VIETNAMESE ECONOMIC ISSUES HCM City, June 14th 2013 Nguyễn Hồng Thắng, UEH

Outline Vietnamese Economic Issues GDP & Inflation Investment Foreign Trade State Budget Economic forecasting in short-term GDP Inflation Public Debt State-owned enterprise Economic Restructing

1. Vietnamese Economic Issues

GDP Growth & Inflation (%) Source: Vietnam GSO

Inflation from Apr 2010 to Apr 2013 Source: Bích Diệp, Dân trí, 29/4/2013

GDP/capita from 2002 – 2012 (USD) 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Source: Vietnam GSO

GDP/capita in some countries, 2011 USD Source: http://data.worldbank.org/indicator/NY.GDP.PCAP.CD

Foreign Investment (registered) from 2000 to 2012 (USD Mill) 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Source: Vietnam GSO

Foreign Investment (registered and realized) from 2000 to 2012 (USD Mill) 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Source: Vietnam GSO

Investment by countries (USD Mill), Dec 31th 2011 Japan Others Korea United-States Taiwan Malaysia Singapore Hongkong English Virgin Source: Vietnam GSO

Import and Export to GDP (%) Export/GDP Import/GDP 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Export goods by USD, 2010 Food and animal Other Manufacture Drink, tobacco Raw materials Fuel, oil Machine, spare part Manufacture Chemicals

Public Expenditure structure (%), 2010 Public Management Economic service Public Investment Transfer Payment Health service Education Social service

Public Investment/Total Public Exp.

From Foreign Investment Enterprise Public Revenue structure (%), 2005 VAT on Import Duty & Excise Tax From SOE From Foreign Investment Enterprise From Non SOE Oil Personal Income Tax Land Tax Registeration Fee

From Foreign Investment Enterprise Public Revenue structure (%), 2010 VAT on Import From SOE Duty & Excise Tax From Foreign Investment Enterprise Oil From Non SOE Land Tax Personal Income Tax Registeration Fee

2. Economic Forecasting in Short-term (2013-2015)

Annual growth rate in GDP 1. The National Assembly: 5.5% 2. Three scenarios of the Vietnamese economists: Poor: 5% Normal: 6% Positive: 7%

Inflation 1. The National Assembly: 8.0% 2. Other: ANZ Bank: 6% - 8% HSBC: 6.3%

State Budget Complying the aggregate fiscal disciplines and the restrained fiscal policy: The state budget deficit: not over 4.8% GDP The public expenditure: lower than 28% GDP Tax revenue: 23% GDP

Public Debt Public Debt (domestic and foreign) includes: Central Gov Debt Local Gov Debt Debt guaranteed by Central Gov Not over 65% GDP in long-term

State-owned Enterprise Going on the privatization of state-owned enterprise Vietnamese economists recommend the Government not to develop the economy base on SOE.  State-owned Groups are not the pillar of the economy.

Tax policy Cut the Business Tax Rate to 20% Environment protection tax is an indirect tax which is applicable to the production and importation of certain goods deemed detrimental to the environment, the most significant of which are petroleum and coal.

Changing the Economic Models 3. Economic Restructing Changing the Economic Models

Overall Target Association with the conversion of the growth model in line with a roadmap with proper steps so as to form an in-depth model of growth by 2020, guarantee growth quality, and improve the economy’s efficiency and competitiveness.

Monetary and Fiscal Policy Applying monetary policies and their tools in a careful, flexible; closely attaching these policies to fiscal ones in order to curb inflation and maintain macroeconomic stability and a proper growth rate; Tightening fiscal policies for thrift practice; uniformly taking measures to increase transparency, publicity and accountability in State budget collection and spending. Maintaining State budget balance, public debts and national foreign loans;

Trade Policy Promoting export, tightly controlling import of unencouraged goods and products which can be made at home; Boosting the development of supporting industries and production of domestic consumer goods; Further mobilizing more resources for development investments; Tightening price and market control. Maintaining balance of trade, balance of payments.

Restructuring Investment Mobilizing resources for development investment so that total social investment accounts for 30%-35% of GDP; Maintaining an appropriate percentage of State investment, about 35%-40% of total social investment; Increasing the annual savings from the State budget for investment; spending about 20%-25% of total budget spending on development investments; Renewing the distribution and use of capital, minimizing scattered investments and prodigality while improving efficiency of State investments.

Restructuring Investment (cont.) Maximizing the scope and opportunities for private investors, especially Vietnamese ones; Encouraging and creating favorable conditions for private investments into infrastructure, potential sectors and products of advantages, and spearhead economic zones.

Applying New Technology Restructuring industrial production in accordance with technical-economic industries, regions and new values so as to increase scientific-technological content and percentage of domestically-made component in each and every products.

Shifting from Assembling to Manufacturing Shifting from assembling to producing in sectors and products of competitive advantages, such as food processing, aquaculture, beverage, garment, footwear and leather products, associating them to the global network of production and the chain of values; developing some prioritized sectors and supporting industries like petro-chemistry, electronics and information technology, metallurgy, manufacturing engineering, green industries and recycled energy, automobile spare parts, and agricultural machinery in order to improve and raise the development level of the economy.

Promoting Services Diversifying services and raising the development level of service sectors: commercial services, construction services, hotels, restaurants, tourism, telecommunication, finance-banking, logistics, education and training, health care, and agricultural production services; Forming some tourism service centers with high-quality products imbued with national cultural identities, which can compete in the region and the world;

Thank you!

Sources Master plan on economic restructuring in association with conversion of the growth model towards improving quality, efficiency and competitiveness during the 2013-2020 period, Vietnamese Government. GSO.