Vietnam a silver lining in gloomy world economic picture: legislator

Vietnam has emerged as a bright spot in the "grey" world economic picture this year, said Vu Hong Thanh, Chairman of the National Assembly's Economic Committee.

The country’s macro-economic situation remained stable, with inflation curbed at only 3.1%, he told a Sunday press meeting prior to the Vietnam Socio-economic Forum 2023, to be held on Tuesday.

“Major balances in the economy such as public debt, foreign debt, and government debt were under control and below the ceiling levels set by the National Assembly (the legislature),” Thanh noted.

The national credit rating also improved last year when Vietnam was the only country in ASEAN to have its credit rating upgraded by Moody's, he added.

The legislator attributed these positive outcomes to the authorities’ adherence to the policies and guidelines of the Party as well as the resolutions of the National Assembly and the government to stabilize the macro economy, control inflation, and ensure major balances.

Thanh also described U.S. President Joe Biden’s visit to Vietnam and the upgrade of the two countries' relationship to a comprehensive strategic partnership as a very important event for the Vietnamese economy.

However, he acknowledged that the country’s economy picture still had "grey" spots with some growth drivers such as investment, exports, consumption and services slowing down and businesses facing numerous difficulties in accessing loans despite interest rate cuts.

Deputy head of the Central Party Committee’s Economic Commission Nguyen Duc Hien forecast that this year only 10 out of 15 socio-economic targets will be met. Some objectives that may be not fulfilled are those on the proportion of processing and manufacturing industries in the GDP and labor productivity.

Regarding value added tax (VAT) policy, at a June meeting, the National Assembly decided to cut VAT by 2 percentage points on goods and services subject to 10% tax until the end of 2023, except for the real estate, banking, securities, and insurance sectors.

Thanh said businesses and people want this policy to be extended, but reviews and evaluations are needed to clarify the pros and cons.

"The government must report the results of the VAT reduction at its year-end meeting to see if the policy needs to be extended or not. In my opinion, an extension would stimulate domestic consumption and growth," he noted.

In 2022, a 2 percentage point reduction in VAT helped businesses and people save about VND44.5 trillion ($1.83 billion), contributing to reducing the prices of goods and services, promoting production and business, and creating more jobs.

Total retail sales of goods and consumer service revenue last year increased by 19.8% year-on-year. Domestic VAT collection did not decrease but went up 10% over the same period the previous year.

The national economy expanded by 3.72% year-on-year in the first half of the year, according to the General Statistics Office (GSO). The country’s consumer price index (CPI) in August was up 2.02% over December 2022 and 2.96% over August 2022. The 2.96% record is still below the target of 4% for this year.

Vietnam's index of industrial production (IIP) in August increased 2.9% month-on-month and 2.6% year-on-year, but the index fell 0.4% year-on-year in the first eight months of the year.

Registered foreign direct investment capital in Vietnam rose 8.2% year-on-year to nearly $18.15 billion in the year to August 20. Out of the $18.15 billion, $8.87 billion was registered capital for 1,924 new projects, up 39.7% and 69.5% year-on-year, respectively.