Vietnam’s economic recovery is on track
Updated: 1/20/2015 3:04:50 PM GMT + 7

(MPI Portal) – Report of updated Vietnam’s recent economic developments of the World Bank (WB) announced at the press conference on December 3rd 2014 showed that Vietnam’s economy has grown faster and expected to improved from 5.4% in 2013 to 5.6% in 2014.

According to WB, continued macroeconomic stability has helped underpin growth in Vietnam. It has contributed to the country's improved sovereign risk ratings which enabled government bonds to be issued on international capital markets, raising US$ 1 billion on relatively favorable terms. Government revenue increased by 17% in the first nine months of this year, compared to the same period last year. At the same time, total expenditure rose by 11.5%, due largely to recurrent spending. While Vietnam is still considered at low risk of debt distress, overall public debt levels are becoming an increasing concern.

Underlying the broad patterns of recovery, the performances of foreign-invested and domestic firms have been dichotomous. The foreign-invested sector continues to be a significant source of growth, while the performance of the domestic private sector has been more mixed, with rising number of domestic businesses have been closing or suspending operations.

Speaking at the press conference, Ms. Victoria Kwakwa, WB's Country Director for Vietnam said that it is necessary to resolve some gaps of SOE and bank sector in order to raise Vietnam's economic growth. Continuing to accelerate progress of reform and perfect business environment is a key to push the economy to new growth trajectory.

Regarding improvement of business conditions, Vietnam Government has taken some important measures in 2014, which is a resolution to shorten the time for administrative procedures for filling taxes, reduce administrative costs and strengthen the transparency and accountability of state administrative agencies. The revised Law on Bankruptcy, the Enterprise Law and the Investment Law, are expected to improve corporate governance in enterprises and State Owned Enterprises (SOEs).

WB proposed to accelerate reform of the Government with the goal of resolving the fundamental challenges in financial sector according to 3 phases: Meeting prerequisites for successful implementation of reform; Launching components of the reform program; Improving reform program.

According to WB's evaluation, foreign investors always consider Vietnam as an attracted and potential market. FDI sector is still an important growth resource of Vietnam's economy, contributing 20% of GDP, 22% of total investment capital, 2/3 of goods export turnover and creating jobs for labors./.

Nguyen Huong
MPI Portal
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