Continuous improvements to the business environment, nationalcompetitiveness, and efficiency of the economy will ensure optimalconditions for higher economic growth, Director of the Central Institutefor Economic Management (CIEM) Nguyen Dinh Cung told Nhan Dannewspaper.

Q: In your opinion, what is the main motivation for stronger economic growth in the first four months of this year?

A:The rapid economic recovery in the first four months of this year hasshowed higher confidence in production and business activities. Theeconomic growth was mainly driven by the industry sector with thehighest growth in the area of industry and construction. The industrialproduction index in four months rose 9.4 percent compared to the sameperiod last year.

Consumption also increased by 8.67 percent, thehighest rate since 2011, contributing 8.5 percentage points to economicgrowth. The total investment capital in the first quarter of this yearincreased 9.1 percent against the same period in 2014, equivalent to30.4 percent of the GDP.

It was obvious that the economic growthin the first four months of 2015 was attributed to the recovery ofproduction, consumption and investment. The recovery was also driven bythe positive improvements in business environment in addition to thestable macro economy and increasing confidence in production andbusiness activities.

However, such positive results were initial figures and there remain many troublesome issues.

Q: What are the troublesome issues?

A:Last year was a bumper year for agricultural production with goodselling prices and good growth but this year has seen a poor harvest anddeclining prices of farm produce. Agricultural products that arecongested at border gates or discarded to feed animals has remained aninsolvable problem for many years.

Despite considerableimprovements in domestic consumption, there was an insignificantimprovement in the service sector, which was mainly driven by a drop inthe tourism sector due to a decline in the number of foreign touristsover several months.

The pace of export has seen reduced speedand trade deficit has returned in addition to high budget deficit andincreasing public debt.

The business environment and entry costhave been improved but the national competitiveness index has declined,showing unsatisfactory results in the Government's effort to facilitateenterprises. I hope that the implementation of the Government'sResolution No.19 on measures to improve business environment andnational competitiveness capacity in 2015-1016 will contribute toreinforcing these indices. It is expected that there will haveappropriate adjustments to policy to impulse the sustainable recovery ofthe economy.

Q: What do you forecast for the economic situation in the subsequent quarters and for the whole year?

A:The GDP growth target of 6.2 percent is feasible. The MacroeconomicReport for the First Quarter of 2015 released by the CIEM and theconsultant group from the Restructuring for a more Competitive Vietnam(RCV) has predicted that Vietnam would achieve GDP growth of 6.18percent in the second quarter of 2015, inflation increasing 0.85 percentcompared to Q1, total exports increasing by about 9.7 percent comparedto the same period last year, and a trade deficit of approximately 1.2billion USD.

I think that Vietnam is able to achieve a highereconomic growth if the country continues to improve the businessenvironment; enhance competitiveness; improve productivity, quality andefficiency of the economy; as well as reinforce confidence in theGovernment's policies. And if there are more effective policies for thedevelopment of private enterprises, Vietnam could achieve a GDP growthof 7 percent for this year.

Q: What policies should be considered to achieve this growth rate?

A:CIEM has made a number of recommendations. First, it is necessary tocontinue reforming the microeconomic foundations; consistently implementthe Government resolution 19/NQ-CP on main tasks and solutions toimprove business environment and lifting national competitive capacityin 2015-2016; and cease any discriminatory treatment and differencebetween private enterprises and state enterprises.

Regardingfiscal policies, they ought to avoid increasing revenues andover-collection, or adding more taxes and fees without reasonableexplanation. Continue to simplify procedures and shorten the tax paymentperiod and tax refunds; and accelerate the disbursement of Governmentbonds. Consider and adjust the requirements of issuing bonds with afive-year maturity or more, in order to ensure medium- and long-termcredit for enterprises. Control the state budget deficit ceiling at 3-4percent of GDP.

Regarding monetary policies, top priority shouldbe given to the completion of the process of restructuring commercialbanks. Inflation is now at a low level, but doesn’t yet fully reflectthe risk of rises in Q2. Monetary policy should continue to operate in acautious manner, anchor inflation expectations to help businesses stayfirm with long-term investment decisions. The exchange rate changeshould also be considered in a careful manner.

It is alsonecessary to control imports by technical measures, and give priority toimports that help increase domestic manufacturing capacity; speed upthe negotiation of free trade agreements (FTA) and closely link thenegotiating process and the content of negotiations concerninginternational treaties with the process of the country’s economicinstitution reforms.

Strictly implement the management andcontrol prices of some essential products and services to maintain thegeneral price level, and support the inflation control target. Carefullyconsider the roadmap to enhance medical and education services to avoidincreasing pressures on inflation. Once the service price increases,clear explanation should be made and supporting policies related topoverty reduction should be deployed.-VNA