Striving to curb inflation, stabiliZe THe macro-economy, guarantee social SECURITY and SustainABLe growth
(Government’s report, presented by PM Nguyễn Tấn Dũng
at the 3rd section, 12th National Assembly,
6 May 2008)
Leaders of Party, State and the Fatherland Front of Việt Nam
National Assembly deputies,
Comrade veterans and guests,
Compatriots, comrades and friends
Prior to this Meeting, the Government sent two reports to the National Assembly deputies. First, the additional report on 2007 socio-economic situation and the implementation of 2008 socio-economic development plan; and second, the additional report on the implementation of the 2007 State budget and the 2008 State budget. At the request of the National Assembly Standing Committee (NASC), the Government also sent to NA deputies a number of other thematic reports. All these reports deal with all aspects of the socio-economic situation, the State budget, and issues to be addressed in implementing NA Resolutions. In this report, on behalf of the Government, I would like to brief some emerging important issues in the implementation of the socio-economic development tasks in 2007 and the first four months of 2008, and key measures to curb inflation, stabilize the macro-economy, ensure social security and maintain sustainable economic growth.
I
Implementation of the socio-economic development tasks
in 2007 and the first FOUR months of 2008
In 2007, encouraged by the reform achievements, our country has made full use of opportunities and risen over many challenges, maintained social and political stability and continued to develop in many areas. The economy grew by 8.48% over 2006; most 2007 socio-economic targets were fulfilled or outperformed.
Industry grew well, with the output rising 17.1%; agriculture continued to grow, with total output increasing by 4.6%; services saw positive changes, expanding above the average economic growth at the rate of 8.68%. Total export turnover rose by 21.9%, in which 10 products valued over US $1 billion each. Total investment reached VND 505 trillion, or 44% of the GDP, in which both investments from the State budget and households increased; especially, both foreign direct investment and Official Development Assistance reached the highest ever. State budget revenue was 12.1% higher than planned, increasing by 16.9% over the 2006 level; budget expenditure was 11.8% higher than planned, increasing by 20%.
Culture, social affairs, education, healthcare, science and technology maintained their development momentum and gained new progress. 1.68 million new jobs were created. People’s livelihood was better in many aspects. More investment programs on socio-economic infrastructure for needy areas and direct support policies for life and production of poor people, victims of natural disasters and diseases were done, bringing about practical changes. The rate of poor household reduced to 14.8%.
External activities, international integration and economic cooperation gained many positive results, further facilitating the development and enhancing the international profile of our country. National defense and security was strengthened. Social order and safety was reinforced.
We set and implement our 2008 socio-economic tasks in very favorable conditions thanks to the successes of the reform over the past 20 years, especially the gains in 2006 and 2007. However we still face not small challenges, namely small economic size; slow economic restructuring; low quality of growth; poor productivity, efficiency and competitiveness; transitional economy; incomplete market economic institutions; inexperienced international economic integration; not very sound macro-economy; lagging socio-economic infrastructure and human resources behind demand; low solvency of capital; and many pressing but unsolved social problems.
In addition, in the last few months of 2007, the world’s economy saw complicated developments. The prices of oil, food, raw materials, machines and equipment rose sharply, thus seriously challenging our economic management and adversely affecting our macro-economic stability. Our price of consumer goods soared sharply in the fourth quarter, thus increasing the 2007 CPI to 12.63%. Total import value rose by 39.6%; trade deficit was high, equivalent to 29% of total import volume and 2.7 times higher than 2006.
With such, in implementing the NA Resolution on socio-economic development tasks, the Government focused efforts on giving prompt and sound guidance in the face of the changing situation, identify and deal with emerging problems. Many timely policies and measures were taken to curb inflation, strengthen market and price management, and stabilize the monetary, stock and real estate markets; remove obstacles to production and investment; intensify export, limit trade deficit and ensure the supply-demand balance of basic necessities; give practical supports to stabilize the life and production of people, especially farmers, fishermen, the poor, and those affected by natural disasters, diseases and price rise.
