Economic challenges are no hurdle for Hanoi to aim high in 2021: Expert

The severe Covid-19 situation in the first nine months of 2021 slowed down Hanoi’s economic growth to 1.28%, but it could not prevent the city from aiming to end the year on a high note.

Chairman of the Hanoi People's Committee Chu Ngoc Anh visits Toto Vietnam in Thang Long Industrial Park, Hanoi. Photo: Lam Khanh

“With strong efforts from the entire political system, business community, and people, Hanoi could still achieve a growth rate of 7% in the fourth quarter, and eventually reaching the 4.5-5% target for 2021,” economist Nguyen Minh Phong told The Hanoi Times.

“A strong finish in 2021 would lay the foundation for Hanoi to continue its development plans in 2022 and subsequent years,” Phong added.

Meanwhile, Vice Chairman of the Hanoi Association of Small and Medium Enterprises (Hanoisme) Mac Quoc Anh expected more policies of greater flexibility and substantiality to further support the business community, especially as the city has changed its strategy in Covid-19 fight towards safe adaptation with the pandemic.

“Strict restrictions only cause hardship for the people but at the same time could not fully put the pandemic under control,” Anh told The Hanoi Times.

Sharing the view, General Director of Garment 10 Company Than Duc Viet said the responsibility would lie on each company to draft their own Covid-19 prevention plan.

“For their own good and also the benefit of the society, companies should raise employees’ awareness in complying with anti-Covid-19 measures,” Viet said.

“In the case of Garment 10, a single infection case would mean factory closure in a few days for testing and tracing, in turn significantly impacting our production activities,” Viet added.

The pandemic and subsequent restriction measures also caused disruption to economic activities, with the number of newly-established enterprises in the January-September period going down by 12% year-on-year to 17,300, while 9,800 others temporarily suspending operation, up 12%.

Priorities to boost growth

In such a difficult context, the Hanoi People’s Committee stressed the necessity of protecting the progress gained in the Covid-19 fight, along with speeding up the disbursement of public funds and addressing concerns of the business community to accelerate economic recovery.

Seen as one of the key measures to boost growth, Hanoi aims to achieve the disbursement rate of public funds at 95-97% of the yearly target.

The city urges localities to set up task forces specialized in resolving issues during the process of project approval, site clearance, and construction while taking steps to ensure efficiency in state budget collection.

According to Phong, Hanoi targets to realize its socio-economic development goals set for the 2021-2025 period, in which enterprises, cooperatives, and business households would stay central in any policy-making process.

As the pandemic will persist in the long term, Phong expected the city to gradually lift restriction measures along with progress in Covid-19 containment.

“The city should set up task forces to address concern and difficulties of enterprises during the pandemic. In the longer term, it is essential for Hanoi to continue administrative reform and simplify procedures in planning, land, and urban management to ensure effective budget collection and high disbursement rate of public funds,” he said.

A production line of Garment 10 Company in Long Bien District, Hanoi. Photo: Thanh Hai

In providing support for the business community, Phong said there should be consistent policies in terms of legislation, finance, credit, and corporate governance.

“Hanoi should set an example for other cities/provinces in carrying Government’s supportive policies in waiving and freezing of taxes, land rental fees, or providing subsidies for water, electricity and phone bills,” he said.

Enterprises, especially small and medium ones, should be able to access preferential loans to resume operation and embark on the digital transformation to further enhance their competitiveness and resilience against future shocks.

Phong called for Hanoi to keep up with promoting public online services as the key solution in administrative reform and create utmost convenience for businesses’ operations in the future.

In this regard, Anh from the Hanoisme said administrative reform should be seen as a breakthrough approach in boosting socio-economic development.

“It was the active and timely response from the Government to remove legal bottlenecks and support businesses during the pandemic,” Anh said.

For the time being, Anh urged the local authorities to continue prioritizing workers at industrial parks for vaccination, which would serve both goals of keeping business running and ensuring social stability.

“As the fourth outbreak has disrupted supply chains, the focus for policymakers would be to strengthen the linkage between domestic and foreign enterprises to enhance their resilience, ” Anh added.

Despite the severe Covid-19 situation, Hanoi continues to set a high gross regional domestic product (GRDP) growth of up to 7.5% during the 2021-2025 period.

Given the city’s estimated GRDP growth at around 3.97-4.54% in 2021, this would require

Hanoi to achieve an average growth rate of 8.25-8.4% for the 2022-2025 period.

In a less optimistic scenario, the city is expected to average economic growth of 6.5-7% during the five-year period. This case is based on the assumption that Vietnam could only fully contain the pandemic in the fourth quarter of 2021 and achieve herd immunity by the second half or late 2022. The growth rate, therefore, for the 2022-2025 period is estimated at 7-7.77%.