At the conference to announce the Asian Development Outlook (ADO) report, Shantanu Chakraborty – Country Director of Asia Development Bank (ADB) in Vietnam – predicted that the economy of Vietnam will have a growth rate of 6 percent and 6.2 percent in 2024 and 2025, respectively. Although this is lower than the target of 6.5 percent in 2024 proposed by the Ministry of Planning and Investment, the stable economic growth rate of the country is a positive sign.
In the report, ADB also mentions geopolitical uncertainties in the world and structural weaknesses of the national economy that might affect this growth rate. ADB experts stressed that private investments in Vietnam in 2023 only saw an increase of 2.7 percent compared to the previous year, which is the lowest in 10 years. This resulted in a drop of 6.2 percent in the total investment amount last year, opposite to a rise of 11.3 percent in 2022, showing a decrease in confidence among private investors.
This matter was also the focus of yesterday’s conference held by the Vietnam Institute of Economics. Dr. Tran Dinh Thien – former Chairman of this Institute – shared that people usually feel positive thanks to the number of newly established businesses rather than worried by those withdrawing from the market. These days, the latter’s figure has been higher than the former’s one as the scale of domestic enterprises is usually small, and their life normally short.
Sharing the same concern, Dr. Vo Tri Thanh – Head of the Research Institute for Brand Strategy and Competitiveness – analyzed that private investments are seeing a wane. The credit growth rate in 2023 was extremely slow, and the situation is not better this year. The number of micro, small, and medium enterprises has dropped faster than ever. However, he added that green and digital transformations are offering new business chances as long as investor confidence is maintained well.
For a more sustainable growth, it is critical to increase the efficiency of public investment. ADB calculates that a rise of 1 percent in the disbursement of public investment is equal to a GDP growth of 0.058 percent. A public investment disbursement success of VND1 is able to stimulate VND1.61 from the private sector. Despite certain efforts of the Government in this matter, the disbursement proportion of 80 percent is still lower than the set target. Increasing this will create a great potential for more positive changes.
In addition, improving the investment environment, reducing unnecessary steps in administrative procedures for businesses, especially micro, small and medium ones, should be the focus of the whole political system.
Along with fiscal and monetary policies to stimulate consumption and investment, to support businesses in need, functional agencies at all levels should adopt more practical solutions to help enterprises overcome their obstacles and keep up with global trends like green economy, circular economy, digital transformation so that they can successfully enter global supply chains and increase the added value of their products.
This has been recognized by the Government in Resolution 02/NQ-CP, issued at the beginning of this year. Effectively implementing this Resolution means more encouragement to businesses so that they can bloom brightly and contribute to the national economic development.
