Pandemic challenging businesses and economic growth

The lengthy and relentless Covid-19 pandemic has disrupted economic growth drastically, making it challenging to achieve the expected target for the period 2021 to 2025. 
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It has also put substantial pressure on innovation, institutional reform, and the effort to improve the quality of business environment so as to make fast recovery towards economic growth.

Change inevitable

The Covid-19 pandemic has caused a global crisis for the last two years. Although the extent of the pandemic impact on individual countries varies a great deal, its effects are far-reaching and extremely damaging. The fact that new virus strains are constantly appearing, puts the whole world population at grave risk. This also clearly shows the efforts of accelerated strong and high-speed development of the 4.0 digital technology and digital economy.

The attempt to do so must not be delayed. This is the time to converge many factors together that will compel us towards a progressive change. Vietnam has well been able to control the pandemic and maintain a modest and successful steady economic growth rate. Therefore, if we do not accelerate our pace towards development, we will miss the world tempo, slow down and risk falling far behind many nations.

It is this pressure towards change that has created a new wave of reform and development, that is moving fast towards innovation and modern technology. By 2025, our goal in all developing countries must be to adopt a modern industry, and upgrade from a low-middle income level. By 2030, developing countries must move towards modern technology and higher middle level income. Our aspiration in Vietnam must be to become a developed, high-income country by 2045. Therefore, without implementing extraordinary solutions, we will not be able to achieve the goal set out by the 13th Party Congress, and we will be further away from our aspirations, targets and goals.

It is becoming evident that 2022 will be the year of opening up to more reform. We believe that we will continue to be resilient, and also economically sustainable. We will no longer have to follow a blockade on a large scale, or face major disruptions in the supply chain. The bright spot for 2022 is that the macroeconomy will continue to be stable; inflation will still be within the planned target; exchange rate will continue to be stable; and major balances in the economy, especially external balances, will continue to be maintained.

According to the planned target and some recent forecasts, economic growth in 2022 is expected to be about 6% to 6.6%. The coming year is also a year of unprecedented demands and pressure for the completion of the 2021 to 2025 term goals and the 2021 to 2030 socio-economic development strategy.

If we want to achieve these goals and aspirations, we need to be stronger, innovative, and adopt more drastic solutions to support the solutions already being implemented in the five-year socio-economic development plan for the years 2021 to 2025, as part of the economic restructuring project to transform the growth model in the 2021 to 2025 period and the 2022 socio-economic development plan. These solutions are being eagerly awaited so that the program of economic recovery and development can be implemented soon.

Currently, institutional reform, administrative procedures, and business environment improvement are being strongly promoted, along with legislation for digital transformation and digital economy. This is what businesses and people need and expect the most.

Reform necessary

In recent years it looks like reform has been slowing down. In order to reform institutions and improve the quality of the business environment in the 2021 to 2025 period, it is necessary to continue reform on regulations and ways of managing businesses; reduce and narrow list of conditions on businesses; and abolish or simplify regulations on conditions for industries and trade.

We need to move towards enforcement and state management of businesses under plans of risk management and post-inspection, and apply more digital technologies. With regards to management, it is necessary to be flexible and find a balance for the whole term rather than just annually. In this direction, the budget deficit for the whole term may remain at the target of 4% of GDP, but it can be adjusted to about 6% to 7% in 2022, 5% in 2023, then gradually reduce to 3% annually. Similarly, if inflation for the whole term is 4%, the year 2022 can accept a higher level than the rest of the years. By operating in this direction we will create room for a recovery program and accelerate growth for at least two years from 2022 until 2023.

In 2021, exports were an important contributor to economic growth. However, imports and exports are also now facing many difficulties because of stricter management and inspection of import and export goods. Therefore, it is necessary to continue to reduce the list of goods subject to stricter management and inspections, and fully cover all aspects of risk management, while switching to post-inspection. Simultaneously, we must connect and share data and carry out administrative procedures for strict inspection management on the national one-stop portal.

What needs to be done, and also must be done, is to follow a step-by-step reform of regulations and administrative procedures related to construction investment, including laws on investment, construction, housing, real estate business, land, and environment. In which, we must review and abolish administrative procedures that are unnecessary, inappropriate, and have no management objectives.

For instance, by approving investment policies for private investment projects, offshore investment licenses and investment policies, and investment decisions for public investment. We must remove unnecessary repetitive documents, concretize dossier content, abolish regulations and overlapping processes. This is a difficult area to reform because it touches on the territory of relevant ministries. Therefore, this method cannot rely on the administrative apparatus for administrative reform but requires independent research, evaluation, and recommendations outside of ministries holding relevant interests.

 Strategic competition between superpowers, and change in globalization will exert pressure on national strength and competitiveness. Digital transformation is inevitable, and it will force individuals, organizations, and the whole country to adapt to a new transformation.

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