Self-reliance needed to respond to global crisis

December 1, 2008 in Uncategorized
Tags: Add new tag, crisis, global, needed, respond, Self-reliance

Hanoi (VNA) – Vietnam, whose exports constitute more than fifty percent of the country’s GDP, should take full advantage of its internal strengths to cope with the current macroeconomic outlook, impacted by the global financial crisis, said Chairman of the American Chamber of Commerce (AmCham) in Vietnam Michael J. Peace on Dec. 1.

“Vietnam’s best option is self-reliance” as the financial crisis and the decline in consumer spending in Vietnam’s main export markets is likely to create a difficult environment for Vietnam in the coming months, said Peace said at the Vietnam Business Forum in Hanoi.

Vietnam’s inflation is estimated to reach 22 percent this year while the country’s trade deficit had, by the end of October, exceeded 16.2 billion USD. The country’s exports have also been adversely affected with a steady downward trend having been observed since September. Export values hit an eight-month low of 4.8 billion USD in November.

Vietnam’s main export markets are the US, which accounts for 26 percent of Vietnam’s total exports, the EU at 19 percent, and Japan at 16 percent. However, all three markets are currently experiencing serious economic difficulties.

“Roughly two-thirds of US imports from Vietnam are apparel, footwear, and furniture. These categories of goods suffer during consumer downturns, making it likely that Vietnam’s exports to the US will drop,” Peace said.

The AmCham Chairman added that “By increasing productivity and reducing the costs of doing business, Vietnam can maintain and improve export growth.”

He also urged the Vietnamese government to consider the timing of the implementation of a new minimum wage decree and increased social security, along with other taxes. If the decree comes into effect in January next year, the cost of doing business will rise due to a 20-30 percent increase in labour costs across Vietnam’ key export industries.

Chairwoman of the Hanoi Association for Entrepreneur Women, Pham Thi Loan said that, in addition to prioritising policies for inflation control and macro-economic stabilisation, there should be policies governing demand stimulation, local production increases, a sustainable reduction of excessive imports, and detailed policies in place to ensure an increase in local businesses’ competitiveness.

According to a Report on Business Environment Sentiment Survey 2008, launched at the forum, to maximise the country’s self-reliance, it is necessary to create a business environment attractive to businesses.

Over 46 percent of the 254 domestic and foreign-invested businesses taking part in the survey suggested that the government should focus on the enhancement of legislative preparation; 40 percent, the removal of unnecessary permits; 37 percent, the enhancement of legislative implementation; and 36 percent, improvement of the infrastructure.

Corporate Secretary of the Australian Chamber of Commerce in Vietnam Giles Cooper said that a stable and predictable business environment is essential for Vietnam’s future prosperity, particularly at a time of slowing global economic growth and investment.

Such an environment requires legal and regulatory certainty, enabling businesses and investors to operate efficiently. In addition, legal measures should be built on a foundation of the interests of on-going business. –