Vietnam To Revamp Its Economy
Feb. 27 – Vietnam has approved a plan to boost its economy by focusing on restructuring public investments, banks and state-owned enterprises (SOEs). Furthermore, in an attempt to generate sustainable growth by 2020, attention will also be placed on strictly controlling inflation.
As he signed a 29-page directive that took effect on February 19, Prime Minister Nguyen Tan Dung announced that the goal was to create and maintain prudent monetary policies that would tame inflation and ensure “reasonable growth”. Vietnam also plans to restructure its financial markets and consolidate SOEs and investments.
The directive further elaborates that Vietnam will tighten its fiscal policies, promote exports and control imports while boosting the domestic production of consumer goods.
It also states that Vietnamese banks will redirect their focus to deal with the sector’s overall debt, expand their core businesses, improve payment systems, avoid cross-ownership and increase transparency. By 2015, banks will have slashed their debt to less than 3 percent of loans (debt made up 8.82 percent of loans in September, 2012, up from 3.07 percent at the end of 2011).
In a bid to maximize the scale and opportunity for private investment in the domestic sector, Vietnam further plans to restructure its investment in SOEs to 30-35 percent of the country’s gross domestic product . The restructuring will primarily affect businesses in the defense industry, monopolies, and enterprises that provide essential goods and services. The government also plans to open up an increased number of SOEs to the public.
Furthermore, plans will be enacted to accelerate economic growth this year to 5.5 percent, while keeping annual inflation between 6.0-6.5 percent.
As the central bank reaffirmed today that it would keep the dollar/dong exchange rate stable, and due to the news that the government had approved the plan to boost the economy, Vietnamese stocks rose by 0.2 percent.
Dezan Shira & Associates is a specialist foreign direct investment practice, providing corporate establishment, business advisory, tax advisory and compliance, accounting, payroll, due diligence and financial review services to multinationals investing in emerging Asia. Since its establishment in 1992, the firm has grown into one of Asia’s most versatile full-service consultancies with operational offices across China, Hong Kong, India, Singapore and Vietnam as well as liaison offices in Italy and the United States.
You can stay up to date with the latest business and investment trends across Vietnam by subscribing to Asia Briefing’s complimentary update service featuring news, commentary, guides, and multimedia resources.
An Introduction to Doing Business in Vietnam
This new 32-page report touches on everything you need to know about doing business in Vietnam, and is now available as a complimentary PDF download on the Asia Briefing Bookstore.
For business enquiries, please contact us as at Vietnam@dezshira.com