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Three major challenges of economy

VGP – The Vietnamese economy is facing three major challenges, namely low credit growth, slow pace of non-performing loan settlement, and sluggish business and production, according to former Deputy Minister of Planning and Investment Cao Viet Sinh.

September 29, 2014 5:58 PM GMT+7

Illustration photo

Although credit growth rose steadily from 3.15% in July to 4.08% in August and 6.62% in September this year, capital has not been effectively pumped into the economy. As a result, it is hard to expect strong growth.

Meanwhile, banks’ non-performing loans tend to increase mainly due to low credit growth and slow settlement of bad debts. For instance, the ratio rose from 3.61% at the end of 2013 to 4.07% last May and even 4.17% in June.

So far this year, the Viet Nam Asset Management Company purchased around VND 19,600 billion of bad debts compared to the preset target of VND 70-100 trillion for 2014 alone.

For business community, the former Deputy Minister said he really feels worried as the number of dissolved and suspended enterprises went up 13.8% , equivalent to 48,330 enterprises, against the previous year.

The number of newly-established businesses and registered capital volume have not much improved, he added.

To overcome the above challenges, the Government has tasked inferior levels to realize a series of solutions to facilitate production and business while stepping up the implementation of the Master plan to restructure the economy.

The General Statistics Office has reported that the economy expanded 5.62% in the first nine months of 2014.The figure, as Mr. Sinh commented, goes beyond expectations.

Specifically, the GDP climbed from 5.09 percent in the first quarter to 5.42% and 6.19% in the second and third quarters, respectively, according to the statistics agency.

The index of industrial production also rose on the quarterly basis, from 5.3% in the first quarter to 6.9% in the second quarter and 7.7% in the July-September period.

Other positive signals include increases in both foreign direct investment inflow (reaching US$8.9 billion, up 3.2%) and official development assistance (US$4.1 billion, up 10% compared to the same period last year)./.

By Huong Giang