The Government Electronic Information Portal organized an online seminar with the topic " Macroeconomic stability and corporate bond market development"
On the afternoon of May 28, the Government Electronic Information Portal organized an online seminar with the theme "Stabilizing the macro economy and developing the corporate bond market" to discuss measures to continue stabilizing and helping the market operate within the legal framework, contributing to the economy.
In 2022 and the first months of 2023, we have basically achieved the set general goals: Maintaining macroeconomic stability, controlling inflation, promoting growth, ensuring major balances, ensuring social security, consolidating national defense, security, safety, and people's safety, enhancing foreign affairs and integration. In very difficult conditions, GDP in the first quarter still maintained its growth momentum. The results achieved are very valuable in the context of unprecedented difficulties and challenges at home and abroad in many years, and difficulties and challenges outweigh opportunities and advantages, with many unprecedented problems.
Under the leadership of the Party, the accompaniment and supervision of the National Assembly, with the participation of the entire political system, the support of the people and businesses, the directions and administrations of the Government and the Prime Minister are consistent, synchronous, drastic, timely, appropriate, substantive, steadfast in goals and principles but extremely flexible, closely following reality, developments in the country and the world, creating substantive, measurable changes in areas of public concern in recent times, creating initial changes in many outstanding issues that have lasted for many years; consolidating and strengthening social trust and market trust with specific and effective solutions, policies and actions to remove difficulties and obstacles for people and businesses.
Although the situation is still facing many difficulties, many policies and management solutions are having a positive impact. In April and May, the situation has improved, many sectors have changed positively, such as newly registered FDI capital in May increased sharply, the Industrial Production Index (IIP) initially showed good signs in April... Reputable international organizations continue to assess and forecast positively about Vietnam's economic prospects in 2023 and the coming time.
The development of the corporate bond market has received much attention in recent times, because this market holds a huge source of capital for the economy. Every fluctuation, no matter how small, of the market has a significant impact on the economy and the sustainable development of this market is also a channel to mobilize capital from the people for the economy in addition to traditional channels, which is an important thing to do.
In the second half of 2022, the individual corporate bond market witnessed a widespread psychological "shock" when investors often saw many cases being handled by authorities. Declining confidence combined with liquidity of bond repayment cash flows of many businesses facing difficulties has increased the risk of this market.
Guests attending the Dialogue (from left to right): Prof. Dr. Hoang Van Cuong, National Assembly delegate, Vice President of the National Economics University; Deputy Minister of Finance Nguyen Duc Chi; Deputy Minister of Planning and Investment Tran Quoc Phuong; Dr. Nguyen Si Dung, former Deputy Head of the National Assembly Office - Photo: VGP/Quang Thuong
To support the market and businesses to overcome the difficult period, the Government, the Prime Minister and management agencies have made many important decisions to stabilize the market, put the market into operation within the legal framework, contribute to the economy and, importantly, to arouse people's confidence in this market for sustainable development. Not only supporting businesses, but the more important goal is to maintain macroeconomic stability and promote growth in the context of great need for resources to recover after the pandemic. Although it has not developed as expected, the market has shown positive signs. The road ahead is still long, with many difficulties, obstacles and challenges to overcome, requiring us to make more efforts and be more determined in implementing "ice-breaking" measures for the market.
To gain more perspective on this issue, the Government Electronic Information Portal organized an online seminar with the topic " Macroeconomic stability and corporate bond market development ".
The panel discussion included the following guests:
1. Deputy Minister of Planning and Investment Tran Quoc Phuong
2. Deputy Minister of Finance Nguyen Duc Chi
3. Prof. Dr. Hoang Van Cuong, National Assembly delegate, Vice President of National Economics University
4. Associate Professor, Dr. Vu Minh Khuong, Lecturer at Lee Kuan Yew School of Public Policy ( answering online from Singapore )
Dr. Nguyen Si Dung, former Deputy Head of the National Assembly Office, moderated the content of the Dialogue. The Dialogue was LIVE RESPONSE on the Government Portal and other platforms of the Government Portal.