Thanks to the efforts made by the whole Party, people and army at all levels, all state agencies and the business community, the socio-economic situation in the first four months of 2008 saw noteworthy results. However, there are emerging weaknesses, and huge challenges.
The economic growth rate in the first quarter, though rather high (7.4%), was actually lower than that in the previous year (7.8%), and far lower than the set target for the whole year (8.5% to 9% or higher). Industrial output in the first four months of 2008 increased by 16.4%, but was lower than the same period last year (16.7%). Agricultural output grew higher than in the same period last year; however, the sector is facing numerous difficulties caused by natural disasters and diseases. Services grew by 8.1% in the first quarter, higher than the same period last year (8%). FDI continued to increase in the first four months compared to that in the same period of 2007 both in terms of new registration (41.4%) and disbursement (26%).
Export in the first four months was higher than that in the same period last year (27.6% compared to 22%), but import rose higher than that in the first four months of 2007 (71% compared to 32.8%). Trade deficit in the first four months equaled for 60.8% of export, which was the highest level over many years now. Import rose mainly because of rapid increase in both quantity and price of raw materials and production machinery. However, the underlying causes are slow economic restructuring with many existing weaknesses, underdeveloped machinery and supportive industries, and industrial exports being mainly processed and assembled goods (for which 70% of raw materials and spare parts have to be imported), and low investment efficiency, and vast wastefulness in production and consumption.
The CPI, though has showed some slow-down, remains very high. In April 2008, it rose by 11.6% against December 2007. If compared to that in last April, the CPI rose by as much as 21.42%, which is the highest rise in many years now.
Positive results have been made in the fields of culture, social affairs, science and technology, education, healthcare, employment, environmental protection, poverty reduction, administrative reforms, anti-corruption, external relations, national defense and security. We have managed to keep the political and social stability.
However, we have a great deal of concerns over high inflation, price rocketing and soaring trade deficit coupled with the volatilities of monetary, stock and real estate markets, which have been severe risks to the macro-economic stability and badly affected production, growth and investment environment as well as employment, income and life of people, especially the poor, the low-income group and people in the areas ridden by disasters and epidemics.
The challenges facing us also come from the slowdown of the US economy and the weakening of US dollar which are leading to the recession of the world economy. It is noted that the skyrocketing price in the world, notably high price of crude oil, food and raw materials, has badly affected all economies and become the driver of high inflation in most of all countries. As for Việt Nam, as a wide open economy (in 2007, the trade value accounted for 150% of GDP, import value made up 90% of GDP), we have seen strong influences. Disasters and pandemics have continuously hit our country in the past years, causing difficulties for our production, especially in agriculture. Given this context, apart from our advantages in governance, we recognize the disadvantages and shortcomings in the management of the Government as the major problems revealing the weakness of our economy.
The shortcomings in the management of the Government are the followings:
First, the implementation of a loose monetary policy for many years, especially in 2007 has raised the total liquidity and credit debts putting pressure on inflation. Tightening monetary policy to control inflation is very critical. However, the inappropriate and inconsistent measures coupled with the lack of coordination among the relevant agencies have generated difficulties. State’s management over the operation of banking system and credit institutions, especially the investigation and monitoring over commercial banks, has seen shortcomings and ineffectiveness. Many joint stock banks have scaled up their credit loans drastically and used a lion share of short-term credits to provide customers with long-term loans, especially for securities and real estate trading, causing difficulties to management and stability of the macro-economy. Management of exchange rate particularly with US dollars is inflexible and fitting.
Second, we have kept budget deficit of 5% in many years while the scale of our economy is getting bigger and we are yet to work out plan to reduce budget deficit. Therefore, there is no pressure for management and saving in budget spending. Public investment remains huge and ineffective. This error also occurs in the investment of SOEs and the utilization of preferential credits of the State. Policy and management measure are yet to transform the social investment into in-depth and sustainable investment to push the economic restructuring and increase saving in production and consumption. Our ICOR is much higher than that of other economies at the same level of development. This curbs the quality of our growth and competitiveness.
