According to the Institute of Chartered Accountants of England and Wales (ICAEW), although forecasted to grow relatively well in 2017, Vietnam's economy still has many risks.
The gross domestic product (GDP) of Vietnam in 2016 increased 6.2% from 2015 and this year's increase is forecasted to reach 6.5% thanks to one of the major forces is the direct investment Foreign direct investment (FDI), according to information released at the Economic Outlook: Southeast Asia, held by ICAEW today, June 20.
According to ICAEW, FDI is an important factor supporting Vietnam's economic growth. FDI inflows continue to show potential growth in this market in the future.
However, the ICAEW said that despite the growth forecasts, Vietnam's economy in 2017 still have many risks. In particular, the budget deficit remains high, with public debt and foreign debt ratios above GDP of 64.7% and 53.6% at the end of 2016. Measures, plans are used to adjust. Deficits such as budget cuts and tax increases threaten to slow down GDP growth.
Dr. Tran Dinh Thien, Director of Vietnam Institute of Economics, said that the strategy of attracting FDI is showing many problems inadequate. Policies favoring many advantages and incentives of Vietnam for FDI enterprises "enjoy" but can not make full use of the advantages of FDI enterprises. FDI enterprises and local businesses are very weak.
"Domestic enterprises are not connected to FDI enterprises, inputs are still mostly imported." Intel and Samsung are two good examples, and the localization rate in the supply chain for these two groups is about 3% and 8% .The labor is mostly simple, low salary, high risk of job loss due to aging and robotic process, "Thien said.
At the workshop, Thien said that the number of enterprises set up in 2016 reached a record (about 110,000 enterprises), but GDP growth in the first quarter of 2017 was only 5.1%, lower than the last two years. He raised the question as to why the number of new businesses increased is not a strong growth engine for the new period?
Thien said that in the 110,000 newly established enterprises, there are only over 98,000 enterprises in operation; Of these, 35.4% are in the wholesale and retail trade, car and motorcycle repair and only 13.7% in the manufacturing industry. Small, super-small businesses make up the majority (95-96%), contribute little to growth, and lack large private corporations as pillars.
Not to mention, the number of businesses closed is not small, according to Mr. Thien. In the first four months of 2017, many businesses have to leave the market and 92% of dissolved enterprises have capital of less than 10 billion.
Talking to the press, Thien commented, the spirit of starting a business can now become a movement, far from reality. State start-up funds are also easy to assess and invest.
"Encouraging entrepreneurial spirit is essential, but startup products require more advanced, more creative. The state must have policies to help other start-ups, as businesses have difficulty growing up recently, "Thien said.
ICAEW is a member of the Global Accounting Association (CAW). Economic Prospects: South East Asia is prepared by Oxford Economics, an economic forecasting organization and a partner of the ICAEW. The report was made at the request of ICAEW to provide information to 145,000 ICAEW members on the state of the regional economy. The report carries out a quarterly review of Southeast Asian economies, focusing on Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam.
According to ICAEW, FDI is an important factor supporting Vietnam's economic growth. FDI inflows continue to show potential growth in this market in the future.
However, the ICAEW said that despite the growth forecasts, Vietnam's economy in 2017 still have many risks. In particular, the budget deficit remains high, with public debt and foreign debt ratios above GDP of 64.7% and 53.6% at the end of 2016. Measures, plans are used to adjust. Deficits such as budget cuts and tax increases threaten to slow down GDP growth.
Dr. Tran Dinh Thien, Director of Vietnam Institute of Economics, said that the strategy of attracting FDI is showing many problems inadequate. Policies favoring many advantages and incentives of Vietnam for FDI enterprises "enjoy" but can not make full use of the advantages of FDI enterprises. FDI enterprises and local businesses are very weak.
"Domestic enterprises are not connected to FDI enterprises, inputs are still mostly imported." Intel and Samsung are two good examples, and the localization rate in the supply chain for these two groups is about 3% and 8% .The labor is mostly simple, low salary, high risk of job loss due to aging and robotic process, "Thien said.
At the workshop, Thien said that the number of enterprises set up in 2016 reached a record (about 110,000 enterprises), but GDP growth in the first quarter of 2017 was only 5.1%, lower than the last two years. He raised the question as to why the number of new businesses increased is not a strong growth engine for the new period?
Thien said that in the 110,000 newly established enterprises, there are only over 98,000 enterprises in operation; Of these, 35.4% are in the wholesale and retail trade, car and motorcycle repair and only 13.7% in the manufacturing industry. Small, super-small businesses make up the majority (95-96%), contribute little to growth, and lack large private corporations as pillars.
Not to mention, the number of businesses closed is not small, according to Mr. Thien. In the first four months of 2017, many businesses have to leave the market and 92% of dissolved enterprises have capital of less than 10 billion.
Talking to the press, Thien commented, the spirit of starting a business can now become a movement, far from reality. State start-up funds are also easy to assess and invest.
"Encouraging entrepreneurial spirit is essential, but startup products require more advanced, more creative. The state must have policies to help other start-ups, as businesses have difficulty growing up recently, "Thien said.
ICAEW is a member of the Global Accounting Association (CAW). Economic Prospects: South East Asia is prepared by Oxford Economics, an economic forecasting organization and a partner of the ICAEW. The report was made at the request of ICAEW to provide information to 145,000 ICAEW members on the state of the regional economy. The report carries out a quarterly review of Southeast Asian economies, focusing on Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam.
According to thesaigontimes.vn