Economist Pham Chi Lan believes that the government must maintain transparency while stepping up its efforts to cut public investment funding, to curb inflation, stabilize macro-economy and ensure social welfare.
|Economist Pham Chi Lan|
Economist Lan said that the government should announce the number of construction projects suspended and provide detailed information on how much of the public investment amount has been cut in each province, as the more information the government provides, the more credible it will seem.
Lan said that this year, Vietnam targets reducing credit growth to below 20 percent through its Resolution No.11. So far the government seems to be moving in the right direction as the credit growth in the first half of the year has already dropped by 10 percent.
Nonetheless, inflation still remains high by 23 percent than it was during the same period last year. Hence, the government must tighten monetary policies as well as cut public investments in order to curb inflation.
Although the Ministry of Planning and Investment has said that provinces throughout the country had cut VND82 trillion (US$3,942 million) from their public investment funding, the figures are questionable as people are unaware as to the details of projects that were shelved. Moreover, it is also unclear how much of the state budget will be allocated to various localities.
Lan expressed her worry that many localities nationwide have hesitated in reducing or suspending projects that use state budget funds.
Alongside cutting on public investment funding, Vietnam also needs to boost its savings. No nation in the world spends as much as Vietnam in ratio to its earnings, Lan said. The country has a 28 percent GDP growth while it’s neighboring countries 15-17 percent. For the last two years, citizens have paid very high taxes, but the country spends more earnings than it saves.
Lan affirms that the government’s resolution is very clear as to what needs to be cut; however, related ministries and agencies should provide necessary information to each locality. On the other hand, provincial authorities must also report the difficulties faced by related agencies while implementing the procedures.
Lan is also concerned with the fact that funding for the medical and education sectors was relatively low, while the government gave higher priority to giant projects on infrastructure development and businesses. Lan requested the government not to spend on unnecessary projects, but lend more monetary support to medium and smaller enterprises.
In addition, the government should control prices of necessary commodities such as oil and electricity. She disagreed with ministries and agencies to increase electricity prices every three months, as electricity prices have a direct influence on production cost.
Last but not least, the government should re-structure its economy while adopting measures to curb inflation.