There is every reason to trust the management to achieve the set goals.
Dr. Nguyen Si Dung: Currently, the world situation is changing rapidly, complicatedly, and unpredictably, with many unprecedented problems arising beyond forecast. Many challenges are posed to countries such as economic recession, rising inflation, energy insecurity, global food security, etc. How do external factors and the international environment affect our efforts to stabilize the macro economy? How would you evaluate the economic achievements, especially the macro economy, that we have achieved in recent times? Could you please compare them with other countries in the region?
Deputy Minister of Planning and Investment Tran Quoc Phuong : Based on the actual situation, the domestic and world economic situation in 2022 and the first months of 2023 can be summarized as follows: More difficulties and challenges than advantages; rapid fluctuations; very unpredictable, difficult to forecast, some realities that occur exceed forecasts and the complexity of the world situation affects economies.
Our country's economy is still modest in scale while its openness is large (nearly 2 times that of GDP). Thus, the impact of external factors on our country's economy is very large. At the end of 2021 and 2022, we expect that after overcoming the COVID-19 pandemic, the economies will enter a period of strong recovery. However, the reality is not as predicted, there are even factors such as political conflicts, finance - currency ... have slowed down the recovery process, even pushing the economy to the risk of recession.
Some factors in the world seriously affect the macro economy of countries, in which inflation is a major factor, originating from the US and Europe, spreading globally. Many countries have to launch solutions to cope with the situation of rising inflation, especially fiscal and monetary solutions. The Fed continuously increases interest rates at a large margin, the central banks of Europe and major economies have all moved to increase interest rates sharply to curb inflation. The above solutions make us face a decline in economic growth.
Despite the difficult context, the results of macroeconomic management and growth, ensuring major balances, and controlling inflation in our country's economy have still achieved encouraging results. According to the comments of experts and state management agencies on macroeconomics, the most important thing we have achieved is maintaining macroeconomic stability, controlling inflation below the target assigned by the National Assembly, as well as ensuring major balances, and operating monetary and fiscal solutions at a reasonable level. For example, regarding exchange rates and interest rates, we have adjusted them but within appropriate amplitudes, without creating major shocks to the macro economy.
Besides, we still have to continue to face increasing pressure from the outside and must find ways to overcome it in the coming time, such as: World demand has decreased sharply; the manufacturing, processing and manufacturing sectors and some dynamic sectors have been severely affected; lack of orders, production reduction... These are the immediate difficulties we have to face from now until the end of the year.
Compared to other countries in the world and the region, through the aggregated statistics, our macro context is still quite positive. For example, after the end of the first quarter, our country's GDP growth rate reached 3.32%, while major partners and large economies had low growth rates such as the US reaching 1.6%; EU reaching 1.3%; Japan reaching 1.3%; South Korea reaching 0.8%. When growth is low, consumer demand in these economies also decreases, leading to the impact on our business orders and output products. In the first quarter of 2023, the growth of the processing and manufacturing sector decreased significantly.
But the growth rate of 3.32% compared to the World Bank and IMF's forecast of more than 2% in 2023 shows that we are still at a quite positive level, creating a premise to strive in the last months of the year.
Besides, after 4 months, we achieved an inflation rate of under 4% as per the target set by the National Assembly. Other economies are at quite high levels such as: Singapore (5.5%); Indonesia (about 5%), EU (about 7%); US (about 5%). These are our partner economies and they are all struggling with rising inflation. With such analysis, we have every reason to believe in our policies and management from last year as well as the beginning of this year to achieve the set target.
Vietnam Dong is the best currency
Dr. Nguyen Si Dung: Regarding this issue, we would like to hear the opinion of Dr. Vu Minh Khuong from Singapore!