Third, State’s role in market management (including the stock and real estate markets) and management of price, export and import has unveiled shortcomings. We delayed working out suitable and effective policies in our management in order to ensure the healthy developments of these sectors. The persistence in managing price in accordance with market rules is right and essential, but anyway there remain weakness and mismanagement. The solutions to combat speculation and smuggling are not really effective.
Forth, we do not pay due attention to the work of market forecast and information. The consultation work related to macro-economic issues is yet to meet the requirements of management. By the end of 2007, given the optimistic ambience of obtained achievements and good opportunities, and at that time, we did not fully analyze and forecast the emerging challenges, thus the Government submitted to the National Assembly the proposals of high growth target in 2008 (GDP growth of 8.5 to 9 % or even higher) and the target of controlling the increase of consumer goods price less than the increase of GDP.
Fifth, the information and communication works are untimely, inadequate and inconsistent, especially as the new changes happen and the sensitive policies and measures are put in place, leading to public frustrations. Mass media are yet to be engaged practically and effectively in the realization of urgent and important tasks of our country.
The weakness and shortcoming in the management of the Government and the disadvantages of our economy have made the national economy vulnerable to the external fluctuations. The Government has seriously reviewed and recognized the advantages and disadvantages especially the shortcomings in management.
The Government reported to the Politburo and the NASC on socio-economic situation in the first quarter, goals, tasks and measures of governance in 2008. The Government has also swiftly undertaken the recommendations and guidelines of the Politburo.
II
MAJOR TASKS AND MEASURES TO CONTROL INFLATION AND KEEP SUSTAINABLE GROWTH
According to many forecasts, the world economy is bound to see the downturn. Rising inflation and price in the whole world will badly affect all economies. Climate change, natural disasters and epidemics will be more complex. Given this scenario, our economy will face greater challenges with severe impacts. Therefore, the major targets planned in 2008 SEDP are not fitting any more.
Based on the analysis of the data in the first four months and being fully aware of opportunities and challenges to realize socio-economic targets for this year, the Government has unanimously identified the urgent tasks in the upcoming months of 2008 as follows: strive to control inflation, stabilize the macro-economy, assure social welfare and sustainable growth, notably inflation control is the first and foremost priority. This is a hard mission, requesting the joint efforts of the entire political system and the determination of the whole people. The Government would like to request the National Assembly to adjust the growth norm in 2008 at about 7% in order to rein inflation and work out integrated measures to curb the price of commodities.
To achieve the said tasks, the Government determined eight groups of solution needed to focus on as stated in the report of the Government circulated to the deputies. Now, I want to highlight the following points:
1. Implementation of a tightening and effective financial and monetary policy
Implementing tightening financial policy by reducing at maximum the spending especially the regular expenditure and strictly controlling public investment and gradually curbing budget deficit. It is crucial to guarantee the collection of budget in accordance with the law, striving to increase budget collection of at least 5% in order to ensure the expenditure as planned. The increase in our budget collection shall be earmarked for contingency budget with the priorities of giving allocations to the prevention and fight against disasters and epidemics, offset against high price of gasoline and assurance of social welfare.
The Government requested all ministries and agencies and state-owned enterprises to seriously review their expenditure to cut 10 percent of recurrent expenditure in the remaining eight months of the year 2008, except for those related to employees. Expenditure for non-urgent tasks should also be cut down while budget for buying cars and other valuable properties and repairing offices should be postponed. In addition, the Government decided to reduce as much as possible expenditures for organizing festivals, conferences and meetings, awarding and anniversary ceremonies, domestic and foreign study tours using state budget. The Government also requested ministries and agencies to reduce at least 10 percent of the use of petroleum, power, water, telephone, office stationery and air fare.
The Government decided not to adjust total investment in 2008 given the inflation. Ministries, agencies and local governments will implement the investment budget in accordance with allocated amount. Budget increase will only be approved for urgent tasks such as social safety, national defense, security and prevention of natural disasters and epidemic. Moreover, it is necessary to tighten the control of budget advance for 2009 and the use of budget reserve and increased revenue of budget in 2008. The Government also tighten the expenditure forward of unused budget of 2008 for next year.
