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  Policy & Strategy

Viet Nam's economic prospect looks bright

Viet Nam's economic growth has been maintained at 7.1 percent, a high rate, in each of the last three years despite numerous difficulties and challenges, reported the Ministry of Planning and Investment.

After years of deflation due to the impact of the regional financial crisis, the national economy rebounded in 2000 with a growth rate of 6.7 and has enjoyed constant growth rates since then.

The economic structure has been geared to industries and services over the past three years, as industrial revenues contributed an estimated 39 percent to the gross domestic product (GDP) in 2003 against 36.7 percent in 2000 while services revenues were maintained at 38.5 percent. Industrial production output posted an annual growth rate of 15 percent, or 2 percent higher than planned. Although agricultural make-up in the GDP was reduced to 22.2 percent from 24.5 percent, the output value of agriculture, forestry and fisheries recorded an annual growth of 5.3 percent.

Those achievements were partially attributed to the promulgation of the Enterprise Law, which has given a fillip to the development of the private economic sector, thus contributing to the industrial growth, said economists.

The country's tax collection is estimated at 21 percent of the GDP annually while its overspending is limited to below 5 percent of the GDP.

Especially, foreign economic activities have made remarkable progress over the past three years, with the implementation of commitments in the Association of Southeast Asian Nations, efforts to negotiate for the World Trade Organisation admission and development in the relationship with international financial institutions. The country's export value reached 51 billion USD in the 2001-2003 period, representing an average increase of 10.4 percent a year.

Amid a decline of the official development assistance (ODA) in the world, ODA funds pledged by international donors for Viet Nam have kept rising over the past three years, reaching an all-time high of 2.8 billion USD in 2003. The ODA disbursement was estimated at a total of 4.6 billion USD in the three years.

Since 2001, the domestic investment environment has also been improved, helping to attract nearly 1,600 foreign-invested projects, worth a total 7 billion USD.

Those economic achievements have become an important force driving socio-cultural and educational development. Over the last three years, additional 1.5 million jobs have been created annually and the birth rate has dropped by 0.04 percent. By the end of this year, the poverty rate had declined to 12 percent. Fifty four percent of the rural population now have access to safe water and the malnutrition rate in children has fallen to 28 percent.

However, the Government said that the results from the last three years' performance have fallen short of demands given the huge potential among the population that remains untapped to the full for socio-economic development. To achieve the targets set for the 2001-05 period, it said, the annual economic growth rate in the next two years should be higher than the past three years to stand at 8.2 percent at least.

At its November session, the National Assembly set the goals of securing in 2004 a 7.5-8 percent increase in GDP and an 11-12 percent rise in export turnover; mobilising 249,000-255,000 billion VND for development investment (an equivalent 36 percent of GDP); increasing budget revenues by approximately 12 percent; containing overspending to 5 percent at most of GDP; and keeping the inflation rate under 5 percent.

The Government has come up with six measures to achieve these goals. They include further improvement of the business environment to facilitate operations of businesses and enhance the competitive strength; establishment of capital, property and labour markets; renewal of tools and policies for marco-economic management to ensure high and sustainable growth; continuing policies of broadening foreign trade and effectively integrating into the world's economy; enforcement of human resource and social development policies; and boosting administrative reforms.

VNCG-VDC1 - (17/12/2003)

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