Dr. Vu Minh Khuong, Lecturer at the Lee Kuan Yew School of Public Policy: The world expected to overcome the pandemic but did not expect it to penetrate deeply into the health of the economy, some things that do not happen overnight. Meanwhile, the context of the Russia-Ukraine war has caused the international situation to be unstable, inflation is high, interest rates are at an unprecedented high, countries are struggling. In that context, we need to sympathize with the Government, localities, and businesses that are struggling fiercely. But the good news is that Vietnam is showing good character. From the outside, Vietnam looks like a rocking ship but has a steady steering, improved credit rating, good budget revenue and expenditure, and tight inflation control compared to many countries.
Global growth is a bright spot, although the IMF forecasts Vietnam to grow 5.8% this year, the forecast for next year is quite high. They still have high expectations for Vietnam's future. Foreign investors are still eager to enter Vietnam, expecting Vietnam to participate in the new value chain.
Looking outward, like Vietnam, Singapore has a trade ratio several times higher than its GDP. In the first quarter, Singapore's GDP increased by 0.1%. The US growth rate, when adjusted recently, was down to 1.1%, which means there are still difficulties before returning to favorable conditions.
What I want to emphasize is that the difficulties clearly create a sense of inhibition for businesses. Looking at the truth, it is not because of the Government's management, but the economic model that is beginning to show great pressure to change.
For example, shrimp and seafood exports have decreased, while international competition has increased. I go to countries to give lectures or talk about Vietnam's experience first. Bangladesh and India export 7 billion USD, want to increase to 15 billion USD, so they grasp digital transformation and green transformation very quickly. Meanwhile, we are still only improving the business environment, there is no fundamental breakthrough. This is something we must pay attention to, it is time to fundamentally reconsider improving the growth model in the future.
It is gratifying that localities are maturing rapidly and have great ambitions to contribute to the realization of the goal of a prosperous Vietnam by 2045. Leaders of localities such as Ho Chi Minh City and Hai Phong are very attentive and want to learn from the experiences of other countries to apply to the country's development.
We are entering a new stage of growth, requiring new breakthroughs in thinking as well as awareness of building a modern nation in the next 2-3 decades.
Dr. Nguyen Si Dung : Dr. Vu Minh Khuong has specifically analyzed the solutions and achievements that have contributed significantly to resolving this psychological factor. Dr. Khuong, how do you perceive and evaluate Vietnam's efforts and response measures to stabilize the macro economy?
Dr. Vu Minh Khuong : Vietnam's response is very sensitive. I especially appreciate the efforts of the State Bank, the Ministry of Finance, and the Ministry of Planning and Investment to help international investors feel secure.
They said that Vietnam's response capacity is quite good, the Vietnamese Dong is the best currency, other currencies have depreciated. Of course, currency stability can cause difficulties for export enterprises, but fortunately, current account surpluses are good, FDI attraction is good, export activities are quite good... On the macro side, it is good, promoting public investment, highways, projects have been implemented by the Government drastically, when there are difficulties, they are resolved immediately.
Regarding the electricity issue, we need strong support from the state-owned enterprise sector. This sector has not yet had satisfactory solutions, it needs to be resolved immediately, focusing all efforts on solving it. For example, the renewable energy issue, although not yet standard, is in the right direction, it needs to be resolved, not to let the situation of power shortage...
The overall picture of the general response is correct and good, but the ecosystem response to the challenge is beyond the capacity of a specific ministry, branch or the Government, but requires the entire political system, including businesses, to discuss and solve the big problem.
Singapore's experience is that we need to have a council to shape the strategy for the coming period, clearly define responsibilities, and closely coordinate to create momentum to move forward and build trust in society. There are many issues to discuss, but what is being done is commendable and is going in the right direction.
Maintaining macroeconomic stability is the greatest success.
Dr. Nguyen Si Dung: Dr. Vu Minh Khuong has positively evaluated the solutions that have helped us stabilize the macro economy and still promote growth. Dr. Vu Minh Khuong has concerns about the electricity issue. I think the Government has recently made very timely decisions to remove obstacles for solar power, wind power, etc.
With the same question, I would like to ask Dr. Hoang Van Cuong, how do you evaluate the solutions to stabilize the macro economy to ensure our recent growth?
