VIET NAM: KEEPING THE ROAD OF REFORM & PUT FORWARD INDUSTRIALIZATION –
ACHIEVEMENTS & DIFFICULTIES SINCE 2007
1) Growth and shifting economic structure: In recent years, the ecomomic growth rate has reached rather high at at sectors. In the year of 2007, GDP growth rate increases at the possibility of 8.5%, in which industry and construction can growth by 10.6%, agriculture, forestry and fishery 3.5%, services about 8,7%. The share of industry and construction in GDP continunously increases, in the year 2000 is only 36,7%, in 2007 is 41,8%. The share of service sector has been decreased by several years but risen again since 2005 and reach to 38.2% GDP in 2007. Inversely, the share of agricultural sector has been down since 2000 from 24.5% to 20% in 2007.
In year of 2007, each region and economic sector are shifting forward industrialisation, strengthening linkage, attaching manufacture to the market, increasing socio-economic efficiency, as well as adapting to strick requirements of deep, wide and complehensive intergration process. In Industrial sector, structure of production and product quality has actively progress; the proportion of processing and chanical engineering and the domesticalization of industrial products have been raised; the competitive products increase in the market; labour productivity go up quite high. The struture of argriculture and rural economy keep shifting toward increase of efficiency, espcially aquaculture. Rural economy has grown in the orientation of diversification focusing on value added products and high value exports.
In the service sector, it has been focusing continuously to develop some potential services to mobilse advance and competitiveness such as: tourism, sea transpotation, finance and banking, securities. Strengthen services to ensure commondity can be circulated in domestic market and foreing trade market. The total volume of circulated goods and service revenue increased about 22,5%. Keeping to develop tourism of Vietnam as key economic industry basing on efficient exploitation of natural and ecological conditions, cultural and historical traditional. Estimatedly, in 2007 the number of foreign tourists come to Viet Nam reach to 4.3-4.5 million, increased by 20,4-26% in compared with 2006.
The economic struture by regions has been transformated toward taking advance of each region which all contribute to development of Vietnam, especially key motivated regions and regions with border crossing. The economic entity structure has been also moving toward mobilse their potentiality, in which the ratio of state economic sector, co-operatives, households and individuals sector decreased gradually, the ratio of private sector and foreign investment sector increased. In the struture of total volume of retail goods and service revenue, the ratio of state economic sector decreased continuously from 12,4% in 2006 to 10,7% in 2007; the ration of non-state economic sector increased relatively from 83,6% to 85,1% and the foreign investment sector was 4% and 4,2%.
Howerver, the state economic sector due to hold the major industries of the economy, still attest the desive role, in which SOEs is key player.
2) Invetsment: In 2007, the ratio of total investment of economy/GDP started declining although investment structure has been transformed possitively.
Estimated total investment of economy can be reach to VND 463,3 thousand billion (at current price), equivalent to 40,5% of GDP, increased 16,1% in comparison with 2006’s achievement; in which investment by state budget increased 17,5%, by state credit investment decreased 2,6%; by SOEs investment increased 3,9%; by private sector and people investment increased 19,5%; by foreign investment increased 17,1%.
All economic investments have been spent on important targets on socio-economic development, economic transportation, enhancing production efficiency, mobilising each economic region and industry. Particularly, the state investment focused on building socio-economic infrastructure, especially large-scale infrastructure for argriculture and rural, poverty reduction, enhancing human resource, development of scince and technology.....Many projects have been operated leading to increase capacity of production and bisiness, create many competitive products....
For state investment particularly, in fact, it has been used properly since 2005. In 2007, the situation of unfocused investment using state budget has been reduced with initial step of reduction of loss and waste in investment and construction thank to implementation of Resolution No. 36/2004/QH11 dated 3/12/2004 and the Decision of the Prime Minister No 210/QD-TTg on criteria and norm for allocation of development investment in the period of 2007-2010.
