Government bullish on economic growth plans Instead of adjusting the economic growth target for 2016, the government has highlighted some key measures to spur local production and inspire business confidence, thereby enhancing growth.   The state has pledged to aid businesses on the way to fulfilling 2016’s expectations-Photo: Le Toan At last week’s government-led cabinet meeting, the first of the new government recently elected by the 14th National Assembly, the Ministry of Planning and Investment reported to the government three growth scenarios for 2016. In the first scenario, the GDP will grow 6.83 per cent for the year’s second half -balancing out the 5.52 per cent of the first half - making for a rate of 6.27 per cent for the whole year. This rate seems readily achievable. In the second scenario, the target rate for the second half will be 7.23 per cent, meaning 6.5 per cent for the year, which may be reached. In the third scenario, the target will be 7.57 per cent for the second half, and 6.7 per cent for the year in full. This rate will be difficult to hit. However, Prime Minister Nguyen Xuan Phuc stressed that the government would “do its utmost to weather all difficulties and ensure the targeted economic growth rate of 6.7 per cent for 2016. This target will not be revised down.” To support these goals, Phuc said that “we will have to radically remove all obstacles in favour of enterprises. Business development and innovation must be considered prime priorities.” From now until the year’s end, the government will concentrate on speeding up administrative reform, with a specific focus on improving the quality of legal documents in favour of enterprises. “All unsuitable sub-licenses have to be annulled, with all business conditions being made transparent and feasible,” Phuc stressed. “Private enterprises have to be considered an important growth impetus of the economy. Investment from multi-national groups will continue to be lured, in connection with the development of local enterprises and supporting industries.” Pham Phu Quoc, a National Assembly deputy representing Ho Chi Minh City, said that the growth rate of 6.7 per cent “will be difficult to reach.” “I think it would be good if the economy grows only 6 per cent,” he said. “But I still agree with the prime minister’s view that it is unnecessary to adjust the 6.7 per cent target, but very necessary to focus on helping enterprises out of difficulties. The government should not pursue high growth at all costs. It should instead concentrate on improving the growth quality.” Echoing this view, Vu Tien Loc, chairman of Vietnam Chamber of Commerce and Industry (VCCI), looks forward to the prime minister’s orders translating into action. “Businesses are now finding it hard to access bank loans. If they can, they have to pay very high rates,” Loc said. He also cited problems with local implementation. Though the government had enacted a clear plan for bettering the local business climate, he said, many ministries and localities failed to obey this order. “For instance, two years after Resolution 19 [declared in 2014] on improving the national business climate was enacted, only 13 out of 63 cities and provinces, and four out of 22 ministries, have sent their reports on the implementation of the resolution to the government,” Loc said. According to a VCCI survey, he added, 60 per cent of local enterprises reported either no profit or losses. Since early 2015, about 120,000 businesses have had to stop operation. Some international organisations recently reduced their growth forecast for Vietnam, but remain quite optimistic about the economy’s growth potential. For instance, in its mid-July update on Vietnam’s economic developments, the World Bank lowered its projection on the country’s 2016 growth rate from the 6.2 per cent rate it had forecast in April down to 6 per cent. “Vietnam’s medium-term outlook remains positive, underpinned by robust domestic demand, in turn reflecting strong private consumption and investment growth,” said the update. The Asian Development Bank recently raised its forecast for Vietnam’s economic growth this year to 6.7 per cent, from the 6.6 per cent projected last September. In their projections, the economy’s growth will decline slightly to 6.5 per cent next year. By Nguyen Dat, VIR