Vietnam has proved its mettle by achieving a high economic growth in 2009 despite the impact of the global financial crisis. In the last few days of this year, Vietnam announced that its economic growth rate is expected to reach 5.2 percent. At a Consultative Group Meeting in early December, international donors committed themselves to providing more than US$8 billion in ODA to Vietnam - the highest figure so far. With great potential and prospects, Vietnam has become one of the three most attractive destinations for foreign investors, after China and India.

The Minister of Planning and Investment, Vo Hong Phuc, says that the Government has made a great effort to cushion the economy against difficulties and reach its projected targets. The Government has given priority to stabilising the macro-economy, preventing the economic downturn, containing inflation and ensuring social welfare.

At a meeting to review the financial sector in 2009, deputy Prime Minister Nguyen Sinh Hung says that the State Budget collection reached 100.2 percent of the projected target, thus the key task for preventing the economic downturn has been achieved. In the context of the global economic crisis, leading to a negative growth in many countries Vietnam’s budget collection above plan is attributed to efforts from the business community and the Government’s timely, accurate and practical measures.

The State also played a decisive role in obtaining economic achievements, especially in financial and banking management. Since early this year, the State Bank of Vietnam has gradually reduced the ceiling interest rate to 14 percent per year to control the capital market, which was overheated at the time. Later the basic interest rate was reduced to 7 percent to help stabilise and spur the economy to further growth. Commercial banks also lowered their interest rates to provide a chance for businesses to access cheap loans to invest in production and prevent the economic crisis.

A series of stimulus policies were also issued, such as providing loans for investments, helping farmers to purchase equipment, building houses, issuing tax exemptions, reducing poverty and directing businesses to purchase rice and other agricultural products to ensure profits for farmers.

The Government’s stimulus package aimed to help businesses to access bank loans at a lower rate. Banks had to lower their deposit interest rates but also raise their loan rates. Furthermore, maintaining the basic interest rate at 7 percent until December and then changing it to 8 percent as well as other measures to support businesses and farmers has made the economy survive.

On the other hand, the stimulus package has helped to strengthen businesses, banks and investors’ trust in the State’s responsibility and prospects in the market and investment environment. The target of stabilising macro-economy, preventing the economic downturn, containing inflation and ensuring social welfare has become a reality.

At a recent seminar on Vietnam’s capital and financial market, held by the Euromoney Group and the Ministry of Finance, both domestic and foreign economists agreed that the Government’s stimulus measures have been on the right track.

However, if the stimulus package is abused it will affect the economy, causing waste and debts. At its year-end meeting, the National Assembly approved another stimulus package with a level of lower support and for a shorter period. Accordingly, from December 1, the basic interest rate was raised to 8 percent and the ceiling interest rate of commercial banks is now 12 percent per year, instead of 10.5 percent.

In 2010, the National Assembly approved several main criteria: a GDP growth rate of 6.5 percent, an export growth of 6 percent, total social investment of 41 percent of GDP, a consumer price index of 7 percent and a poverty reduction rate of below 10 percent. This is a demanding task as the world economy has just started to look up but the national economy is not really sustainable. After three years of entering the World Trade Organisation, Vietnam has yet to implement its commitments to tax exemptions and non-tariffs.

 Judging from the Government’s experiences and businesses’ efforts the projected target is not beyond reach.

(CPV)