Prof. Dr. Hoang Van Cuong: I strongly agree with the assessment of Deputy Minister Tran Quoc Phuong on the macroeconomic situation as well as the opinion of Dr. Vu Minh Khuong. Indeed, we see that in the context of the world having turbulent waves such as inflation and growth decline, Vietnam maintaining macroeconomic stability is the greatest success for us to create stability in many aspects, including people's lives, business production activities of enterprises and we do not have to pay the price for restoring balance. To be successful, there are many solutions that the Government has implemented, but I think from 3 perspectives:
Firstly, macroeconomic stability has been very successful. I think that the Government's fiscal policy management has responded very promptly, appropriately and effectively. We see that, in the context of the epidemic, many countries also use fiscal policy to support businesses and people, but the consequence after the epidemic is inflation. But Vietnam still supports businesses and people, also uses fiscal policy but does not fall into inflation, still reduces the burden on businesses, such as reducing taxes, extending and postponing contributions. Even with the people, there are places where we directly support with money, there are places where we support with material means. Or we also see problems related to revenue and expenditure policy management. In such a difficult context, of course, revenue tends to decrease, especially when we exempt, extend and postpone revenues. But in fact, in the past two years, 2021 and 2022, revenue has exceeded forecasts by a lot, showing that we have taken advantage of the opportunity to exploit revenue sources to compensate for the delay, postponement, and late payment of enterprises. It is from doing well in revenue sources that our balance of payments is always lower than the deficit level assigned by the Government. Therefore, public debt has decreased very low, previously there was a period of over 50%, if calculated according to the new GDP, in 2021 it was down to 42% and in 2022 it was only over 38%. This is a very good space for us to continue using these fiscal policies. That is a success and shows that we are very skillful and effective in using fiscal resources.
Regarding currency, as Dr. Vu Minh Khuong said, we are the country that maintains the most stable and best currency value. Our exchange rate is not rigid, there are adjustments and flexible changes, but it only fluctuates around the 23.5-24.5 frame and eventually returns to the stable exchange rate, thereby creating a stable currency value, helping businesses feel secure in production and business, without fear of currency devaluation, causing panic, hoarding... I think these are the factors that demonstrate our success, the whole world has such high inflation, we can maintain it, especially our open economy, when the currency prices of other countries increase, the risk of our currency devaluation is very high. Recently, in 2022 and recent months, while the world forecasts that inflation tends to slow down, major banks in many countries have hardly made any moves to reduce operating interest rates, but the State Bank of Vietnam has reduced operating interest rates three times, aiming to bring down the interest rate level, helping businesses have resources. This is a drastic action in the current context and also resolute. We have heard, for the third time, the Governor's directive: If commercial banks do not reduce, they can consider credit room later... Of course, we must be very cautious in the context of many difficulties in the world.
Third, regarding the management work, I think that the management work between the Government and the National Assembly has a very clear interaction and support, almost as if the policies are born, there is always a quick support and interaction. What is needed for life, we have a legal framework to implement, and when there is, the Government's actions are very decisive in difficult contexts. Over the past year, there have been many directives from the Government to resolve the bottlenecks, even the Government leaders have made many inspections to the localities. Many meetings that I find very good are to assign deadlines to complete the work, very clearly to the localities that by this time they must be resolved. I think that when quantitative requirements are set, the deadline also shows the Government's determination and decisiveness very well.
Dr. Nguyen Si Dung: The assessments of Dr. Hoang Van Cuong show that the recent solutions are very correct and positive. But there are still many difficulties in the future. He said a very important idea is that the National Assembly's cooperation with the Government is a very important foundation, because without cooperation, the approval agency will be in trouble. In your opinion, what is the next solution that we must pay close attention to and promote?
Prof. Dr. Hoang Van Cuong : It is true that we are still facing a world context with many unpredictable fluctuations. It is forecasted that world inflation will tend to decrease, but we do not know if it has really ended. In particular, we have recently seen a series of banks falling into crisis, some even going bankrupt and having to be sold. That is a concern that will affect the financial system. If this event occurs, it will create a systemic spread, then the risk of warning about a world economic recession, even falling into crisis, is not unfounded. Moreover, the context of the geopolitical crisis is not yet clear, creating disruptions and conflicts in the world economy. The world context is extremely uncertain and has many risks. So how can domestic policies respond?