Investment projects should be reviewed and rearranged toward the following principles: postponing projects not including in approved master plans, projects without building license and others of building offices, meeting halls, museums and cultural houses to be implemented in 2008 but having not commenced. Budget will only be provided for preparatory stage for essential projects. In addition, extend the deadline of projects approved in and before 2007, projects delayed for a few years and with less than 50 percent of budget allocated at the end of the year 2007, projects facing obstacles in investment and site clearance procedures and those which are not urgent. Budget for those projects, therefore, will be transferred to those which are in good progress and nearly accomplished. Moreover, public investment projects with high rate of return will be transformed into other appropriate investment forms. Capital should concentrate on National Important Projects and others that could be put into use this year and the following year.
It is necessary to review and cut 25 percent of investment budget for 2008 generated from sovereign bonds. Budget should only be provided for approved projects which have gone through all investment procedures, including school and health clinic building projects at the district level. Disbursement will be permitted for projects implemented and completed ahead of schedule. Sovereign bond issued in international markets will be considered at an appropriate time. In addition, investment portfolios and post-investment support should be tightened to reduce additional budget provision.
Projects invested by state-owned enterprises should be reviewed. Multi-financed projects without capital available, low cost-effective projects and new office buildings should be postponed or delayed. Strictly review investment projects of SOEs that are not their core business, especially those in finance, securities, banking, insurance and real estate.
Ministries, agencies and local governments, economic groups and corporations must report to the Prime Minister on their concrete plans to review and adjust investment budget in accordance with Government’s resolutions. Any violation of the law on using State’s investment capital should be inspected and strictly handled with.
A tightened monetary policy should be implemented such as to tighten the control of increasing money supply and credit supply while ensuring liquidity and healthy performance of the banks. Tools of monetary policy should be used in an active, flexible and appropriate way in accordance with market principles. Appropriate measures should be taken to stabilize the interest rate to achieve a real positive rate. A flexible exchange rate with suitable bands should be introduced to reflect the demand-supply balance of foreign exchange. Practical measures should be taken to prevent the dollarization of the economy. Establishing and opening of banks and branches should be tightened while the operation of commercial banks should be further monitored in order to ensure the compliance in stock issuance, charter capital increase and mobilization, lending and credit quality. Any violation of these principles should be promptly detected and handled with to ensure safety and stability of the whole banking system. The Bank for Development and Investment of Vietnam (BIDV) and the Vietnam Bank for Social Policy (VBSP) should tighten the lending so that the benefits will go to the right people.
Institutional and management framework should be improved to ensure healthy development of the stock market. Moreover, equitization of SOEs should be furthered to increase the supply and product quality. Greater transparency should be given in securities trading. Foreign investors’ participation needs to be clarified. Lending for securities trading and establishment of new securities firms should also be tightened.
Close monitoring and timely measures are required to gradually reduce current account deficit, maintain budget surplus and stabilize total balance of payment in both short-term and long-term by quickly increasing foreign exchange income from export, tourism and other services. ODA should be effectively used with increased disbursement. It is also necessary to attract more FDI and speed up its disbursement. Various sources of remittance should be also encouraged. In addition, an appropriate legal framework should be created to stabilize and put FPI into long term investment projects. Foreign debts of enterprises need to be seriously controlled, especially those of SOEs. It is necessary to reduce the use foreign exchange to import nonessential goods and services. In addition, national foreign exchange reserve also needs to be increased. Measures should be actively worked out to address unpredicted changes in capital market.
It is important to implement an appropriate financial and monetary policy to promote a rapid and healthy growth of the real estate market. The housing supply for low income people and office for lease, hotel and industrial infrastructure should be concentrated. It is also necessary to tighten the control of lending for real estate business and imposition of appropriate tax policy along with administrative measures needed to ensure a balanced market development based on the rule of demand and supply. Encourage the effective use of real estate to reduce speculation and illegal profit. Provincial and city People’s Committees must take strong measures to review and make a list of real estate portfolios according to priority order, publicize master plan information and address difficulties in approval procedure, construction license, land provision and compensation for site clearance. Strong measures must be taken to take back land of delayed projects and handled with any violation of law. We should work hard on an early issuance of the policy on real estate tax.
