Mr Vo Tri Thanh, Vice President of the Central Institute for Economic Management (CIEM), tells about the economic picture this year and into the immediate future.

What are your thoughts on Vietnam’s economy in 2010?

2010 has been a year of challenges for policymakers, the market and enterprises. For policymakers, the global economy has created difficulties and there are many risks facing Vietnam’s economy, such as public debt, easing monetary policy in the US and the amount of capital flowing into East Asian countries, which could put macro-economies out of balance and affect other countries worldwide, leading to a monetary war. In such a context, Vietnam also faced challenges in bringing its economy out of recession.

It’s even more difficult for Vietnam because the economy’s stimulus packages have come to an end and some risks are higher than others, such as inflation, the trade deficit, the balance of payments, public debt, and market stability. But we must work to see the economy recovers and is stable. Three years after joining the WTO, Vietnam recognises its internal weaknesses and need to develop a sustainable economy in harmony with the development of society, and resources need to be allocated efficiently.

Many recent reports show that Vietnamese enterprises have an optimistic view of the economy. In the short term, due to macro-economic instabilities, enterprises may worry about dealing with the existing uncertainties, leading to resources being used inefficiently and there being less investment in production and business.

How the economy affects their production and business is a problem for both domestic and overseas enterprises. Although they have received support from the government, this year has been full of turbulence and challenges.

What lessons have we learned from the challenges of 2010?

At the end of 2009 the government used the stimulus packages to strengthen macro-economic stability and I believe this was reasonable. In general, the government provided socio-economic polices consistent with reality, but there were lessons to learn for us to work better.

Firstly, market messages were a weakness the government tried to improve but was unsuccessful. Market messages were inconsistent and were sometimes unclear, leading to mistrust among the people. This issue was assessed by foreign investors and organisations as hampering macro-economic stability.

Secondly, due to the unclear market messages, accountability was not transparent. Each economic variable and each economic policy target was related to many ministries and agencies, who rarely speak with one voice. None have been accountable. And accountability was not supported by transparent market information, because information was inconsistent between agencies. Two important factors are clear accountability and responsibility and, especially in a context of economic uncertainty, it is very difficult to propose perfect policies.

Thirdly, policy management needs to improve next year. This requires relationships among policymakers, the public and technocrats. Policymakers need to listen to opinions from the public and technocrats and act decisively in introducing policies consistent with reality. Clear economic policies lead to clear accountability.

We are confused about consistency in policy targets and policy technology (having reasonable measures to deal with uncertainties), and this gives the market unclear information. The supervisory mechanism is also a matter of concern. 

The have been challenges and lessons for the economy for many years and the government recognises the issues and has adopted measures for improvement. But institutional reforms have not been drastically implemented.

What do you see for the economy in 2011?

If the government pays due regard to macro-economic stability, in 2001 the economy will be in good shape. At the eighth session of the 12th National Assembly (NA), we saw a clearer message on macro-economic stability from the NA, with delegates discussing economic indicators for 2010 and 2011.

According to recent economic forecasts from international organisations, economic growth around the world and in the region next year will be lower than this year. Vietnam is an open economy so is greatly affected by external factors, and I think that lower growth is consistent with new targets and continuing economic recovery.

2011 will be the first year and a significant year in the implementation of the ten-year Socio-Economic Development Plan. The government should harmonise targets, markets, society, the environment and other issues. Policies relating to economic growth and macro-economic stability need to be fully coordinated in order to avoid any unnecessary shocks.

DO HUONG (news.vneconomy)