Stimulus package will support businesses and long-term national development

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Minister of Planning and Investment Nguyen Chi Dung talks about the main objectives and priorities of Vietnam’s socio-economic recovery program for 2022.

The VND350 trillion ($15.42 billion) program, the largest in history, aims to restart and accelerate the country’s economy after a long period of social and mobility restrictions, due to the COVID-19 pandemic.

Minister of Planning and Investment Nguyen Chi Dung.

What are the main objectives of the recently approved socio-economic recovery program, which was designed by the Ministry of Planning and Investment?

Vietnam’s socio-economic recovery program was designed based on the country’s ability to procure vaccines and medical supplies, with an emphasis on supporting businesses and workers, especially those who have been seriously affected by the pandemic.

We expect to see steady GDP growth of 6.5-7% per year over the 2021-25 period, with a sustainable level of income, a stable macro-economy and adequate support provided to low-income households and vulnerable groups. .

The program aims to improve business resilience, prioritizing the development of key infrastructure projects under the public-private partnership model. In the meantime, the government should continue to roll out reforms to streamline and improve administration, the investment environment, risk management and enhance macroeconomic stability.

The design of government support for the business sector has been the subject of much thought, as we need to balance the elements of fiscal policies, socio-economic development as well as short and long-term impact on the economy.

At the heart of our socio-economic recovery is the competence of the business sector and its ability to change and adapt to the new environment.

What lessons have been learned from the international experience and successful model in program design?

The pandemic has forced governments to issue huge stimulus packages, sometimes at the expense of fiscal discipline and rising levels of public debt, to get the economy back on track. Most governments prioritize improving medical facilities, social programs, infrastructure investment and immediate support for hard-hit sectors of the economy. Notably, common practices include credit extensions and more relaxed financial regulations.

The last time we deployed a major recovery plan was in 2008, during the global financial crisis. The $6.9 billion package helped Vietnam’s economy not only recover quickly but also record positive growth, a rare occurrence at the time.

Valuable lessons on what not to do and the negative impacts on the economy of the 2008 stimulus package have been studied in depth.

This time around, our design aims to stimulate the economy, productivity and provide social support, while maintaining a balance between fiscal policies, interest rates and the injection of liquidity, in order to minimize the risk runaway real estate speculation and high inflation.

Support for the business sector must go hand in hand with helping to find new markets and new consumers. Measures must also be put in place to prevent abuse and exploitation. For example, businesses eligible for financial support may choose to deposit cash for short-term interest payments rather than investing in themselves. This was one of the many lessons we learned in 2008. The full effect was felt in 2011 when inflation in Vietnam hit 18.6% and we still have to undo a lot of damage since that time. , even today.

What are the main drivers of Vietnam’s socio-economic recovery for 2022?

The first and highest priority in 2022 is to vaccinate the population, especially our workforce, to ensure that we have the workforce needed to fuel the country’s socio-economic recovery. The government must accelerate and improve the efficiency of public investments by focusing on key economic sectors, transport infrastructure and inter-regional connectivity projects.

The pandemic has forced us to engage and accelerate the process of economic restructuring to better integrate into the global value chain, make better use of our resources and produce better quality products to be competitive. It has been a wake-up call for us to come up with a comprehensive strategy to force collaboration between economic regions to replace the old “competition against each other” mentality.

Another key element is the many free trade agreements we have signed. It is the responsibility of the government to support and support companies in order to make the most of these agreements, to stimulate exports and to access foreign markets. At the same time, improving inter-regional connectivity, securing supply and stimulating demand are seen as key factors in boosting domestic market demand.

What do you think is the determining factor of the socio-economic recovery program?

I believe that the most important factor that will decide the outcome of the program is the degree of support it garners from the business sector and the population. So far, we have reason to believe that the majority of businesses and the population support the government’s efforts to stem the spread of the virus, while maintaining somewhat limited socio-economic activities.

We have also seen considerable efforts by Vietnamese companies to seek new markets, adopt new and better technologies, especially digital assets, and overcome difficulties. This is a welcome sign, as the country relies heavily on the corporate sector to spearhead an economic rebound once social and mobility restrictions can be eased or even removed.

Businesses can count on the government to continue implementing many support tools, including extending credit, reducing or waiving fees and property tax, and lowering interest rates for commercial banks.

On the other hand, we encourage companies to launch their own reforms, aimed at improving their competitiveness, the quality of products and services, human resources and management capacity.

Source: Vietnam News

New support program to help economic recovery after the pandemic

New support program to help economic recovery after the pandemic

When the Covid-19 pandemic broke out, Vietnam was in a vaccine-free state, so it had to implement social distancing to protect people’s health and lives.

Government proposes $15 billion economic stimulus package

Government proposes $15 billion economic stimulus package

The government has submitted for the approval of the National Assembly an economic recovery and development program worth nearly 350 trillion VND (15 billion dollars) for the period 2022-2023.

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