Professor Nguyen Duc Khuong: A year of Vietnam facing spectacular challenges

(Dan Tri) - From France, Professor Nguyen Duc Khuong - CEO of Leonard de Vinci Business School (EMLV Business School) France; Chairman of the Association of Vietnamese Scientists and Experts Global (AVSE Global) sent an article to Dan Tri.

The Government's report shows that Vietnam's economic growth after the first 9 months of the year was quite positive, with each quarter higher than the previous quarter. Compared to the same period, GDP in the third quarter increased by 5.33%, the second quarter increased by 4.05%, and the first quarter increased by 3.28%. Although it has not yet achieved the year's target, this is still an encouraging result when looking at the context of fluctuations in world geopolitics , the international trade environment, and changes in people's consumption and saving habits. The Russia-Ukraine war has not yet ended, but instability in the Middle East has broken out between Israel and Hamas. These local conflicts have had a great impact on the parties involved, focusing on social issues, immigration, and energy security. Vietnam is still among the countries with high growth in the region and internationally.

In October 2023, the International Monetary Fund (IMF) updated its forecast for global growth in 2023 at around 3%, the dynamic Asia- Pacific region at 4.6%, and ASEAN at 4.2%. The most negative forecasts from the World Bank (WB) and OECD for Vietnam's economic growth this year are also 4.7% (August) and 4.9% (September). Other positive points that are still Vietnam's strengths include a stable macro environment, controlled inflation, and improved investment environment. The high contribution to GDP of the industrial and construction sectors (37.16%) and the service sector (42.72%) is also a bright spot affirming efforts to improve the growth model. Foreign direct investment (FDI) inflows in 2023 will continue to increase and are estimated to reach 36.6 billion USD in registered capital, up 32.1% over the previous year.

Overall, the positive results achieved come from many factors such as efforts to reform the economy, promote business expansion, create a transparent and favorable investment environment to mobilize domestic and foreign capital, build connecting transport infrastructure and complete the legal corridor to ensure fair competition and protect investors. Vietnam's proactiveness in promoting the implementation of bilateral and multilateral trade agreements helps expand the market for Vietnamese enterprises, limit risks in international trade, especially the risk of shortage of raw materials, input factors, and export decline thanks to diversified markets. The CPTPP (Comprehensive and Progressive Agreement for Trans -Pacific Partnership), EVFTA (EU-Vietnam Free Trade Agreement), and UKVFTA (Vietnam-UK Free Trade Agreement) are taking effect. For example, data from the Ministry of Industry and Trade shows that trade turnover between Vietnam and CPTPP countries in 2022 reached 104.5 billion USD, up 14.3% compared to 2021. Economic coordination in the context of geopolitical instability, competition for influence and local conflicts in many regions requires flexibility, adaptability and initiative. In the past year, the Government has done this, demonstrated through many economic diplomacy activities to expand the market.

Receptions and talks with senior leaders of major partners (USA, China, Korea, Japan, Australia, Netherlands, etc.) are creating work and business opportunities for domestic and foreign corporations. In 2023, many global corporations such as Boeing, Walmart, Apple, Qualcomm, Nike, Morgan Stanley, Intel, GE, Google, etc. came to Vietnam to seek opportunities to expand investment and production. Policies promoting strategic breakthroughs have made clear progress, in which society is aware of the major focuses of the year such as stabilizing the macro economy , controlling inflation, creating growth momentum, developing infrastructure, science and technology, innovation, digital transformation, and approaching new economic models (green, circular). Institutional reform and administrative reform have also received attention from the Government, resolving many problems related to production and business, finance, currency, real estate, corporate bonds, access to credit, and land. Putting people and businesses at the center of administrative reforms, along with using indicators in reform management and administration (SIPAS administrative service satisfaction index and PAR administrative reform index), is important not only in assessing achievements but also in seeing the way forward that needs to be done.

In addition to the bright spots, it is undeniable that Vietnam has also faced many challenges in the past time. In 2023, businesses in general will operate in an environment of declining demand and increasing production costs. Difficulties in supply chains, logistics and rising energy prices will pose major challenges to production and business. Many Vietnamese businesses, especially those in the textile and garment export sector (down 9%) and seafood (down 22%), are in a state of holding on due to a lack of orders due to slow growth recovery in major export markets such as the US and EU and weakening growth in China. The growth of the EU and the euro this year is expected to be only about 0.6%, while the US will grow by about 2%. Despite improvements, global aggregate demand in 2024 will still be weak. To overcome the challenges of the global economy, it is important that Vietnam promptly grasps and adapts to changes in consumer needs and tastes in developed markets. For example, a huge trend in France and Europe is changing lifestyles, with people increasingly consuming products with clear origins, low carbon emissions and environmentally friendly. According to the "Global Paper and Packaging Report" by Bain & Company, 71% of European consumers want to buy sustainable products, while 71% of American consumers want to buy products with as little packaging as possible.

In Vietnam, the Van Thinh Phat and SCB Bank cases, as well as a number of other market manipulation cases, have had negative impacts on the market and economic growth due to the complex economic and legal relationships between affiliated legal entities. Early detection and handling of such cases will avoid major economic losses, the risk of market disruption, and chain effects on the system. Because the stability and efficiency of the financial market and the banking system play an important role in mobilizing investment capital for growth, the requirement is to continue to be determined to make the market transparent, find ways to reform and improve the management capacity, and effectively supervise banks to avoid manipulation, manipulation, and fraud. Part 2: It's time to switch to a new model Photo: Vu Tuan Anh / GokuAgency

Content: Moc An

Design: Tuan Huy

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