Regarding monetary policy, we are very determined. I think we are one of the pioneering banks in operating to reduce interest rates early to help businesses with resources. But we also need to be very careful because if the world situation gets worse, we also need to have the capacity to cope. Recently, there was an incident at SCB bank but we handled it very promptly. We must always be in that situation. Therefore, regarding monetary policy, I think we must continue to use a flexible monetary mechanism but must be cautious and must control cash flow. If in the current context, many businesses are in difficulty, have needs but we cannot control cash flow, so that cash flow does not flow to the right places where it is needed to produce and do business to create wealth to bring to the market, liquidity immediately, but falls into frozen areas, lacking money, and having debts, it is almost like throwing money into a black hole, throwing salt into the sea, sometimes only depleting financial resources.
Regarding fiscal policy, we have quite good room to implement fiscal policy. I appreciate that recently, the Government has continued to implement supportive fiscal policy, such as immediately deciding to defer contributions, taxes, rents, etc. and recently proposed that the National Assembly further reduce VAT by 2%. I think these are very timely measures. VAT is even currently proposed to be further reduced until December 31. December 31 is the time when we have to finalize the budget balance, but according to the policy, I think it should be open. By December 31, if the situation becomes complicated and there are still difficulties, the Government continues to propose that the National Assembly Standing Committee approve it, then we can extend it immediately, without having to wait until the May session. I think that we must proactively implement support policies, and some fiscal policies can even provide stronger support. We see that currently, the bank is reducing interest rates using monetary management tools, but I think that using fiscal policy in combination with monetary policy by supporting interest rates is very effective. If we can increase the interest rate support, we will also direct capital flows to those who need support, thus increasing opportunities for many businesses.
In addition, other policies such as Dr. Vu Minh Khuong said that export enterprises are currently facing difficulties, so we can manage the exchange rate policy on the one hand, but also the corporate income tax for this group. Or there is a trend of enterprises laying off workers because of few orders and high labor costs, we must consider social support policies or policies to postpone social insurance contribution obligations to reduce the burden. In terms of finance, I think it is also a very important factor.
The last point I really agree with Dr. Vu Minh Khuong is that we must change our thinking and actions, especially appreciate the actions of some local leaders. Perhaps in the current context, the key lies there. That is, we must remove institutional bottlenecks to free up resources. In the context that the world has not recovered, the world market is still weakly absorbing, we must free up resources to increase domestic capacity in the country. Currently, I think these bottlenecks are quite common, so the situation of public investment disbursement is not fast despite our strong promotion; or the Resolution 43 package on economic recovery capital has not been disbursed much up to this point, still stuck in policy mechanisms. I think that we need to remove institutional and policy bottlenecks to free up resources to increase internal strength.
Vietnam is a country with the world's future development orientation
PhD. Nguyen Si Dung: Prof. Dr. Hoang Van Cuong clearly stated the solutions now so that we can continue to promote, including monetary policies, fiscal policies, and then support businesses, remove institutional problems and congestion. Please hear the opinion of TS. Vu Minh Khuong!
PhD. Vu Minh Khuong : GS. Hoang Van Cuong presented very comprehensively and deeply. I want to emphasize 3 points.
When talking about preparing external shocks, with a developed economy like us, it is also necessary to prepare for the inner shocks. We can have shocks, local crises somewhere, businesses, other banks, so they must be ready, not just outside. It is the problem that the world they also have to guide clearly, which is to create buffers (cushioning) to penetrate what may happen. For example, how is the bond default? In other words, how people go to the emergency room, how to treat it? Need to localize all the problems that do not affect the mind of everyone. Anyone who does well still goes forward, and whoever falls down is a salvation immediately. That is to prepare the situation.
