JICA upbeat over Vietnam prospects
Vietnam saw its economy rebound in 2016, leaving a brighter outlook for 2017. Yamamoto Kenichi, deputy chief representative of Japan International Cooperation Agency’s (JICA) Vietnam Office, spoke with VIR’s Thanh Tung about his office’s expectations for the local economy in the time to come.
What is JICA’s expectation for Vietnam’s economic prospects for 2017?
Before talking about the prospect, let me recall some significant challenges and achievements of Vietnam in 2016 as I believe they will pave the way for performance in 2017. In the first half of 2016, the economy experienced negative growth in the agriculture sector, due to severe drought and salinity intrusion.
But the sector performance gradually improved in the later half. This suggests its potential to further contribute to Vietnam’s economic growth, if agriculture restructuring is properly implemented.
In the context of sluggish global trade, Vietnam achieved an 8.6 per cent growth rate in export value in 2016. The actual economic growth rate in 2016 was 6.21 per cent, lower than the National Assembly’s targeted 6.7 per cent and the government’s expectation of 6.3-6.5 per cent. However, given the difficulties and challenges mentioned above, it is highly appreciated.
I believe in a brighter picture for the economy next year, with a higher economic growth rate.
What challenges do you see waiting for Vietnam in 2017?
Many challenges remain for Vietnam to weather. For example, I have not seen significant actions in the progress for non-performing loan resolution and state-owned enterprise (SOE) reform.
If these matters are not resolved, they may become obstacles for Vietnam to get back to the high economic growth trajectory experienced in the period before the global financial crisis.
Given the expected increasing volatilities in the global economy in 2017, only restructuring efforts will help strengthen the economy from its inside to better cope with external headwinds and seize the opportunities for high and sustainable growth.
What are your policy recommendations for the government?
From my point of view, the future holds challenges for the nation to overcome in addition to the advantages it will bring.
This is especially true in Vietnam’s adaptation to conditions of the ASEAN Economic Community, and of the several free trade agreements coming into force.
One of the most important policy questions is how to improve the country’s investment and business climate in order to increase investment from domestic private sectors.
In this context, the Vietnamese government is suggested to carry out policies that promote the investment climate of business through the restructuring of key sectors, including SOEs, the banking system, and logistics systems – in such a case as fully and efficiently utilising the port system around Ho Chi Minh City.
The international competitiveness of Vietnam could be enhanced more strongly when the government pays more focus to facilitating finance to small- and medium-sized enterprises (SMEs) who are working in supporting industries.
Also, developing a favourable financial mechanism for farmers and/or agricultural enterprises that have concrete and feasible business plans in the agricultural sector could be very important in helping increase the value of agricultural products. This is considered a key factor for improving the competitiveness of Vietnam’s agriculture in the future.