VCCI names 3 pillars as driving forces for Vietnam economy

Three pillars that serve as driving forces for Vietnam’s economy, including institutional reform, global integration and digital transformation, remain intact, according to Chairman of the Vietnam Chamber of Commerce and Industry (VCCI) Vu Tien Loc.

VCCI Chairman Vu Tien Loc at the meeting.

These are the key factors that could help create breakthroughs for the economy in the coming time, stated Mr. Loc at a conference discussing Vietnam’s economic prospects on November 24.

As the Covid-19 pandemic continues to wreak havoc in the world, including Vietnam, international organizations have all revised down their global economic forecasts, raising concern that the world is set for a long road of recovery.

However, during this context, the Asian Development Bank (ADB) in its latest Asian Development Outlook still expected Vietnam to deliver positive economic growth of 1.8% in 2020 and bounce back to 6.3% one year later.

While Vietnam’s economic outlook in the near term is bleak, the country is showing stronger resilience than most comparable economies, with the outlook over medium and long-term remaining positive, the report added.

Mr. Loc attributed such a positive outlook to the current global trend of trade, investment and production. “It is a miracle that Vietnam still maintains positive GDP growth, showing the country has succeeded in realizing the dual target of both containing the pandemic and boosting economic growth,” he noted.

The VCCI chairman added that, with a stable macro-economic environment, the Vietnamese government has been able to ensure all three requirements for growth, including stability, growth and connectivity.

Moreover, the government has timely provided support programs for the business community and people affected by the pandemic, Mr. Loc stated, but the most important issue is the people and enterprises’ resilience against unfavorable external factors.

According to Mr. Loc, this also showed the strong belief and positive sentiment of the public towards the country’s economic outlook. The recent signing of the Regional Comprehensive Economic Partnership (RCEP), the world’s largest free trade agreement, would also enhance such positive sentiment and reaffirms that global economic integration remains a key motivation for Vietnam’s economic growth, he asserted.

Institutional reform remains long-term solution for growth

Nevertheless, Mr. Loc suggested it is essential for the government to continue supporting the recovery of enterprises, especially as millions of people are now losing their jobs.

In addition to the first relief packages, an upcoming second one should focus more on fields that have high potential for growth but are struggling for dealing with the crisis, including aviation or tourism.

During the post-Covid-19 pandemic, these sectors would play a key role to support the economy, he noted.

While fiscal support and better credit access for enterprises are only short-term solutions, institutional reform and simplification of administrative procedures would be the long-term response to sustainable development, he stressed.

In this regard, Mr. Loc said there have not many improvements in Vietnam’s ranking in terms of business friendliness and competitiveness in the Southeast Asian region, therefore, a stronger focus on improving the business environment would be the most important support for economic recovery.