2. Addressing difficulties to further promote production, service and investment
Enhancing production activities and services is a basic solution to create direct and multi-sided effects, thus increasing goods and services supply in the domestic market and for export to promote economic growth, control inflation and reduce trade deficit.
In implementing the tightened financial and monetary policy to control inflation, it is important to further promote production, services and investment attraction. Special attention should be paid to addressing difficulties while securing budget and foreign exchange for industries to meet great demands in both domestic and foreign markets. ODA and FDI should be further attracted and disbursed, especially hi-tech projects and export industries.
Tax should be used in a flexible and effective way in accordance with our international commitments to further production, export and reduce trade deficit.
It is also essential to review the amendment of administrative procedures to better assist people and businesses, especially the rules and procedures on business establishment, investment, borrowing, disbursement, tax and customs, land access, foreign exchange trade and inspection.
Relevant ministries, People’s Committees, and business associations should enhance cooperation to support enterprises to overcome their problems, reduce cost and price of products, maintain and promote production especially important industrial and export products. Apart from ensuring the productivity of those production units currently in operation, we have to make efforts not to have any problems that would affect the output. Complete the investment projects as scheduled to increase the output, ensure the sufficient electricity, coal, steel, cement, chemical fertilizers, oil and gas for production and reduce the dependence on import. In regard to export products that have the capability to expand markets, we should focus on increasing the output of these products.
As one of the main income of the majority of our population, the development of agriculture, forestry, fishery production have the direct impact on the stability of food price, contribute to controlling inflation and have the basic foundation to ensure social security. This is increasingly important in the global context of the arising food crisis. Therefore, we should promote investment for agriculture production and rural development for domestic consumption and export and further improve the life of farmers. In the short term, it’s necessary to concentrate on cultivating rice crops that are yet to be harvested, and prevent the diseases from spreading widely; ensure the provision of seeds, fertilizers, insecticides, and irrigation for the next rice crops and other food crops; and try to surpass the goals in terms of crop yield and production. Continue to promote planting industrial crops along with expanding the raw material and processing industries especially the products of high value and high demand for domestic and overseas markets. Ensure the provision of breeding, feeds, skills and other necessary conditions to quickly restore and develop the livestock industries. Pay more attention to fishing, fish farming and seafood processing industries for export.
Continue to work effectively on disease prevention for crops and animals, especially the bird flu and blue-ear pig diseases. Mobilize resources, apply comprehensive measures to quarantine, contain and prevent the spreading of epidemics. We need to have necessary policy to support and take measures to overcome the consequences of the epidemics and soon restore the production and stabilize the people’s life.
After more than two years of implementing the National Assembly’s Resolution for the land-use plan in 2006-2010 and Government’s regulations, stricter rules on changing the use of agricultural land, including paddy land, to other purposes were put in place. The Government is taking prompt measures to review, readjust and impose restrictions on changing the use of land for growing rice and other crops to other purposes such as industrial parks, new towns, eco-tourist areas, golf courts, and so on, in order to ensure national food security both in the short and long term.
Despite difficulties, many service sectors currently are enjoying advantages. We need to promptly create favorable conditions for the service sector to develop, especially those having potential and high value added. There should also be comprehensive measures to promote tourism. Support the transport sector in order to improve the quality of transportation, ensure the circulation of goods and the travel service for the people.
3. Enhancing export, reducing trade deficit; ensure the demand-supply balance of goods; increase market and price management; prevent speculation and smuggling
Strong measures should be taken to enhance export as the key solution to reduce trade deficit, increase growth; at the same time apply appropriate measures to effectively control import and step by step reduce trade deficit. Increase the efficiency of trade promotion activities. Encourage and effectively assist enterprises to enhance the quality of and diversify products and markets. Promptly address the obstacles in administrative procedures for export to reduce cost, increase the competitiveness of Vietnamese exports. Try to increase the export turnover by 25% compared to last year.
