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MPI’s 2012 economic development scenario described as illogical
The 2012 economic development scenario drafted by the Ministry of Planning and Investment (MPI) has met mixed responses. Instead of agreeing to the optimistic targets in the context of the current big difficulties, economists say that the scenario should clearly point out the things the government needs to do to recover the national economy.
An illogical scenario
The Central Institute for Economic Management CIEM believes that the national economy in the first 10 months of the year was “not so optimistic,” saying that the monetary policies were not really tightened as expected.
Of the investment projects kicked off in 2011, funded by the capital from the government bonds, 333 projects were not found in the list of projects subject to the state budget’s capital in 2011. Central and local ministries and branches have checked their public investment projects, but in fact, the projects have only been delayed, or have been cut only on… paper.
Vietnam successfully cut down the spending of 10 trillion dong, but the actual expenses were higher by 70 trillion dong than the estimates. Nearly 120 trillion dong has been allocated to 17,700 projects, of which 22 trillion dong has been budged for 5000 new projects (4.3 billion dong per project), and 95,500 billion dong to 12,700 projects (7.52 billion dong per project) which were kicked off in previous years
Dr Nguyen Dinh Cung, Deputy Head of CIEM, commented that the 2012 economic development scenario is illogical. The scenario shows that in 2012, the GDP growth rate would still reach 6-6.5 percent, while the consumer price index (CPI) would be curbed at less than 10 percent.
“The economic restructuring will surely require the re-allocation of investments. If so, this will upset the growth model, which means that the GDP growth rate in 2012 would not be higher than this year’s,” he said.
Some other norms mentioned in the economic development scenario are also believed as unconvincing. The overspending should be 5.5 percent instead of 4.5 percent, because it is necessary to count on bonds and other borrowings of the government. Meanwhile, MPI proves to be too cautious when setting up the targeted export growth rate of 13.1 percent, if noting that the recent annual export growth rates are regularly higher than 20 percent.
Government urged to cut down public investment
The latest survey of TNS has pointed out that the inflation rate in Vietnam is now the highest in Asia, at 17.05 percent by the end of October 2011, and that Vietnam has been relying too heavily on the world market with more than 70 percent of GDP coming from trade and foreign direct investment FDI.
TNS pointed out that the high inflation rate has killed all Vietnam’s economic potentials, and that if Vietnam does not carry out a large scale reform to settle difficulties, it will not be able to recover the economy in 2012.
The firm has suggested the comprehensive measures for recovering economy, stressing that Vietnam needs to curb inflation, heighten the efficiency of the financial system management, heighten the efficiency of state owned enterprises and attract FDI.
However, TNS said that Vietnamese consumers still keep optimistic about the national economy, even though the economic problems still exist.
Meanwhile, CIEM has suggested a drastic measure of cutting down 50 percent of unnecessary investment projects and focusing on half-done projects. Ministries and branches need to discuss to reach a consensus about what projects to cut. “If the money of the state budget is still allocated to a high number of projects, no project will be completed perfectly,” he warned.
CIEM has also proposed to control the dong/dollar exchange rate and the food prices, carry out necessary measures to curb inflation, tighten the lending to the real estate sector and force the interest rates down.
vietnamnet, Lao dong
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