterioration in loan quality, capital, profitability and liquidity, Moody's Investors Service said at a conference in Beijing Tuesday.
"On inflation, 5 percent to 7 percent seems pretty ambitious, even by 2015," said Johanna Chua, Hong Kong-based head of Asian economics at Citigroup Inc. "If they really want to achieve that, I'm not sure that's consistent with 6.5 percent to 7 percent growth, unless there are a lot of structural changes such as liberalizing the service sector and reforming state companies."
The benchmark VN Index of stocks closed down 0.5 percent Tuesday. The dong weakened 0.1 percent to 20,996 per dollar as of 1:00 p.m. local time, according to data compiled by Bloomberg. The currency was devalued by about 7 percent in February, the most since at least 1993, in part to try and curb the trade gap. The stock index is down about 16 percent so far this year.
The lawmakers also approved the objective of restructuring the economy, including the banking system, state-owned businesses and public investments. The government needs to "strictly control" bad debt at state enterprises, companies' overseas loans and foreign investment into the stock and property markets, according to the socioeconomic plan.
"We need to focus on improving the security of the banking system," Nguyen Van Giau, head of the legislative body's economic committee, told reporters Tuesday. Detailed initiatives will be submitted to lawmakers next year as "we are still at a very early stage on this," he said.
The State Bank of Vietnam asked state-owned companies to gradually cut their stakes in financial institutions, the central bank said separately in a statement posted on its website today.
Vietnam will aim for an annual trade shortfall of less than 10 percent of the value of exports by 2015, according to the socioeconomic plan. The deficit for the 10 months through October was $8.39 billion.
The assembly also approved a budget deficit goal of less than 4.5 percent of gross domestic product by 2015 and a public debt target of no more than 65 percent of GDP by the same year.
Vietnam's inflation rate was 21.59 percent in October, easing from 22.42 percent in September. The pace is the fastest in a basket of 17 Asia-Pacific economies tracked by Bloomberg.
The Southeast Asian nation's gross domestic product may climb 5.8 percent in 2011, the slowest pace since 2009, Asian Development Bank data show. The economy, a production hub for companies from Intel Corp. to Honda Motor Co., expanded 6.8 percent last year.