Deputy Prime Minister Pham Binh Minh said the US – China trade war may bring benefits to Vietnam in the short term, but would negatively impact Vietnam’s economy in the long term.
In the short term, the trade war is expected to boost Vietnam’s exports, but in long term, Vietnam’s GDP would see a decline of VND6 trillion (US$255.82 million) over the next five years, Minh said at a hearing at the National Assembly on Thursday.
He noted there has been a shift of production facilities from abroad to Vietnam, requiring the nation to revert to a more selective investment policy with focus on modern technologies and environmental protection.
Additionally, Minh warned of the possibility of Vietnam being used as a proxy destination for products that would be later exported to a third country in an attempt of tariff evasion.
Since the start of the trade war in 2018, Vietnam has been looking at solutions to minimize its negative influence. The measures include stabilizing macro-economy and foreign exchange polices, controlling the inflation, enhancing corporate competitiveness and the investment environment, among others.
Deputy Prime Minister Pham Binh Minh at the hearing. Source: VGP.
More policies to support private sector
According to Minh, the ratio of enterprises to population in Vietnam remains low at 1:140, indicating one enterprise for every 140 citizens.
The rate is significantly lower than the average in ASEAN with one enterprise per 80-100 citizens and developed countries including the US, Japan or EU with one business per 10 – 12 citizens, Minh said at a hearing held by the National Assembly held on June 6.
Minh acknowledged the low efficiency and capacity of the private sector, especially the small and medium enterprises (SMEs), referring to poor corporate governance, productivity, technology application and low position in the global value chain.
In the coming time, the government would focus on drafting new policies supporting the development of the private sector, Minh said. This would include the finalization of the revised investment and corporate laws, ensuring a healthy development of the sector and fair competition in a market-based economy.
Meanwhile, Minh stressed the growing importance of private companies during the process of economic growth, creating jobs and addressing social issues.
As of present, Vietnam has a total of 730,000 enterprises in operation, and more than 100,000 enterprises register for new establishment every year, not to mention millions of business households, he added.