|
Economist urges financial reform in crisis
Encouraging people to increase their purchasing power should go hand in hand with financial reform, Dr Le Dang Doanh, a senior economist told the Tuoi Tre (Youth) newspaper.
The Government has approved a plan to encourage people to spend more. What should we be putting on our shopping lists?
Over the last two months, the consumer price index (CPI) has dropped. So has spending. This is not the usual, natural rule of the economy.
People often spend more during the last quarter of the year.
I think CPIs between October and November (– 0,19 and – 0.76 respectively) were the result of a drop in price of many essential commodities in the world market. The bumper crops within the country further fuelled this drop.
With the growth rate in domestic production sinking, it’s so important to encourage spending.
A big number of small and medium businesses have disappeared over the past several months. Many automobile assembling companies have slashed their working week to one day. Meanwhile, many traditional craft villages are forced to halt production.
Facing such gloom, it is important to increase spending and to encourage production development. It is not for the sake of increasing the CPI.
Farmers will be targeted first in our plans to encourage more spending and production. This won’t be easy as they have just suffered huge losses in a recent spate of natural disasters. To help them maintain and develop production, the Government should support them with seed and irrigation projects while lowering some agricultural fees. They should have access to credit schemes.
In my opinion, for small- and medium-sized enterprises (SMEs), it is better to encourage investment in capital works and product expansion. The subprime mortgage in the USA is a good lesson for Viet Nam to learn from.
How can you increase spending?
In my opinion, we should focus our spending only on investment and construction projects that are effective and will generate quick returns.
It is imperative to have transparent investment information. The practice of "ask and give" must be abolished. That kind of practice costs a lot of money for project owners.
As I already mentioned, reducing these extra costs will help SMEs a great deal.
It is right to focus investment on capital works. But some people are concerned that the benefits would mostly go to State-owned enterprises. How do you respond to that?
What happened in 1997-1998 was a good lesson for us. Though we had invested a lot in State-owned enterprises, the result was very poor.
I strongly advise that we carry out reform parallel to increased spending. That’s the only way to avoid following the beaten tracks.
How can you balance supply and demand in a gloomy economy?
It is the role of the Government to promote trade and look for new markets, while helping businesses reduce production costs and boost competition.
But businesses must take a share of the responsibility too. They should come together and share information about market needs.
They could also help by accepting lower benefits and sharing difficulties with consumers.
Do you think it is time for the Government to adjust real estate and other taxes, such as personal income tax?
I have earnestly asked the Government to exempt natural disaster victims and poor people from taxes.
For the immediate future, I suggest the Government should put a good social security system in place as unemployment increases.
We should learn from China that all economic groups are asked to contribute to the social welfare fund to help poor people.
Regarding personal income tax, I think we should proceed with the law. But the allowances for dependants should be reconsidered.
In my opinion, everyone needs to have something to save for the rainy days - before being taxed.
Viet Nam News, vietnamnet
|
