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Five breakthroughs to make V-shaped economic recovery

Five breakthroughs to recover the economy

A great message has been emphasized by the Prime Minister, namely when the social distancing measures are loosened and the pandemic has passed, the economy is ready to burst out after beingstretchedlike a spring for a long time. At the Prime Minister's Conference with businesses, the Prime Minister requested to concentrate strongly to restart the economy with the goal of striving for over-five-percent GDP growth, and at the same time keeping inflation under 4%. He stressed Vietnam must make a V-shaped recovery, and must not make a U-shaped or W-shapedeconomic recovery.

To do that, five major breakthroughs are key, including: attracting investment of domestic economic sectors, firstly by private investment; attracting FDI; boosting exports; promoting public investment; and encouraging domestic consumption with a population of nearly 100 million.

However, in fact, private investment –the first breakthrough in the order to restart the economy – is an area facing many difficulties.

After two months of Covid-19, 22,700 enterprises had to temporarily stop their operations, increasing by 33.6% compared to the same period last year. Reportedly, the total registered capital added to the economy in the first four months of this year from the private sector was more than VND1.1 trillion, down by 20%compared to the same period last year.

Finding a solution to mobilize investment capital from this area is the central content and also a big challenge in the context of many businesses trying to “survive”.

In this regard, Mr. Nguyen Van Than, Chairman of the Vietnam Association of SMEs, suggested that the Government propose effective solutions to attract short-term and long-term idle resources among people and businesses.

“Firstly, the Government should approve the form of issuing more bonds related to public investment projects to mobilize foreign currencies and precious assets such as gold, silver and gems. Secondly, it is necessary to promulgate a supervised pilot mechanism for FinTech, including peer-to-peer lending,”Than said.

Along with attracting private investment, promoting public investment is a solution for the economy in 2020, as well as an opportunity for private enterprises to participate in order to increase revenue. According to Vu Tien Loc, Chairman of VCCI, only public investment for infrastructure projects was included in the plan with the amount of moneybeing in the "pocket" of ministries and localities was over US$30 billion.

“If the procedures are removed, the quick disbursement this year can create an important push for the economy. Promoting the role of institutions, ensuring the mobilization of total social capital in a way that promotes public investment, so that this capital can resonate with private investment and FDI. Thus, weare likely to achieve GDP growth of over 5% this year,”said Vu Tien Loc.

Export will create resilience for the economy

Along with the success in controlling the Covid-19 pandemic, Vietnam's position in attracting investment is increasing. This will contribute to boosting FDI inflows into Vietnam in the future.

Mr. Hong Sun, Vice President of South Korea Business Association in Vietnam (Kocham) said: “The FDI business community appreciates that Vietnam always reforms and improves its investment environment. In particular, Vietnam has made very good measures to prevent and control Covid-19. Both of these things contribute to strengthening the confidence of the South Korean business community and foreign investors in Vietnam, a safe and attractive investment destination,”Mr. Hong Sun said.

Mr. Hong Sun also said thatSouth Korean businesses will work with Vietnamese businesses to create a strong link to build new supply chains in the context of Covid-19.

“Vietnam is a country with many valuable resources, developed food and manufacturing industries. With potential resources, it’s time for Vietnam to reach out to the worldwide market. And South Korea will certainly accompany Vietnam to recover the economy and develop in the future,” said Vice President Kocham.

Regarding the medium and long-term solution for the domestic market, many comments said that Vietnamese businesses are still facing difficulties in the consumption market. And we need to promote the campaign “Vietnamese people prioritize using Vietnamese goods” to support domestic enterprises.

Regarding this issue, the Minister of Industry and Trade said thatit is necessary to promote the development of the domestic market, considering this an important foundation to facilitate and support economic development in 2020.

Accordingly, it is necessary to open the market through e-commerce and trade infrastructure.

"In the future, we will continue improving and upgrading trade infrastructure, creating greater demand stimulus and greater motivation for growth to serve domestic market development; there is a stimulus package to focus on a number of industries with needs and potential for development,” Minister Tran Tuan Anhsaid.

In this regard, Mr. Nguyen Duc Chung, Chairman of Hanoi People's Committee, said that from the end of May and the beginning of June 2020, Hanoi will coordinate with the business community and the provinces and cities to connect supply and demand, organize a promotion month to stimulate domestic consumption, and stimulate domestic tourism.

Regarding solutions to promote the domestic market for businesses, the representative of the Wood and Forest Products Association proposed that the Government should have a policy to promote links to better meet the demand for wooden furniture and interior decoration in the country.

Regarding the development of export markets, Minister Tran Tuan Anh said that the foreign market was also given special attention in the second half of 2020. This is a highlight creating a rebound for Vietnam's economy and commerce.

"The markets of the United States, Europe, China, Northeast Asia and ASEAN will be key markets, needing the overall framework for the development in the second half of 2020. The Ministry of Industry and Trade is building specific projects developed for each region, market and industry as soon as Covid-19 was controlled worldwide,”said Minister Tran Tuan Anh.

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