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Government needs to seek long-term strategies, not just temporary ‘fixes’
Talking to the press on the sidelines of the National Assembly session on May 21, Economics Committee Chair Ha Van Hien said that the committee has urged the Government not only to carry out temporary measures to deal with the current economic downturn, but also to build up long term overall strategies on economic development.
How do you assess the Government’s demand stimulus package?
The demand stimulus measures are not yet fully effective; they have only been in effect for a few months. However, we can see the interest rate subsidy and the credit guarantee programmes have been considerably useful for businesses. The measures show the high determination by the Government to curb the economic downturn.
However, we need to check if there are problems in the implementation of the Government’s policies. For example, we need to find out if the state’s support goes where it should and if it brings the desired effects – that should be made clear. We will not obtain our goal, if businesses use the money they borrow under the interest rate subsidy programme to pay debts.
A lot of businesses complain that they still cannot obtain loans at preferential interest rates. What do you say about that?
We heard that complaint when we took inspection tours to localities. Small and medium enterprises complain that they still cannot get loans under the interest rate subsidy programme due to the complicated procedures. It is understandable. Some businesses still do not have a methodical accounting system. They cannot prove that they can meet the requirements for preferential loans under the interest rate subsidy programme. Meanwhile, commercial banks have their own standards.
Do you agree that demand stimulus programmes mainly target state owned enterprises?
I don’t think so. All the documents affirm the equality of different economic sectors. Only businesses that can meet the established criteria are eligible to benefit from the Government’s support programme. A lot of small and medium enterprises are in the group that has gotten preferential loans.
With a demand stimulus package equal to 10 percent of GDP, we will pump a huge sum of capital into the national economy. Do you see any risks that this will bring back high inflation?
Pumping cash into the national economy is a factor that may cause high inflation. Now, right at the beginning of 2009, the Government affirmed that it must both fight economic downturn and prevent the return of high inflation. We got much experience in fighting inflation in 2008.
Some experts speculate that Vietnam may fall prey to ‘stagflation’ – inflation and low or no growth at the same time.
Vietnam was in that situation at the end of 2008. Inflation was high, but then signs of weakness appeared.
Do you agree that we now only focus on measures to curb economic downturns, while we have skimped on long term measures to ensure sustainable economic development?
In fact, we have been doing necessary things to restructure the economy. For example, in industry, we have figured out how to develop ancillary industries, in agriculture, the proper relationship between husbandry and crops, in crops, what the ratio of vegetable and fruit production should be, and in trade, how to develop the domestic market.
Businesses have thought of bringing goods to rural areas, but it is a bit late. We need to build up planning and anticipate our moves. Companies won’t find buyers in rural areas right after they begin to market there. Vietnam needs to have reasonable production and distribution policies.
Hoang Phuong
vietnamnet
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