Leaders of the Party, State, Việt Nam Fatherland Front,
NA deputies,
Compatriots and comrades,
First of all, on behalf of the Government, I would like to thank the NA for agreeing with the Government’s reports and for approving Resolutions on socio-economic development for 2012 and the period of 2011-2015.
At this working session, 77 deputies have raised 237 questions to the Prime Minister and Cabinet members; including 11 questions to the Prime Minister. The Government spoke highly of NA deputies’ questions regarding issues of the management and instruction of the Government. Over the past two days, five ministers, two Deputy Prime Ministers stood for interpellation. Their ideas and answers featured with sense of responsibility. On behalf of the Government, I would like to explain more about issues widely concerned by NA deputies and compatriots. They are also the tasks that the Government will focus on addressing them in the time to come.
I. UPDATE SOCIO-ECONOMIC PERFORMANCE
At the beginning of the session, the Government presented a report on socio-economic development in the first nine months and whole-year forecast. In October and November, socio-economic situation was getting better and better, the consumer price index continued dipping, with 0.36% in October and 0.39% in November. State budget collection considerably increased, reaching 98.5% of the set target by November 15; exports in the first 11 months rose 34.7% against the same period last year and about three times higher than the NA’s set target; trade deficit fell to 10.2% of the country’s total export turnover; interest rates decreased. Balance of payment was getting better, foreign reserve climbed up against 2010. Production continued expanding. Service sector recorded relatively high growth, total retail sales shot up by 23.5% against the same period last year. Culture and society made progress.
However, our economy is facing a string of difficulties and challenges. Inflation, which gradually fell over the past six months, is still very high; interest rates decrease slowly, the liquidity of banks and the economy encounters difficulties, bad debt tends to increase; demand for foreign currency and interest rate pressure in the last months of the year remain enormous. Real estate and securities markets are deserted. The tightening of the monetary policy to control inflation was effective, but consequently, it is difficult for businesses to access to credit loans, brought back positive results and if it is not solved, production will stagnate, growth will slow down, adversely affecting macro-economic stability. Many works are now half-invested, causing wastefulness. Industrial production is slowing down, agricultural production was badly damaged by natural disasters. Job creation and life of the poor, low-income groups and workers are pressing issues.
The world’s economic situation continues to change complicatedly. The Europe’s public debt crisis is forecast to get worse and may push the region into recession, putting brake on the global economic growth, production and import demand will consequently fall, prices of oil and food are likely to soar. These factors will negatively impact on open economies like Việt Nam.
The above circumstance requires us to promote advantages and obtained achievements, consistently follow set solutions, at the same time, keep close watch on realities, timely settle emerging difficulties and challenges, be flexible in regulation; strive to achieve the targets and tasks of 2011 and make throughout preparations for the realization of 2012 tasks.
II. MACRO-ECONOMIC STABILIZATION
NA deputies and voters are now concerned about solutions for stabilizing macro-economy, controlling inflation, regulating interest and exchange rates, securing growth target. I would like to explain more as follows:
With drastic regulatory solutions, the consumer price index dropped over the past consecutive months, standing at 17.5% in the first 11 months. With this trend, the target of keeping consumer price index under 18% in 2011 is within reach. The Government is instructing agencies and localities to accelerate production, prepare goods to secure balance of supply and demand, particularly foods, foodstuff, and other essential commodities at the end of the year; expand inspection and control over the market, give strict punishments to speculative activities, enhance information dissemination to prevent price hikes caused by psychological factors.
To follow a cautious and flexible monetary policy to control inflation and meet requirements for economic growth targets approved earlier by the NA. To lower interest rate in accordance with the decrease of inflation rate and to be active in regulating inflation control. To flexibly regulate the exchange rate in line with market reality to encourage exports and reduce imports and secure the value of VND. To take necessary measures to support the restoration of a healthy securities and real estate markets.
To strictly control gold import-export activities and gold market, contributing to stabilizing macro-economy, striving to ensure that domestic gold price will not be differential to the world price; ensure people’s right of gold ownership; not to let gold to become a popular form of payment, design proper policies to mobilize the society’s gold resources for development.
For fiscal aspect, in the year 2012, the Government will continue implementing a tight fiscal policy, striving to reduce budget overspending down to less than 4.8% and lower in the following years, secure safe public debt. Budget collection will be consolidated by introducing measures to avoid budget losses, prevent tax fraud or evasion of businesses, including foreign-funded ones and at the same time save budget spending; study ways to lessen the ratio of budget contribution and enhance private sector’s investment capacity, support the restructuring of investment. The Government will expand inspection and supervision spending items.