3) Consumption: Consumption is always the most important component of total demands of our economy. In 2007, the consumption is about 37,1% of total demand while assets accumulation increased to 21,3% and exports increased to 41,6%. It is remarkable for 2007, social consumption growth rapidly increased to 8%. Otherwise, Government expenditure continuously goes up and to higher than GDP growth rate. Therefore, the high risk of unbalance between demand and supply accompany with high inflation can be back since 2007.
4) Exports: In 2007, exports turnover estimated around USD 48 billion, increased 20,5% than 2006, in which FDI enterprise sector contributed about USD 19,5 billion (not included crude oil), increased 32,2% than 2006. Due to high growth and to be big share in GDP of export turnover, exports play an important role for the economic growth.
However, transmission process of export structure is toward the possitive way. In years of 2005-2006, the share of industrial exports, both of heavy industry and mineral industry (majority natural resources), in total export value tended to decline, while the share of agriculture, forestry and fishery exports were going up, but it is inverse for 2007: the share of heavy industry export increase and the share of agriculture, forestry and fishery exports go down. Particularly, in the industrial exports, the ratio of heavy industry and mineral industry tend to reduce while the ratio of light industry and small-scale industry exports go up strongly.
Besides, growth of some major exports basing on competitiveness and export orientation, is rather high such as: garment and textile increase 28,6%; wooden increase 29,3%; electronics 40,5%; bags and suitcase 29,2%, electric wire and cable 41,8%; fruit and vegetables 23,6%. Additionally, widening of high purchasing power market is developed. Growth rate of exports turnover to European market is 30% (29% of EUparticularly), to American market is 24% and ASEAN neighbor market is 26%.
In 2007, estimated turnover imports reach to about USD 57 billion, increase 27% than 2006. It is the highest growth rate in around 3 recent years (2006 increased 15%, 2005 increased 22,1%). The import deficit of 2007 is about USD 9 billion reach to the highest record up to now. Growth import higher than export is because of getting high FDI flow in Vietnam.
5) Budget: In year 2007, the state finance in general, state budget in particularly continue to reinforce and improve, contribute to stability of macro economy and exploitation better finance-human resources. Followed the progress of state budget collecting until now, the total state budget collecting estimated this year reach to VND 287,6 thousand billion, increase 11,5% higher than 2006 and over 2% estimation. The ratio of state budget/GDP is 25,2%. If added the balance transferred of 2006, the total state budget balance is VND 311,5 thousand billion; ratio of state budget/GDP is 27,3%. The state budget collecting structure shifted toward increasing the share of collecting sources which is from domestic production and stable, decreasing the share of collecting sources which come from external production.
According to increase of budget collecting, state expenditure is significantly improved. Total state expenditure of the whole country in 2007 is foreseen VND 366,7 thousand billion, over 2,6% of estimation figure and increase 14,5% higher than 2006. In the total budget expenditure, expenditure for development investment is VND 101,5 thousand billion, up to 17,9% than 2006. Expenditure for debts and assistant implemented as planned result in ensuring to settle all debt responsibility in time. The ratio of expenditure in GDP is declined in comparison with 2006 (31,2% in 2007 and 33% in 2007). Budget deficit of 2007 (incl. the balance from 2006) is VND 56,5 thousand billion, account for 4,95%GDP, lower than 5% set by the National Assembly.
6) Inflation: In the first months of 2007, the inflation (as CPI) has been increase again at the higher level than the same previous last year. Up to September, the CPI increased 7,3% compared with Dec 2006, the price rose at all groups of goods from 3,5% to 10%. Additionally, the increase of price focused in two main good groups: “restaurant and food service” and “materials for housing and construction”. The reasons for these 4 commodities have been considered as economic theories explanation for inflation, such as push and pull cost, high growth of moneytery and credit and inadequate market management and price management.
