Rejuvenate the drivers of consumer demand.

Domestic consumption is one of the three pillars of economic growth. Renewing the drivers of consumer demand is a pressing task.

Associate Professor Dr. Nguyen Thuong Lang - Senior Lecturer at the Institute of International Trade and Economics , National Economics University - had an exchange with a reporter from the Industry and Trade Newspaper regarding this issue.

Stimulating consumption commensurate with the size of the $500 billion economy.

- At the end of the first quarter of 2024, total retail sales of goods and consumer service revenue increased by 9.9% compared to the same period last year. Is this a foundation for breakthroughs in the following quarters, sir?

Mr. Nguyen Thuong Lang: According to newly released data from the General Statistics Office ( Ministry of Finance ), total retail sales of goods and consumer service revenue in March 2025 are estimated to increase by 10.8% compared to the same period last year.

Overall, in the first quarter of 2025, total retail sales of goods and consumer service revenue increased by 9.9% compared to the same period last year; of which, revenue from accommodation and food services increased by 14% and revenue from travel and tourism increased by 18.3%.

At the end of the first quarter of 2024, total retail sales of goods and consumer service revenue increased by 9.9% compared to the same period last year.

It can be seen that increased domestic consumer demand during holidays and the Lunar New Year, along with a high number of international visitors to Vietnam, are positive factors contributing to the growth of the trade and service sector in the first quarter of this year.

Notably, to boost domestic market growth, the Ministry of Industry and Trade recently issued Directive No. 08/CT-BCT dated April 4, 2025, assigning targets for total retail sales of goods and consumer service revenue in 2025 to each locality. Following Directive No. 08/CT-BCT, localities have begun implementing it. This is an important solution to promote domestic market growth in the coming quarters of the year.

However, in 2025, the global political and economic situation will continue to be volatile and complex, affecting both domestic and international commodity markets. Therefore, despite achieving some initial positive results, compared to the government's target of over 8% GDP growth in 2025 and a target of 12% growth in total retail sales of goods and consumer service revenue, the tasks for the remaining quarters of the year will be quite significant.

To achieve growth targets, I believe it is necessary to effectively implement national promotional programs; to have a more suitable and intelligent distribution system that reaches every corner, thereby promoting the distribution of goods through digital platforms and e-commerce; and to promote connections between domestic manufacturers and modern distribution channels to expand the consumption of domestic products nationwide. In addition, policies on tax exemptions, reductions, and extensions, as well as land rent, are needed to support people and businesses and boost production and business activities.

Wage and income policies need to be changed, and income tax policies need to be adjusted. Local authorities should strengthen tourism promotion and marketing, improve the quality of tourism products, and create unique attractions to draw more tourists.

This will stimulate domestic consumption, creating conditions for the domestic market to develop in proportion to the size of the economy, which is projected to reach over $500 billion this year.

Economist, Associate Professor Dr. Nguyen Thuong Lang. Photo: Nguyen Hanh

In addition, it is necessary to promote the development of the private economic sector, create conditions for household businesses to transform into enterprises, and at the same time prioritize the establishment of new enterprises with larger scale and broader scope.

Policy institutions should not only manage and protect, but also maximize encouragement to help this sector's potential be unleashed. This will create a labor market, investment, and other factors, thereby increasing aggregate demand.

Large-scale projects also need to be accelerated. Each accelerated step in these large-scale projects will help increase aggregate demand, thereby creating new impetus for economic growth. All these factors combined will create new momentum in both the market and production of the economy.

Support policies need to be more substantive.

- Regarding stimulating domestic aggregate demand, you mentioned the role of the private sector. This sector is making a significant contribution to the overall economy; however, its development is not commensurate with its potential. What are your comments on this?

Mr. Nguyen Thuong Lang: The private sector is currently underdeveloped compared to its potential. One of the reasons for this is the inadequate legal and policy system, which makes it difficult for private businesses to access resources. The business legal system lacks clarity, specificity, and rationality; it is overlapping, contradictory, and fails to anticipate all possible problems.

The development of the private sector as a driving force of the market economy has been affirmed for almost 20 years. When Vietnam began its economic reforms and opening up, the private sector was considered equal to other economic sectors. However, this is not entirely true in reality.

I believe we need to redefine the private sector. The state-owned economy should play a leading role, the foreign direct investment (FDI) sector should be the driving force for development, and the private sector should be the inclusive economic sector. This is because this sector provides employment for workers not in the state-owned or FDI sectors.

I would like to emphasize the need to consider the private sector as an inclusive sector for Vietnam, to develop an inclusive economy so that no one is left behind.

We also expect that with this new perspective, the private sector will have a more comprehensive development view, be treated more equally, and receive stronger and more substantial support, especially in accessing land resources and capital.

- Returning to the topic of domestic consumption and renewing the drivers of consumer demand, what solutions do you recommend?

Mr. Nguyen Thuong Lang: Consumers who want to increase spending need to have income. For example, in Thailand, the government provides subsidies to farmers, and they also have policies to distribute cash to vulnerable, disadvantaged, and low-income individuals. This initiative helps them boost domestic consumption. I believe Vietnam should adopt this policy if possible.

Furthermore, regarding personal income tax, I believe a lower tax rate is necessary. At the same time, businesses with good policies for their employees, such as salary increases, bonuses, and social welfare benefits, should be encouraged with incentive mechanisms. This will help stimulate genuine consumption.

In addition, consumer credit policies and housing policies for low-income earners need to be more substantive. These policies need to be implemented thoroughly and comprehensively, and the policy cycle should be longer-term.

Thank you, sir!

Nguyen Hanh

Source: https://congthuong.vn/lam-moi-dong-luc-kich-cau-tieu-dung-382411.html