I - SITUATION    

1. The social and economic situation in the first quarter, 2011

Entering the year 2011, Vietnam has fundamental advantages: The economy continues to maintain its pretty good growth; social welfare is guaranteed, national defence, security, politics and social order and safety are firmly maintained; major balances of the economy are basically ensured. The 11th National Congress of the Party was crowned with success, creating further the strength and confidence in the entire Party, people and army in the country’s new development stage.


However, difficulties and challenges remain very great. In the world, the world’s economy continues to see complicated developments: the political and social turmoils in some countries in the Middle East and Africa have made impacts, raising vigorously the prices of oil, gold, food and a number of basic materials; the global financial market, particularly the Euro money area, remains unstable; inflation starts to increase in a number of countries in the region, which is normally the important export market of Vietnam. Domestically, Vietnam’s economy and society continues to face the difficulties and challenges which are even greater than last year’s forecasts concerning inflation, stability of macroeconomy and social welfare. GDP growth inclines to be slower and lower than that in the same period last year; prices, inflation and interest rates are higher as compared to the index of inflation and profit rates of businesses; the state of dolarization and the use of gold in doing business and as the payment tool have become more popular and more serious; exchange rate fluctuates strongly, gold price increases, foreign exchange reserve decreases; electricity supply is still tense. On the other hand, damaging cold spells prolong in the North and the northern part of Central Vietnam, causing losses and making no small disadvantages to agricultural production and farmers’ life.

The above-said situation has made negative impacts on production and people’s life, particularly on the poor people and low-income earners, the pensioners, officials and employees, making influence on the people’s confidence in implementing the objectives and tasks of the social and economic development in 2011 and the following years as approved by the National Assembly and mapped out in the Resolution of the Party’s 11th Congress.

The reasons of the above-mentioned situation: Objectively, it is due to the negative impacts of the world’s situation; subjectively, it is due to the limitations and weaknesses by nature of the economy, the growth model and the economic structure are slowly improved, which have been heavily accumulated during the years it has to cope with the state of economic recession and it is also due to the limitations in management and operation of the different levels. This is also the main reason that leads to the state of affairs in the past few years that Vietnam has always faced with high inflation and more unstable and acute macroeconomy than other regional countries.

2. The situation in the time to come

In the world: many forecasts show that the world’s economy will continue to see bad developments. High inflation has happened in many countries, including the countries in the region. The prices of oil, food and a number of basic raw materials will continue to rise. Natural disasters, climate change and the new developments of the situation in the Middle East and North Africa have made bad impacts on the world’s economy. The global financial market continues to be unstable in some aspects, even there is a warning about the danger of recurrence of crisis.

At home: The simultaneous implementation of three targets (the curb on inflation, stabilization of macroeconomy and guarantee of social welfare)  and the indicators of the 2011 economic growth have met with a lot of difficulties and challenges; the results depend much on the determination and social concensus, on abilities, efficiencies and effectiveness of the operation and organisation of deploying the successful implementation of the policies of the Party and the Resolution 11/NQ-CP on February 24, 2011 of the Government. Consumer price index (CPI) can possibly continue to rise. The impacts of the solutions to curb inflation and to stabilize macroeconomy, besides their positive aspect, could yield some side-effects: to slow down the growth tempo, make impacts on the real estate market, on the financial and monetary market, liquidity and the degree of safety of some commercial banks, particularly on  the stability of the system of mechanism and policy for the development of the socialist-oriented market economy of the country.

II. SOME KEY POLICIES AND SOLUTIONS

A. On the policies        

    - All the levels and sectors should grasp deeply and consistently the leading ideas of the Resolution of the 11th Party Congress; the objectives and tasks of the 2011 social and economic development should be closely associated with the five-year (2011-2015) socio-economic development plan: To curb inflation, stabilize macroeconomy; renovate the growth model, restructure the economy; guarantee social welfare. These are the tasks of mutual interactions, so it needs being grasped and deployed in a synchronized way all through the development process.

    - Priority should be given primarily to the curb on inflation; stabilization of macroeconomy and guarantee of social welfare; considering it as both the short-term urgent task of 2011 and the important task for the several years to come. In the year 2011 and in the first years of the five-year (2011-2015) plan, it is not compulsory to achieve the targets of higher growth rate in 2011 than that in 2010. So doing, it is possible to avoid creating high inflation, thus creating firm premises for higher growth in the ending years of the five-year plan. In the middle of 2011, based on the real situation of the first six months of the year, the Political Bureau will give further directions. The adjustment of the targets of the 2011 plan is not needed to be made at this time.

    - The synchronous implementation of the policy of the 11th Party Congress should be deployed on the economic renovation, the perfection of the institution of the socialist-oriented market economy, specifically all the policies and the urgent, immediate solutions should guarantee the consistent implementation of all principles and the economic laws of the institution of the socialist-oriented market economy. It is necessary to have a roadmap in an advance to put an end to the price subsidy of some important materials, thus creating conditions to a normal development of the economy and relaxing the pressure on inflation in the future; all the policies and solutions should be based on the market mechanism with regulation and management of the State with the suitable roadmap and steps.