Adjust appropriately import tariff for some materials needed for production activities to meet the need of domestic market and export. Apply the special consumption tax on the group of goods that is not encouraged. Strictly control and apply high import tariff on the group of goods that is not encouraged to import. Apply technical barriers and non-tariff barriers in accordance with the international commitments to reduce trade deficit. Increase export tariff on some natural resources, minerals and raw materials.
Demand-supply balance of goods is the premise for the stability of the market; prevent the sudden price escalation, speculation and smuggling. According to estimate, the demand for essential commodities this year increases by 14% compared to last year. The domestic supplies and imports as planned could totally meet the need. The key issue is to tackle the problems resulting from the high price of various products in the global and domestic markets. This has direct impacts on local industries, export and the people’s life. While pursuing the policy to eliminate price subsidies and apply market-based pricing, the Government also has priority of controlling inflation. Therefore, the Government has decided not to increase the price of electricity, fuel, coal, water, air ticket, train fee, and bus fare. Once inflation is controlled, a suitable roadmap will be applied to ensure the market-based pricing. In regard to the fuel price, in the case of sudden increase of world oil price, the Government will consider a suitable and comprehensive plan in the spirit that the State, enterprises and people will make joint efforts to overcome the difficulties for maintaining stability and development.
For many years, the food production has been enough for the domestic consumption with reasonable price while Việt Nam still stands as the world’s second largest rice exporter. In order to ensure national food security in all circumstances and the benefits of rice growers, the Government has set the rice export volume of 3.5 to 4 million tons this year with an appropriate delivery schedule and is considering a rice export tariff. National reserve of food and essential commodities has been increased. The People’s Committee at all levels and relevant government agencies are requested to follow closely the supply-demand situation to prevent any food scarcity in local areas, especially speculation.
Strictly control the master plan on exploiting, using and exporting coal; strictly handle smuggling and illegal coal exploiting activities; practice thrift in using coal and greatly reduce coal export to ensure energy security in short and long term.
The Government has tasked each Ministry to focus and be responsible for ensuring the supply for the essential commodities with reasonable prices in any circumstances. Ministries, business associations, and enterprises in essential industries, especially State-owned enterprises, should cooperate to implement comprehensive measures to enhance production, ensure the supplies and prevent speculation. The Government has also urged the business community and every citizen to practice thrift in production and consumption to contribute to reining inflation.
Along with the financial and monetary measures and others to ensure supply-demand balance, we should enhance the market inspection, and law compliance on prices. First and foremost, we should prevent speculation and other acts to use market changes for speculation especially the essential commodities for production and people’s life. Strengthen inspection on price tagging and selling prices. Strictly handle violations of regulation on prices, including measures to seize goods and commodities or force violators to compensate, especially essential products. Quickly put in place mechanisms in which businesses in essential industries commit to keep stable prices in a period of time.
While following the market principles, there is now a fact that some of commodities in Việt Nam, due to receiving subsidies, are priced lower than those in the regional and international markets. Therefore, stronger measures should be taken to deal with smuggling and trade fraud, especially the smuggling of petroleum, coal and some other items. Attention should be paid to control the supply and selling price of commodities and services which belong to the exclusive trading rights of some SOEs.
The wholesale and retail networks nationwide should also be encouraged to ensure the supply of commodities with reasonable price, especially the essential commodities and for the areas with socio-economic difficulties.
Local authorities at provincial and city level must assume responsibility and take measures to balance the supply and demand of essential commodities in their localities, prevent speculation and smuggling, and control the market prices. These authorities must promptly address the unfavorable price changes and prevent the shortage of essential commodities and price soar.
4. Ensuring the effectiveness of social welfare policies
Price escalation, natural disasters and diseases are causing strong and adverse impacts on the life of people, especially the poor, low-income laborers and those living in disaster-hit areas. Along with the strong measures to control the price increase of essential commodities, the Government also effectively implements social security policies and at the same time, expand and immediately carry out new imperative measures.
