In a talk with Saigon Investment, Dr. NGUYEN DINH CUNG, a member of the Prime Minister's Economic Advisory Group, shared his thoughts on some policies that could help in the recovery of the domestic economy.
JOURNALIST: - Sir, even while the global economy is still continuing to face uncertainties and unprecedented challenges under the Covid-19 pandemic, Vietnam has been struck by a sudden resurgence of the disease that has spread across many localities. How do we best face this threat?
Dr. NGUYEN DINH CUNG: - It is true that the impact of the Covid-19 pandemic will be prolonged, unpredictable, uncertain and highly risky. The world economy has now gone into a recession, and many forecast that this new socio-economic crisis will be more severe than it has ever been before. If the pandemic is brought under control soon, by 2022 the world economy may again reach to the level it was at the end of 2019.
However, current external factors are not favorable, and there may be many unforeseen changes as this health crisis rages on. In Vietnam, this pandemic is now spreading to many provinces and cities, making the economic situation even more grave. If the spread of the disease accelerates, the current economic recovery efforts will slow down or even come to an absolute halt.
We are, at this moment of time, facing our greatest challenge and the economy is sliding sharply since early this year. Specifically, exports have fallen for the first time, Foreign Direct Investment (FDI) has decreased for a large number of new projects, as has registered capital and implemented capital for many important projects. The complications and unpredictability of the pandemic has also created a strain on our economic recovery efforts, which are taking up far more time under the present circumstances.
With our vigilant efforts to keep the disease from spreading, and supported by our robust and effective economic recovery policies and solutions, we hope that by 2022 the country's economy will return to the level it was before the pandemic broke out.
- Sir, Vietnam went through a very difficult period from 2010 to 2011. What do you feel about the situation now as compared to that period?
- During the 2010-2011 period, the economy was still affected by the 2008 global financial crisis, which was the worst economic recession since the Great Depression in the 1930s. In 2010, the Government was still very optimistic and did not expect that more bad things would develop so quickly, and bring a slow down to operations. At that time, economic growth was quite high and unemployment was not such a big problem. However, serious macro-economic instability existed and there was uncertainty in the financial system.
Since the beginning of 2020, the Government has remained optimistic, expecting less impact from the pandemic, but the economy has fallen unprecedentedly low, and there is high unemployment and large-scale job losses. Until now, although the macro-economy is still stable and the financial system is still safe, there are potential risks of instability. An unprecedented large-scale production and business support package has been introduced, but is nothing compared to the economic, production and business losses caused by the disease.
Up until now, these support packages have not had much positive effect because of slow implementation and complicated conditions in receiving them. The Government has set many directives but they are ineffective due to slow enforcement at all levels.
Now the disruption of economic activities is not the only worry, but there are serious concerns about a lack of enthusiasm in attitudes and approach in handling socio-economic issues by leaders in many units. During the period 2010-2011, reforms were slow and far less with no clear direction. Later there was a fundamental change in both action and target to restore macro-economic stability, growth and social security.
In 2012, the economy was at rock bottom and it took three years to recover the growth rate. Currently, reform seems to have lost momentum, as well as a firm direction. The task of the Government may be more complex and difficult, which is to maintain macro-economic stability; growth recovery; economic restructuring; and growth transformation. The current outlook does not look very bright.
- Before the second wave of the pandemic broke out, Vietnam was pushing for more investments in various fields into the country, by offering huge incentives and procedural changes. This second emergence of the Covid-19 pandemic has brought with it new challenges. In your opinion, what kind of reforms can we offer now?
- Looking back on the country’s development process over the last few years, we can see that the period of good economic development was also a period of strong reforms. The more difficult it is to reform, the more we should focus on better reform, because the stronger and more effective the reform the better will be the driving force for growth. The demand for strong reform and innovation under the market economy will surely always to be more urgent and powerful than ever.
The spirit of reform still is market, market and more market. During this difficult time, it is necessary to create more favorable conditions for production and business. Reforms must continue to make businesses safer and more free. Businesses do not only need freedom to do anything, but also must have the freedom to do their own way, and the freedom to do with anyone. Currently, we only pay attention to freedom to do anything.
We must continue to reduce, loosen and remove barriers for doing business and also focus on how laws and regulations create barriers and limit freedom in doing business. It is necessary to change this mindset, remove procrastination and manage according to levels of risks of goods and services and levels of compliances of the business. If reform slows down, economic recovery will become weaker and the recovery period will take much longer, possibly even beyond 2025.
- Thank you very much.