There is an urgent need to clarify the decisions made recently by the Government on exemption and reduction of taxes, fees, and land use levies to help production and business enterprises to recover.
JOURNALIST: - Sir, the economic report for the first two months of the year shows that the negative trend seen in the last months of 2022 still prevails. How will this situation affect the economy this year?
Mr. Tran Quoc Phuong: - These difficulties which perhaps we all realize, are due to the effects of inflation, economic and political crisis, complicated political situations, and natural disasters in the world, which have created a significant impact on the economy of our country in general and has also affected the business community, especially in accessing capital for enterprises.
Industries such as real estate businesses are down by 62.4 percent in the number of enterprises entering the market and 68.9 percent in the amount of registered capital. Finance, banking, and insurance are down by 21.1 percent in the number of enterprises entering the market and 69.2 percent in the amount of registered capital. These are the fields that often have enterprises with a large amount of registered capital, which supports other industries and fields in the economy. Credit growth as of 24 February only increased by 0.77 percent compared to the end of last year, which shows the difficulty in capital flow in enterprises and the economy.
Concerning production and business activities, especially industrial production, import, and export, these were greatly affected. Most of the key industries such as textiles and garments, wood, electronics, and food, all decreased but some increased only slightly. The electrical equipment manufacturing industry decreased by over 50 percent. The risks in the corporate bonds market have had a direct and clear impact on production and business activities, financial markets, currency, labor, and domestic jobs.
Difficulties and challenges are increasing every day. This situation may affect the economic growth target in the first quarter, creating pressure for various quarters as well as on economic growth. There will be an effect felt on macroeconomic stability, and there is now a need to stabilize markets and control rising inflation.
- Sir, according to you what will be the policy focus for coming months?
- Domestic production and businesses still face many difficulties, and competitive pressure is increasing, so it is necessary to have timely support policies which may increase inflationary pressure as domestic demand continues to increase rapidly. Therefore, when determining the focus of policies to control inflation, fiscal policy must play an important and decisive role. The Ministry of Finance should urgently supplement solutions to support accountability to competent authorities for exemption, reduction, extension, postponement, or extension of taxes, fees, and land use levies for enterprises and individuals. We must accelerate VAT refund and create maximum convenience for enterprises in import and export procedures.
Mr. Tran Quoc Phuong, Deputy Minister of Planning and Investment
- Sir, the real estate market and businesses continue to face many difficulties in terms of liquidity and cash flow, especially in the context of the enormous pressure of maturity of corporate bonds in 2023. What is your view on this matter?
- This is a problem affecting many industries and fields and needs timely solutions to prevent capital flow blockage and from affecting other economic sectors and fields. Besides this it will also affect investor confidence and psychology, and we must avoid risks to the banking system and financial markets because these markets are closely linked. The situation requires a quick and timely policy response, but it is also necessary to remain cautious about possible developments that may negatively impact the economy.
- Sir, what do you think about the economic situation in 2023?
- In general, Vietnam's economic outlook in 2023 is forecast to be lower than in 2022. The economy in the coming period will continue to be affected by complicated and unpredictable factors such as slow, difficult recovery and decline in demand by major trading partners; the Russia-Ukraine hostilities will continue; more difficult financial conditions will occur due to increasing interest rates by central banks around the world and additional monetary tightening; the US and Western countries will step up on more sanctions and impose oil price ceilings and gas price ceilings on Russia, and Russia cessation of oil and gas sales to other countries will stay which can then push up the price of oil and gas as well as raw materials in 2023. There are also expected to be more frequent extreme weather calamities that could exacerbate a global economic downturn.
However, we still hope to improve the economy in the coming months with some bright spots in the world economy in 2023, such as positive results from global inflation pressure, exchange rate, interest rate level slowing down, and China eases on its zero-Covid policy. These bright spots will help ease pressure on the macro management of our domestic economy. Along with this, the recovery of the domestic economy will continue to benefit from the implementation of socioeconomic recovery and various development programs taking place across the country.
- Thank you very much.