Running after economic growth at any cost will not make the country develop. The question is how to ensure the quality of growth and make it a primary task.

On the traditional Lunar New Year Festival (Tet), former Minister of Planning and Investment Tran Xuan Gia granted an interview to VOV about Vietnam’s economic status in 2010-2011.

 VOV: Vietnam was one of the few regional economies to record a positive economic growth rate in 2010 while the world economy continued to face a host of difficulties. How did the country deal with weaknesses in its economy to attain this achievement?

Mr Gia: According to the General Statistics Office (GSO), the Vietnamese economy grew 6.78 percent in 2010, a relatively high rate compared to other countries in the world. This indicates that it was bouncing back quickly after some years of slowdown.

However, I think that Vietnam’s economic weaknesses have not yet been fully resolved and were even exposed more clearly through the impact of the global economic downturn.

Vietnam’s economic growth still depended on increased investment capital while the efficiency of investment was low. Industrial value saw a relatively high increase but its added value is not high. Previously, industrial value rose by 1.4-1.6 percent and it created 1 percent of added value, but now, this figure must be 2 percent. Meanwhile, elements of the macro economy were unstable and the inflation rate remained in double digits.

I suppose that in recent years economic growth may have relied on circumstantial solutions which helped the national economy recover but also left a shaky foundation for 2011 and the following years.

VOV: 2010 was the second time within the past decade that the Vietnamese economy recovered after some years of slowdown. Can you explain the similarity and difference between the two economic recoveries?

Mr Gia: The interesting thing is that the decline and economic recovery this time is very similar to the previous one in terms of when it happened and the level of decline and recovery. For instance, GDP growth in 1997 and 2007 stood at 8.6 percent and 8.5 percent, respectively; 5.8 percent and 6.2 percent in 1998 and 2008, 4.8 percent and 5.3 percent in 1999 and 2009; and 6.8 percent and 6.78 percent in 2000 and 2010.  A major difference is that the previous economic recovery was coupled with macro-economic stabilisation but that is not the case this time.

The inflation rate is one of the important indexes indicating macro-economic stabilisation. Inflation rates in 1997 and 2007 were 3.6 percent and 12.6 percent; 9.2 percent and 19.9 percent in 1998 and 2008; 0.1 percent and 6.5 percent in 1999 and 2009; and minus 0.6 percent and 11.75 percent in 2000 and 2010. This time inflation was nearly 12 times higher than in the previous years. Therefore, in 2001, the Government paid more attention to controlling deflation but currently, it is making every effort to curb inflation. The corollary of deflation and inflation at different levels negatively affects production and business.

VOV: The 2010 economic situation occurred as you predicted with high inflation and difficulty stabilising the exchange rates. Do you think that the corollary of the situation will continue this year?

Mr Gia: Yes, I think so. It takes a long time to cure a long-term disease. I agree with proposals made by domestic and foreign economists saying that, to ensure sustainable and rapid development, it is essential to stablise the macro-economy. The Government considers stabilising the macro-economy and controlling inflation a primary target for 2011. In fact, in the 2001-2005 plan for socio-economic development, Vietnam’s CPI and GDP reached 5 percent and 7.5 percent per year respectively, but in 2006-2010, CPI reached 11 percent and economic growth stood at just 7 percent. This is a lesson that needs to be considered when implementing the next five-year plan for socio-economic development (2011-2015).

VOV: Under the new socio-economic development plan and State budget estimates, the country’s total GDP is predicted to reach 7-7.5 percent in 2011. What is your comment about this target as this year marks a new milestone?

Mr Gia: Despite rising out of the group of poor and underdeveloped countries, Vietnam’s per capita income is still lower than about 100 countries in the world. Top priority should be given to achieving high economic growth which is beneficial to all people.

The GDP growth rate of 7-7.5 percent set in the next five-year plan (2011-2015) and the ten-year strategy for socio-economic development (2011-2020) is likely to be much lower than originally expected. Compared to neighboring countries which have maintained an annual economic growth rate of 10-15 percent for decades, the figure of 7-7.5 percent remain quite low. However, to ensure that the national economy will develop sustainably, I believe the figure of 7-7.5 percent is high.

In the short run, businesses will still be challenged to expand production and activities due to the unstable business environment, high inflation, high interest rates and possible power shortages. This will present a lot of difficulties in balancing capital to ensure steady economic growth.

VOV: In what area does Vietnam’s economic development target need to be focused?

Mr Gia: In my own opinion, it is necessary to give top priority to ensuring the quality of growth. High quality economic growth will enable the growth rates to rise in the following years. Such economic growth coupled with macro-economic stabilisation will help increase the people’s incomes as well as improve their material and spiritual lives.

VOV: Thank you very much.

(VOV)