To deploy synchronous measures to spur exports and reduce trade deficit, improve balance of payment to contribute to increasing foreign reserve. Raise the rate of domestic equipment and added value to export products; develop production of goods to replace imports; strictly control the import of commodities that are not encouraged or domestically produced and in accordance with international commitments. Attract and speed up disbursement of ODA and FDI capital. Enhance management over FII inflows. Attract international arrivals and remittances.
For the prices of electricity, coal, and other important goods and services, the Government asks the NA to support the orientation of consistently pursuing market-based price mechanism, at the same time, provide necessary assistance to policy beneficiaries. The Government will map out a reasonable roadmap to implement the mechanism. Businesses operating in these areas must publicize their performance and prices of their goods so that the NA and voters can oversee. Corporations and groups producing or trading these goods must be re-arranged to secure efficiency so that they can fulfill their role.
III. EXTRICATING DIFFICULTIES, SUPPORTING PRODUCTION AND BUSINESS
It is necessary to have proper measures to extricate difficulties and assist production and business, accelerate growth is a common concern of the whole society and NA deputies. I would like to add:
According to a survey by the Ministry of Planning and Investment, in the first nine months of the year, over 48,700 businesses were dissolved or stopped operations, an increase of 21.8% against the same period of 2010. The removal of difficulties and acceleration of production and business will be combined with the improvement of efficiency and competitiveness of enterprises and it is one of the Government’s key tasks. The Government is now directing the implementation of the following solutions:
- Focus on curbing inflation and pull it down to one digit in 2012 to reduce lending rates, create favorable conditions for businesses to access to loans, lower input cost; prioritize credit for production, particularly agricultural production, power generation, export, and small and medium-sized enterprises. This is a basic solution of significant importance.
- At the same time, continue to implement preferential financial mechanisms and policies in combination with improving competitiveness through a Fund for national technological renovation; issue corporate bonds, implement credit guarantee mechanism for small and medium-sized enterprises, export activities.
- Within its competence, the Government will consider to prolong the time for implementing the current policies on tax assistance and ask the NA to discuss the corporate tax reduction at reasonable levels.
- Continue realize measures to expand domestic and foreign market, boost trade promotion activities, effectively exploit FTA markets to increase exports; effectively deploy the ‘Buy made-in-Việt Nam goods” campaign.
- Quickly assist the overcoming of difficulties against agricultural production, particularly in the Winter-Spring crop. Fruitfully realize programs on seed, processing, and post-crop storage and preservation.
- Review real estate projects and develop proper policies, particularly on credit, to ease difficulties against nearly-completed projects in the fields of: constructing factories, houses for workers, social housing, houses for low-income groups, hostels and investment projects on education and healthcare.
- Continue to perfect institution, improve business environment, strengthen the mobilization of society’s resources for development, diversify forms of investment, speed up public-private partnership, simplify administrative procedures regarding the operations of businesses.
IV. ECONOMIC RESTRUCTURING
Through discussions, NA deputies all agreed with the orientation of economic restructuring which focuses on three areas, but NA deputies still worry of the modality and roadmap. I would like to explain more about this:
1. Restructuring of investment, especially public investment
To stabilize macro-economy and control inflation, it is necessary to cut down on public investment and improve the effectiveness of public investment, allocate more State budget to invest in social fields; at the same time, mechanisms and policies will be drafted to mobilize resources of different economic sectors for infrastructure development.
The Government is now focusing on overcoming scattered investment situation, which has caused unnecessary wastes and losses. Review planning schemes and regulations on investment decentralization to make sure that each project will be verified by competent agencies in terms of its planning, necessity, targets, scope, and financial source before allowing investment. For transitional projects, it is necessary to review and reallocate capital according to the list of priorities, projects that lack of capital must change forms of investment or postponed. Expand inspection, and supervision, check on delivery, and assessment of investment efficiency; give strict punishments against offenders. The Government asks ministries, sectors and localities to uphold their responsibility, discipline, and seriously deploy the PM’s instruction regarding this issue.
The Government will quickly perfect institution, create favorable conditions for boosting economic sectors to pour investment in transport infrastructure development under the models of BT, BOT, BTO, and PPP, creating breakthrough in big infrastructure works.
The mobilization and use of ODA and preferential loans must be considered and combined with other development sources. Focus investment on transport infrastructure, irrigation, power generation, environment protection, healthcare, education; at the same time, rearrange priority projects list so that corresponding capital will be allocated properly.
Adjust policies to lure foreign direct investment in developing supporting industries, industries that serve agriculture, high value added services, and infrastructure; prioritize capital for high-tech, energy-saving, environmentally friendly projects. Projects with low salary and high energy consumption rate will not be encouraged.