At the beginning of this year, the minimum salary of civil servants, army officers, and employees of political and socio-political organizations was raised by 20%. The minimum wage of Vietnamese employees working for domestic and foreign organizations and individuals was also raised. For employees who received vocational training, their minimum wage is adjusted to be at least 7% higher than that of the region. Salary for pensioners and the social insurance beneficiaries was increased by 20%, and the subsidies for the meritorious people were also raised by 20%. The Government is also working on a roadmap for increasing the salary of employees of public services agencies, soldiers of the armed forces as well as employees in SOEs. The Government also requested ministries, agencies and local authorities to carry out the new subsidy policy for the elderly, the disabled, and disadvantageous children as well as continue to study the adjustment of social support mechanisms in the coming years. Rice from the national reserve will be provided free to households in disaster-hit areas and hungry households.
Tuition and hospital fees will be kept stable and concessionary loans will continue to be provided to disadvantageous students of universities, colleges and vocational schools. The poor, the policy beneficiaries, and ethnic minority households in the areas with no access to electricity will be granted cash to buy lighting oil. Subsidies for health insurance value will be provided to the poor and sub-poor people and those participated in voluntary healthcare insurance program. Support will be given to fishermen for acquiring new fishing vessels and buying fuel. Fishermen will also be supported in purchasing insurance for ship-body and crew members.
The Government will continue to carry out the National Goal Programs and other policies to help expand production and stabilize the life of the poor, ethnic minorities living in poor regions, and those in disaster-hit areas. These policies include the assistance in housing, land for production, domestic water, infrastructure, borrowing, healthcare, education, employment, legal aid, food, forest land allocation, and resettlement. The support policies for socio-economic development in northern and coastal provinces of the Central region, Central Highlands, Mekong Delta, northern midland and upland regions.
To ensure the effectiveness of the social insurance policies, the Government requested the relevant ministries, agencies and provincial people’s committees to prepare sufficient budget and provisions, and at the same time put in place the monitoring mechanism to ensure that the State’s assistance reach the beneficiaries without losses.
The long-term and fundamental support policies on social security will be further studied and improved. Voluntary social insurance program will be pushed, and the pension mechanisms for farmers in some provinces will be reviewed for a possibility of shifting to voluntary social insurance mechanism. Preparations for the unemployment insurance policy will be accelerated. Labor contracts will be piloted. Measures will be taken to build a durable labor relationship. Enterprises will be encouraged to improve the material and spiritual life of their employees, especially in industrial parks.
Policies for implementing the National Program on Housing need to be finalized. The Government decided to push the Social Housing Development Program to meet the demand of low-income people in urban areas. Public houses for teachers will be built. Poor households in the rural and mountainous areas will be assisted under the Housing Assistance Program. The 2nd phase of the Program for building residential areas and houses in the flood-hit Mekong Delta areas will continue to be carried out, and put in place the Program to develop infrastructure and houses in the Central regions which are frequently hit by flood. The State’s concessionary credit program will change to better support social development projects and policy beneficiaries. The suitable support policies will be introduced to help reduce poverty in a sustainable manner in the 58 most difficult districts. The Government will continue to review and remove fees paid by farmers. The Government will also work hard to introduce new standards of a poor household.
The review and revision of the Land Law need to be accelerated. Compensation, support for resettlement need to be improved for the people whose houses were acquired by the State. People’s committees at all levels must address the complaints of the people in accordance with the law, and the specific conditions of each locality and each case to ensure the legitimate rights of the people and prevent prolonged complaints without being addressed.
Special attention must be paid to prevent the diseases, especially the avian flu, cholera and other serious plagues. Although these diseases have, basically, been controlled, but there remain high risks of the disease reoccurrence. Therefore, strong measures are needed to prevent the outbreak and spreading of the diseases.
According to the forecast this year, more natural disasters might happen with more complicated developments. Based on experiences for disaster prevention and rehabilitation in the past years, the Government requested competent agencies and localities to work out concrete plans on natural disaster prevention, search and rescue in order to minimize the loss of people and their assets.
