(HQ Online) – Positive signs in production, trade and investment in the first two months of 2024 indicate that Vietnam is entering a promising development cycle, according to Assoc. Prof. Dr. Nguyen Thuong Lang (pictured), senior lecturer at the School of Trade and International Economics, National Economics University (NEU).

Assoc. Prof. Dr. Nguyen Thuong Lang

How do you assess the positive signs in the economy in the first two months of the year?

In 2023, despite considerable economic difficulties, Vietnam’s economy still recorded positive growth of more than 5% compared with 2022. This demonstrates the tremendous resilience of Vietnam’s economy. Building on that foundation in 2023, not only production indicators but also Vietnam’s trade and investment indicators will see considerable progress in 2024. This is a sign that we are preparing to enter a promising new development cycle. Vietnam could well achieve growth of 6–6.5%, or even higher.

What are the drivers behind your growth outlook for this year?

Vietnam has introduced many important reforms. For example, the passage of the amended Land Law is expected to help improve the real estate market; wage policies and salary increases for public employees also provide a strong stimulus to demand. In addition, although foreign partners impose many green standards and net emissions standards, Vietnamese businesses have prepared and are capable of adapting. Therefore, businesses will certainly be able to secure more orders and connect with more partners now and in the coming period, creating momentum for export and import growth.

Meanwhile, foreign direct investment (FDI) in Vietnam was already high in 2023, reaching an estimated USD 23.18 billion, up 3.5% from 2022. In the first two months of 2024, it increased by 38.6% compared with the same period in 2023. Thus, FDI in Vietnam is expected to reach a higher figure in 2024 than in the previous year, generating spillover effects for domestic businesses. This reflects expectations that Vietnam’s investment environment offers considerable potential to deliver high returns for foreign investors.

Thus, after just the first two months of the year, the drivers of Vietnam’s economy in 2024 are already very clear. I believe all these drivers will combine to form an engine that helps the economy grow more steadily in the years ahead.

Among the economic indicators for the past two months, Vietnam recorded a trade surplus of more than USD 4.7 billion. Although this is an encouraging sign, what aspects of this figure do you think deserve attention?

A large trade surplus demonstrates the ability of businesses in Vietnam to compete in international markets and to make good use of the opportunities and incentives those markets offer.

However, it is important to consider which business sector generates this trade surplus, as most of the value currently comes from foreign-invested businesses. Over the past two months, the domestic economic sector recorded an estimated USD 16.14 billion, while the foreign-invested sector, including crude oil, recorded USD 43.2 billion, or 2.6 times the domestic sector’s figure.

Therefore, I believe the issue here is to maintain a trade surplus while ensuring an appropriate distribution of benefits among economic sectors. In addition, Vietnam consistently promotes and diversifies integration, but integration must be substantive and sustainable, and we must find ways to translate external factors into internal strength. We must work toward ensuring that Vietnamese businesses take the lead and become the trump card in this international “game.” Otherwise, Vietnam may export a great deal to the world, but the benefits actually accruing to the domestic economy will remain very modest.

In addition, a large gap between exports and imports also warrants attention, as it indicates that businesses are scaling back production and therefore reducing imports of raw and auxiliary materials. However, this is not necessarily a cause for concern. Imports at low prices can sometimes be an advantage, helping businesses improve their price competitiveness; alternatively, businesses may have secured domestic sources of raw and auxiliary materials. What should concern us is when large volumes of imports cause domestic production to stagnate, in which case management reforms and business restructuring are needed.

I believe the issues concerning export and import values described above also create pressure, and even motivation, for domestic businesses and regulatory agencies to adjust the economic structure and business models to keep pace with the market. In addition, domestic businesses will need to learn more from others’ experience, strengthen information sharing on integration and build strong brands… to increase trade value in the coming period.

What solutions would create opportunities for private businesses to develop further?

Harnessing the strengths of all economic sectors is essential. The economy is an organically unified whole, comprising the private sector, the collective sector, the state sector and the foreign-invested sector. The state sector must play the leading role, while the foreign-invested sector is an important source of supplementary resources. In the long term, however, I believe the private sector must be a direct, enduring and fundamental driver of Vietnam’s economy if it is to achieve its development goals.

Therefore, efforts to promote private-sector development must be based on decisive improvements to the business environment. These measures must aim to reduce businesses’ operating costs, simplify administrative procedures and facilitate business development through access to land, human resources, infrastructure…

Thank you!

Interview by Huong Diu

Link: https://haiquanonline.com.vn/tin-hieu-tich-cuc-cho-chu-ky-phat-trien-day-hua-hen-183801-183801.html

This is an automated translation. If you notice any errors, please contact the Department of Communications, National Economics University at phongtruyenthong@neu.edu.vn.