Investment restructuring is the central task of the whole country, sectors, levels and business circle. It is not only a urgent requirement but also a long-term mission throughout the country’s cause of modernization and industrialization. The Government will quickly prepare the draft law on public investment and proposals for the amendment of the Law on State Buget, then submit them to the NA.
2. Restructuring of SOEs
The restructuring of State-owned enterprises (SOEs), especially economic corporations and groups with an aim to raise the effectiveness of these enterprises and promote their role is a pressing requirement. It is one of the three important elements of economic restructuring. The Government is centering on the following issues:
- Clearly define the function of the State and SOEs in the socialist-oriented market economy; review and evaluate management models, effectiveness, operation scope of SOEs and approve a master plan for restructuring SOEs. Based on the master plan, the Government will consider to approve restructuring plans for each corporation and group right in 2011.
- Speed up equitization and diversification of ownership of SOEs, including corporations and groups; only a limited number of necessary enterprises will be maintained.
Corporations and groups only focus on their main business lines; and finish the withdrawal of capital from areas that are not their main business lines by 2015.
Absolutely deal with ineffective enterprises through the models of equitization, merger, dissovlement, or declaration of bankruptcy.
- Quickly study and renovate the mechanism of State ownership in corporations and groups. Develop management criteria, select and appoint elegible cadres to lead corporations and groups effectively.
- Publicize operations and performance of corporations and groups; place SOEs in equal competition with other economic sectors; effectively control natural monopoly.
SOEs restructuring is not an easy process, but the Government be determined to act in a bid to raise the efficiency and competitiveness of the national economy.
3. Restructuring of commercial banks
The objective of restructuring commercial banks is to have a well-administered and effective banking system, which meets the requirements for the development of market economy; step by step improve financial capacity and competitiveness of commercial banks; clear weak banks.
The Government is directing the following specific tasks:
- Review and precisely evaluate the management over and operation of the system of commercial banks and credit organizations, develop a master plan for restructuring of the system.
- Perfect and introduce new management criteria, regulations on safety and risk prevention towards international standards; enhance supervisory role of the central bank over the realization of these criteria.
- Design mechanisms and policies to support quick development of eligible commercial banks and raise their competitiveness domestically and globally; at the same time, encourage banks to expand credit to agriculture and rural development sector.
- Equitize State commercial banks, improve financial and management capacity, quality of services, competitiveness and efficiency so that State commercial banks are the key players of the country’s commercial banks system.
Supplement and perfect institution for joint-stock commercial banks to improve administration capacity and operate transparently; fix minimum capital and related roadmap. Issue specific regulations on selling, merging and encouraging voluntary merger to have financially healthy banks.
- Develop specific plans to quickly reduce weak banks without damaging the safety of the banking system, affecting macro-economic stability, and protecting legitimate interests of depositors and seriously punishing offenders.
- Review and assess to consolidate and promote the efficiency of credit organizations in rural areas. The new establishment of commercial banks and financial institutions, including rural credit co-operatives must be strictly verified in accordance with law.
- Besides, restructure and develop other healthy financial markets like securities, bonds, insurance and investment funds in line with international standard to secure capital for the economy. Operations of these markets must be made public.
Because of reciprocal nature, the three above-mentioned restructuring elements must be implemented synchronously with fiscal and monetary policies along side with the realization of three strategic breakthroughs. The Government will submit a master plan for restructuring the economy in combination with renovation of growth model to the NA at its next working session.
V. AGRICULTURE AND RURAL DEVELOPMENT
Some NA deputies said agriculture and rural development have not received adequate investment; the program on building new rural areas has been slowly deployed, difficult to mobilize resources and some criteria are not reasonable. Minister of Agriculture and Rural Development Cao Đức Phát had already explained. I only stressed the following aspects:
1. Agriculture and rural development hold a special strategic importance in the cause of national construction and defense. Our Party and State have issued many guidelines and policies on agriculture and rural development with significant achievements. The Resolution issued at the 7th Plenum of the 10th CPVCC stresses the need to double budget investment to agriculture and rural development every five years.
In five year period from 2004-2008, the State allocated VND 181 trillion capital for agriculture and rural development, accounting for 39.1% of total budget investment capital and Government bonds. Since the introduction of the Resolution of the 7th Plenum of 10th CPVCC, capital from the two sources continued increasing, in four year from 2009-2012, over VND 380 trillion was disbursed, equivalent to 49.3% of the total budget investment and Government bonds, and 2.1 times higher previous period of five years. Annually, the State also added some VND 7-8 trillion to help localities overcome consequences of natural disasters and epidemics. Moreover, there had been many other forms of assistance through tax exemption and preferential interest rates.
