According to the National Assembly (NA) Committee for Economic Affairs, the Vietnamese economy has essentially overcome the most difficult period while the Government remains in a tough spot to maintain the monetary policy, ensure the balance of the macro economy and monetary supply and demand and stabilise interest and exchange rates.

Reducing the trade deficit

Mr Thanh says that it is imperative to control the trade deficit by taking into account the relative advantages of Vietnam’s export items and coming up with various measures such as providing loans for businesses at low interest rates, using export contracts as a guarantee, reducing the value added tax or import duties based on product component materials and reducing business income tax based on business performance.

In terms of exports, Mr Thanh underlines the need to minimize luxury goods and dumping to corner the domestic market.

On the other hand, to develop the domestic market, it is essential to consider products that can replace imported products, study different types of products able to develop strongly in the domestic market and encourage more proper investment policies.

Capital management

In Mr Thanh’s opinion, strategies for foreign investment should be reconsidered by setting up indirect investment funds or mobilizing a large volume of capital from US$10-20 billion from major international financial centers to invest in effective projects managed by domestic businesses.

Economic experts estimate that in the next ten years, Vietnam will need around US$500 billion or more to develop. In fact, 70-80 percent of the total investment capital for a project are in the term of loans and only 20-30 percent is in equity capital. If Vietnam itself mobilizes US$100 billion in equity capital to implement projects, FDI capital will drop to a relatively safe level. Consequently, Vietnam will not have to follow a model as it is doing now to call for FDI inflows. The State Bank of Vietnam (SBV) itself can function as an agency to issue domestic currency and credit. For domestic currency, the SBV is entitled to deduct and re-provide capital for commercial banks to enable them to meet a sufficient supply of credit for the national economy to develop in a stable and sustainable manner. The SBV is also responsible for monitoring credit inflows and supervising private banks’ operations to curb inflation. The SBV should build an appropriate operational mechanism to perform its functions and tasks effectively.

Apart from solutions to ensure capital supply, commercial banks’ operations need to be supervised strictly so that regulations on credit organizations and loans are implemented properly. Capital borrowing must be based on objective criteria for each project and all businesses should be treated on an equal footing.

It is also necessary to abolish the “give and take” mechanism and other practices that cause negative phenomena in order to provide enough capital for the implementation of feasible projects, Mr Thanh adds.

Giving a boost to rural development

How to create jobs for 70 percent of the rural population is also part of the scenario for the Vietnamese economy in 2010. Mr Thanh says rural development should be enhanced by adopting credit and financial support policies, providing animals and seeds to farmers, effectively implementing irrigation and infrastructure development projects and increasing labour efficiency and productivity. If rural areas develop well, it will stimulate the development of the national economy, leading to economic restructuring, from agriculture to industry. A country with more than 80 million citizens is an advantage and also a responsibility. If there are no proper policies for rural development, the nation as a whole will be left behind.

Last but not least, business restructuring is also part of the scenario. In the business environment, top priority should be given to restructuring. Each business should reconsider its strong and weak points in terms of staff, products and the market.

Economic restructuring should be targeted towards a future of high-level development in which growth must rely on productivity and quality, Mr Thanh concludes.