At present, the Government has implemented serveral strong sollutions to increase supply, control demand, operate economizedly, advoid waste and reclaim amount of money and credit on the market....These sollutions will bring the results in some months late 2007, so that the inlation of 2007 is forecasted as 8-8,2%, in the range of permitted limitation and acceptable for our country which is in transformation and rapid growth process.
7) Social Sector and Environment:
In 2007, 1,68 million labors have been employed, 820 thousand labors have been exported. Labor export markets focused to Malaysia, Tawain, Korea, Japan and Quatar. The total number laborers working in the economy in 2007 is approximatedly 44,6 million, in which state sectors account for 9,1%, non-state sectors 89,2%, foreign investment sectors 1,7%.
According to new poverty line, poverty rate of the country reduced from 22,2% in 2005 to 18% in 2006 and estimatedly to 14% in 2007, annual average reduction of 4%, equivelant to 330-440 thousand of households escaped from poverty, it is rapidly increase. Simultaneoustly, the life of the poor and other people stratum has been gradually improved. Several poverty reduction sollutions have been carried out more effieciently.
In year of 2007, the health sector has control quite well diseases, especiallly newly raised. It is forecasted to reduce the rate of under – 5 malnurished children to 22,3%; 98% commune have medical stations; 70% medical stations have doctors. The percentage of HIV/AIDS infected cases has been controlled under 0,27% of population. The number of maralia cases reduced to 85.5/100.000 people; the rate of dead/infected down to 0,17%; nearly 8 million people have been treated residently with above 50 million treatment days, not included 6 million times of patients treated at home.
Training and Education has important progress, remarkably with arrangement for final examination at high school of 2006-2007 of above 1 million pupils participated. This is the first exam running the motivation of “2 NO” (wrong attitude in the exams and run for achievement in education), the priciples in the testing rooms were much strengthened than previous years. Therefore, the rate of passing this examination in many provinces was lower than some provious years, especial cultural superlementary level. In general, the rate of passing the high school in 2006-2007 of the whole country is 66,7% campared with 93,7% of 2005-2006; the rate of passing superlementary level is seriously reduced to 26% from 82,5%. These result accuratedly reflected puplis’ quality.
Science and technology has been researched as planned; many achievement have been applied gradually in manufacturing and life, especially key industrties, high technology production and exports. The Project on devlopment of technological market has been implemented, focusing on improving legal environment for technology market. Research on social science and humanities concentrated on providing science foundation for successfully acting the Xth Party Congress’ Document and the policy of strengthening integration international economy after Viet nam jointed WTO.
National resources and environment management, ensuring sustainable development has been attached special important. In 2007, land use master plans of all 64 provinces and cities under the Central have been designed and apporved; 61,5% administrative units under district level approved land use master plans; 31/64 provinces/cities compeleted issuesing certification for right of argricultural land use. 54,2% forestry land area and 64,8% housing land area have been certificated right of land use.
Investigation task on water resources has been carried out to find out early about reserves, quality of surface water, under water, using water and waste drainage to the water source. “The master plan of basic survey on mineral resources until 2015, with orientation to 2020.”
8) Review the SEDP 2007s achievments:
In 2007, the economy has been grown rather high and reached to significal important achievements; the economic strutrure is forwarding positively changing. The growth still depend on growth’s elements from last year such as: investment, labor, exports and consumption; but role of growth’s elements based on widen (capital, labor) has been slow downed while that based on deep (capital efficiency, labor productivity) rapidly increased. Performance of finace, banking and price thought fluctuated, still possitively developed under the control. Social and environmental activities have been implemented continuosly.
However, it keeps appear difficulties and challenges, some became severe in 2007. Investment seems slow down. Consumption is fast, result in unbalance of supply and demand of commodity market and high inflation. Total import value increased promtly, affected to international settlement balance and the stability of long-term marco economy. Activities of society, environment, administrative reform mainly depend on the state finance leading to less efficiency and unstable.
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