III
CONTINUE TO CREATE FOUNDATIONS AND PREMISES FOR RAPID AND SUSTAINABLE DEVELOPMENT
The current situation requires us to focus all efforts to control inflation, maintain the macro-economic stability and secure social welfare. These are immediate difficulties arising from the development process. After 20 years of carrying out reforms, our country’s position and strength have strongly improved while there remain great potentials for economic development and in fact our economy is still growing rapidly. Vietnam became a WTO member with an expanded market and strong increase in domestic and foreign investment. Therefore, apart from implementing these said urgent tasks, it is necessary to continue creating foundations and premises for rapid and sustained development in the years to come.
Based on the implementation of fundamental targets set in the Resolution of the National Assembly and the Government since the beginning of this year, we should focus on implementing the Government’s Action Plan to implement the Resolution of the 4th Party Plenum on some major policies for rapid and sustained economic development after Vietnam became a WTO member and the Resolution of the 6th Party Plenum on the continued improvement of socialist-oriented market regime. Especially, it is necessary to effectively implement following tasks:
First, improve the legal system and quickly and comprehensively form the socialist-oriented market economic regime. Continue to speed up administrative reform with a focus on administrative procedures to make sure that this important task and breakthrough will make substantive progress, creating a new standard for the national administration. Improve the role and effectiveness of the State management in the market economy and increasing economic integration.
Second, improve the quality of planning; strongly shift the formation and implementation of the socio-economic development plan (SEDP) with more focus on qualitative indicators, macro-economic stability and sustained development.
Third, accelerate the essential socio-economic infrastructure development, especially important transportation projects in areas which are major commercial hubs with high transport connectivity in order to reduce traffic congestion, increase goods circulation, reduce the traveling costs and increase the competitiveness of businesses and the whole economy.
Fourth, pay special attention to the human resources development, especially high-quality human resources, to attract more hi-tech investment projects with a high value added in order to speed up the economic and export restructuring.
Fifth, create every favorable condition for the development of enterprises of all sectors. Continue to reform the State-owned enterprises with equitization as a central task; review the performance of big economic corporations and further clarify the SOEs’ role in the market economy; improve legal framework and management mechanisms for state-owned economic groups and corporations to operate effectively on a level playing field in the market mechanism in order to make important contributions to meeting essential requirements for the stable development of the economy.
Sixth, together with the preparation for the Project to be submitted to the Central Party Committee on the strategy for sustained development of agriculture, rural area and farmers, it is necessary to establish the National Goal Program on global climate change and sea level rise to minimize potential dangers, especially on agricultural production and farmers’ life.
Seventh, continue to improve policy and expand social security network to give practical assistance to vulnerable groups in the development process, especially wage-earners; sustain the success of poverty reduction, make sure that poor people would genuinely benefit the growth’s outcomes.
Eighth, continue to strengthen the corruption combat, prevent prodigality and boost thrift practice together with the campaign to study and follow the moral example of President Hồ Chí Minh.
Ninth, promote external affairs, national defense and security; preserve the national sovereignty and territorial integrity; maintain the national security, political stability, and social safety; create favorable conditions for the country’s sustained development.
NA deputies,
Comrades and compatriots,
The world economy continues to see complicated and unpredictable developments. In the process of implementing the task of socio-economic development, we should follow closely, update information, analyze and forecast the situation to make timely policy response in order to minimize bad effects caused by emerging difficulties. On the other hand, we must effectively tap new opportunities to bring into full play our country’s development potentials.
The tasks for 2008 are very heavy with serious difficulties and weaknesses in the process of development and integration. However, there are also major opportunities. It is necessary to further improve the information, communication, and increase confidence, determination and responsibility of the whole political system, each party member and each individual to create the consensus and synergy of the whole nation, fully tap opportunities, overcome difficulties and sustain the rapid economic growth.
Being aware of the responsibility before the country and its people, the Government seriously reviewed the situation, identified and took strong measures to successfully implement set targets and goals. The Government hopes to work closely with the National Assembly, the Vietnam Fatherland Front, mass organizations, and all comrades and compatriots.
Under the leadership of the Politburo and the Central Party Committee and with the joint determination and efforts of the whole Party, army and people, we strongly believe that we will successfully control inflation, maintain the macro-economic stability, ensure social security and sustainable growth; successfully implement the 5 year plan 2006-2010 set by the 10th National Party Congress.
Thank you.