Vietnam to boost economy by 2020 with economic roadmap

Featured South East Asia - February 25th, 2013

Vietnam has approved an economic roadmap to boost its economy by 2020 after falling to a 13-year low of 5.03% last year.

The plan aims to tame inflation while ensuring “reasonable growth” and focuses on restructuring public investment, banks and state-owned enterprises, Prime Minister Nguyen Tan Dung said in a 29-page directive signed on Feb. 19, according to Reuters.

Vietnam will conduct tight fiscal policy, promote exports and tightly control imports while boosting production of consumer goods, the directive said.

Banks will focus on dealing with the sector’s overall bad debts which sharply rose to 8.82% of loans in September 2012 from 3.07% at the end of 2011, one of Southeast Asia’s highest bad debt ratios.

The directive unveiled reforms in the banking sector such as expanding their core businesses, improving payment systems, avoiding cross-ownership and increasing transparency by 2015 after grappling with the downgrade of Vietnam and eight of its banks.

The government seeks to cut bad debt to below 3% of loans by 2015.

Vietnam will also “maximize the scale and opportunity for private investment, especially the domestic private sector” as part of measures to maintain total social investment at 30-35% of the country’s gross domestic product, the directive said.

Restructuring of state-owned enterprises will focus on businesses in the defense industry while more firms owned by the state should go public.

The economic roadmap sees economic growth to accelerate to 5.5% this year while keeping annual inflation at between 6.0-6.5%, according to Reuters.