A corner of HCMC

In its Vietnam Economic Annual Report 2023 'Linking and developing businesses towards an autonomous economy' released on June 22, the Institute said that in the first scenario, the GDP growth rate will reach 6.5 percent. In this scenario, the average annual consumer price index (CPI) is about 4. percent. According to VEPR, this scenario is less likely to happen, but possible when the world economy develops positively if China opens up its economy.

In the second scenario, the country’s GDP growth rate in 2023 is only 5.5 percent, the average annual CPI is about 3.5 percent. This scenario is also less likely to happen unless geopolitical conflicts in the world become more complicated. In the base scenario, the GDP growth rate is 6 percent, equivalent to an average CPI of about 4 percent. This scenario is lower than the Government's GDP growth target of 0.5 percent and is more likely to happen.

According to studies, the driving forces of economic growth have declined sharply. Economic growth in the first quarter was only 3.32 percent, the lowest level under normal conditions since 1990.

In the first 5 months of the year, export turnover decreased by 11.6 percent while import turnover also decreased by 18.4 percent over the same period in 2022. Industry and construction sectors decelerated sharply from the third quarter of 2022. Purchasing Managers' index - a measure of the prevailing direction of economic trends in manufacturing - continued to decline in the first 5 months of 2023, falling far below the average level of 50 points.

Noticeably, in the first 5 months of the year, the number of enterprises withdrawing from the market was nearly 93 percent of the total number of newly-established ones. This is an unprecedentedly high rate.

A very large number of businesses, including the leading ones in their fields, are facing difficulties, said Mr. Nguyen Dinh Cung, former director of the Central Institute for Economic Management. According to Mr. Nguyen Dinh Cung, the capital demand of the business sector is very low although the State Bank has reduced the operating interest rate. Firms failed in capital absorption indicating that they are not strong enough.

Many exisiting objective factors can’t be changed except the business environment and reforming administrative procedures. The government should improve the business environment and reform administrative procedures to help businesses.

Worse, the Vietnam Chamber of Commerce and Industry’s survey shows that, in 2022, up to 71.7 percent of businesses agreed that corruption when dealing with business procedures is popular while only 57.4 percent of businesses agreed this in 2021.

Experts recommend that the Government should have its own resolution on improving the business environment and enhancing competitiveness and improving the enforcement efficiency of the government apparatus. Furthermore, the government should focus on reforming administrative procedures to reduce trouble following businesses’ complaints. According to a survey conducted by VCCI at the end of 2022, businesses often complained about taxes/fees payment, land procedures, site clearance, social insurance, fire protection and construction.

In addition, the interdisciplinary administrative procedure also needs reform under the government’s direction. Moreover, inspectors should not pay more visits to businesses but strictly monitor import and export goods.