B- Some key solutions

Together with the concentrated guidance on deploying the  satisfactory implementation of the Government resolutions, particularly the Resolution 11/NQ-CP, on February 24, 2011 “On the solutions mainly concentrated on curbing inflation, stabilizing macroeconomy, guaranteeing social welfare”, it is necessary to deploy the implementation of the solutions concerning the following important issues:

1/ On currency and credit

The currency policy is to be applied in a careful, cautious and flexible manner in a move to curb high inflation, contributing to stabilizing Vietnam dong and gradually raising the reserve of foreign exchange. The mechanism and policy should be quickly built to enhance the management of the foreign exchange (US dollar) and gold market, overcome the state of speculation,  accumulation and illegal trade of US dollar and gold. There should be a roadmap and suitable measures in each period to guarantee the legal interest of those people who have this asset, while paying appropriate attention to the legitimate requirements of businesses and people, trying to avoid making a psychological “shock” leading to social instability; encourage without putting any obstacles to the attraction of foreign exchange sources from abroad and reorganise the gold-trading market. The management of commercial banks’ operations should be enhanced just to avoid having any risks concerning bad debts, liquidity be guaranteed and all the irrationalities in profits and income in this area be overcome.
2/ On finance and investment

While implementing the fiscal policy on tightening and reducing public investment, it is necessary to pay attention to reducing the overspending of the State budget and public debt at a suitable level; take close control over the investment of the State-run business area; and be determined to overcome the state of spreading investment and the lengthy fulfilment of projects as it has happened so far.

3/ On the real estate market   

It is necessary to have synchronous solutions to revamp the real estate market just to make it not to become an affecting factor that could create high inflation and a bubble economy. A roadmap, steps and suitable solutions are needed in the control and limitation of the flow of investment capital into the real estate market and in the fight against speculation, but it is also necessary to avoid making a shock, because in doing so, it will freeze the market, thus making a bad impact on the system of credit organisations and social life.

4/ On the trade deficit

All the opportunities should be made full use of in order to accelerate export work; a close control over import is needed, particularly over luxury goods and those goods that could be produced at home; the mobilization called “The Vietnamese give priority to using Vietnam-made goods” will continue to be accelerated. The implementation of the policy on encouragement of developing support industries should be vigorously deployed; the disparity in the import-export balance be gradually narowed down and the trade deficit be reduced.

5/ On the reform of the State-run businesses

The restructure of the State-run businesses should be enhanced in the direction of equitizing the economic groups and the State corporations; the businesses’ main production sectors should be developed in a concentrated way and all the sectors that are not related to the main production sectors are not encouraged; the State agency that plays the owner’s role of the business should be soon defined so as to avoid the current ambiguous state and the institution on the rights and responsibilities of the organisations and individuals that use the State’s capital in production and business should be promulgated soon.                

6/ On the power issue

Alongside the adjustment of the electricity price according to the market mechanism, the progress of building the power projects should be enhanced; the policy on preferences and encouragement measures for all the economic sectors to make vigorous investment and development should be made public soon; a movement of practising thrift on enegery in the whole society should be launched; priority be given to ensure sufficient electricity for production; investment and production and export of those products that  use much electricity are not to be encouraged.

7/ On the guarantee of social welfare

All the promulgated policies on social welfare should be well implemented; at the same time the situation should be well grasped to give timely support to other objects, including the subpoverty line objects and the low income earners who face with a lot of difficulties due to the affects of inflation and price adjustment.

Resources should be prioritized for agricultural production, production be enhanced and all activities relating to export of food and foodstuff be well managed, farmers’ life and income be raised and rural social welfare be guaranteed.

8/ On the propaganda work

It is necessary to create the uniformity of perception in the entire Party and the concensus in the whole society to grasp in a profound manner the situation and policies and solutions of the Party and the State; to consolidate confidence; encourage cadres and Party members to set good examples in implementing and encouraging the people of all strata and businesses to take an active part in implementing the policies and solutions in a bid to strive to fulfill to the maximum all the mapped-out objectives and tasks.

9/ On organising the guidance and operation work

    - Implementation of the mapped-out policies and solutions should be deployed with determination, consistency and synchronism; the general strength of the whole political system from the Central to the grass-root levels should be brought into full play.

    - The situation should be grasped, analyzed and predicted in a timely and regular manner; the opportunity should be won, the risks should be limited in order to carry out to the best the targets of reigning in inflation, stablizing macroeconomy and guaranteeing social welfare for sustainable development.

    - The vanguard and example of cadres and Party members, of Party organisations at all levels, particularly of the leaders, should be raised in the implementation of policies of the Party and the State; at the same time, the examination and supervision of the implementation should be enhanced at all levels and sectors so as to have measures for timely encouragement, commendation and discipline.

The Political Bureau believe that with the unity of mind and the pool of strength of the entire Party, people and army, all the above-said policies, measures and the Governmental resolutions will be implemented, our country will certainly overcome the current difficulties and challenges and successfully implement the social and economic development tasks as have been mapped out at the Party’s 11th Congress./.