Credit for agriculture and rural development has been increasing, and outstanding debt was estimated at nearly VND 595 trillion by the end of 2011, three fold increase against the figure of 2006. The Government has promulgated a string of mechanisms and policies to attract capital from enterprises of all economic sectors for agriculture and rural development...
However, the Government also saw that the allocation and attraction of investment capital do not match with potentials, advantages and important role of agriculture and rural development as some NA deputies said. In the time to come, the Government will continue to increase budget investment and Government bonds for agriculture and rural development. The Government will submit to the NA a three year Plan for development investment from 2013-2015, if the Plan is adopted, after five year implementation of the Resolution issued at the 7th Plenum of the 10th CPVCC, total budget capital and Government bonds allocated to agriculture and rural development reach some VND 500 trillion, or 2.76 times higher compared to that of the period of 2004-2008, surpassing the target set by the Resolution.
The Government is focusing on reviewing planning schemes for agriculture-forestry-aquaculture development; closely monitoring and improving investment efficiency. Continue to allocate preferential credit and encourage the credit expansion to agriculture and rural development; attract strong investment of economic sectors in this sector; prioritize capital for selecting new seeds, apply processes of modern cultivation, develop processing industry, storage system for post-harvest preservation. Perfect mechanism of combining input producers with processing facilities and distributors to form a supply chain right on home ground and speed up exports. Allocate capital to building essential infrastructure projects, natural disaster prevention, industrial and service development in combination with environmental protection. Improve the quality of workforce.
2. The program on building new rural areas, which is a comprehensive one on socio-economic development with 11 contents, should be implemented patiently and synchronously in a long period of time and accordance with planning schemes, with the engagement of the whole society.
After more than a year, the program recorded initial results, but the deployment of the program was still slow. The Government will focus on removing barriers, providing proper instructions, and allocating capital to develop planning schemes and projects. Quickly amend some of the criteria in accordance with the reality of each region. Allocate budget and Government bonds as scheduled; effectively combine programs and projects in the same area. Continue to design policies to attract more capital from other economic sectors, particularly small and medium sized or foreign-funded enterprises. Prioritize credit for agriculture and rural development. Speed up the Program combining vocational training with economic structure transfer of agriculture and rural areas. Strive for 20% of communes satisfying criteria of new rural areas building by 2015 and 50% by 2020.
VI. FOR SOME PRESSING SOCIAL ISSUES
Voters and NA deputies are interested in and put forth solutions to ensure traffic order and safety, poverty reduction, labor-job creation. I would like to explain more:
1. Traffic accidents and congestion are serious problem. The Government had already submitted a report, in which it specified the current real situation, causes and synchronous solutions to overcome in both short and long terms. The Minister of Transport, the Minister of Public Security and the Minister of Construction had explained in detail.
The Government has the honor of asking the NA to adopt a resolution regarding this issue in order to unify awareness and actions throughout the whole political system and society, uphold responsibility and disciplines, mobilize all resources to realize the NA’s resolution, create considerable progress in transport order and safety, strive to gradually traffic accidents and congestion.
2. Job creation and sustainable poverty reduction are always considered the central task. Many specific policies and solutions have been introduced with positive results.
In 2011, about 1.6 million jobs have been created, fulfilling the preset target. In 2012, inflation curbing, macro-economic stabilization, and maintenance of reasonable growth rate (a round 6-6.5%) are the decisive conditions to create 1.6 million jobs. The Government will synchronously implement policies on vocational training, industrial and service development so as to speed up labor structure transfer towards reducing the rate of workforce in agriculture and increasing the rate of workforce in industries and services, raise incomes.
Regarding poverty reduction, the rate of poor households dropped to 9.45% in 2010 from22% in 2005. In 2011, in the context of inflation curbing and public investment reduction, the State still prioritize resources to secure social welfare and poverty reduction; the rate of poor households fell down by 2%, and 4% in poor districts.
Continue to speed up sustainable poverty reduction, focus resources to support vocational training, create favorable conditions for poor households to access to credit; provide financial assistance and preferential credit to poor pupils and students; assist the poor to access to basic social services, particularly the poor people who have not got medical insurance. Classify poor households in order to design proper ways of assistance. For poor people who are lazy, assistance must go with supervision and community education.
NA deputies,
I have provided additional information to issues widely concerned by NA deputies and voters.
The mission ahead is hard. After collecting deputies’ practical ideas, the Government will quickly realize the Party and NA’s resolutions. The Government asks for NA’s closer supervision of the Cabinet’s performance.
Thank you,
And now I am ready to answer your questions./.