The second is more important, the foundation is that our nails are quite stable. This is our superiority. Overseas looking at Vietnam found that the politics were very stable, the people's position were stable, optimistic and good political system. The Government manages and drastically. It is very good. How do we maintain solidarity and attachment among the entire people so that everything is really on one heart, bringing the country to stabilization. The National Assembly is meeting and should send such messages to show very high consistency in our political system, bringing the country to prosperity. We have just over 25 years, very short.
The third point I think is the most important and also the most challenging point. That is, we have to be aware of the world that has changed, there are not only abnormalities, but not imagining it can happen, will happen. Besides, there are trends in formidable, like chatgpt. I teach students to also have to innovate basically, that is, now asking how to chatGPT how he must do better to get a high score. That is, artificial intelligence develops very quickly. Or green economy. For example, the Philippines identified 178 GW offshore, now attracting investment, producing halogen or electricity. We have a large array in the South China Sea to protect sovereignty and production. It is necessary to survey how much energy and resources to attract foreign investment. Like Singapore, for example, attracting investment centers without green energy is that they do not agree to invest. Where to get it is also the problem. But Vietnam has the same conditions, so our green energy must be better. I feel that many parts in our ecosystem have not been sensitive to green economy. This is catching up with the trend.
Our international cooperation I think is great. The trip of Prime Minister Pham Minh Chinh attended the G7 summit in Japan was highly appreciated. Overseas they look at, our country attended and made a very accurate statement, going into people's hearts. Thus, our international cooperation is not merely an economic problem but it is clearly involved in the stable system of the world as a very responsible and range member. Vietnam is a country with the level of future development of the world, how to promote peace, friendship and prosperity.
I would like to emphasize and return to the economic model that Mr. Cuong also agreed with me: It is clear that the model must be renewed, from the cheap manpower to become a high manpower is a problem that all localities have to think about. Now that "we have cheap manpower, cheap soil, just here" is not. Must be high manpower.
Secondly, we think to solve the business environment for less difficulties, that is, to help harassing businesses, it is already good. Not! Now we must build the foundation of a modern economy. We have to quickly overcome the period of troubles, and from the reduction of troubles to turn into an elite army that supports businesses forward. How the Ministry of Planning and Investment, or the Ministry of Finance sends the elite army to localities and localities who want to break through, we support immediately. I find your officials very excellent and enthusiastic, the ministers and Deputy Ministers are also great. But how to create motivation. We have the ability but do not have a good motivation system to wholeheartedly. Mr. Park Hang-seo told me, his secret to bring success to the Vietnamese team is to create a resonance. Vietnam has not created total power.
The third point in grasping the trend is that we have to switch from attracting passive investment to proactive associated with the world's great businesses to prepare for the future, as the experience of Singapore. Need to learn how their future strategy is, how Vietnam positions to help them move forward. In the coming time, we take the initiative not to wait for the eagle to come anymore but really close to the eagle to solve many problems. This is the problem that I think we must have a huge motion in the near future, we must really turn resources into strategic strength. Having resources that pouring into non -standard things are easy to get caught in the average income, which is only convenient to turn into difficulties. The average income trap is actually simple, it is convenient but does not know how to use it to turn into a big fruit that makes it difficult for businesses. Those are the things that we are very interested in increasing Vietnam's economic response in the near future.
PhD. Nguyen Si Dung : The problem is that everyone is important to inflation. Recently, Vietnam has controlled inflation very well. But if inflation arises, the cost to stabilize inflation will be very difficult, time -consuming and effort. The control of inflation is very important, so in the coming time we need to orient how to keep macro stability, especially to control inflation? Please invite Deputy Minister of Finance Nguyen Duc Chi.
Deputy Minister of Finance Nguyen Duc Chi : Talking about stabilizing the macro balance and the results achieved in recent years, I personally completely agree with the comments, analysis and judgment of TS. Vu Minh Khuong, PhD. Hoang Van Cuong, Deputy Minister Tran Quoc Phuong.
I would like to emphasize a very important aspect, helping the country, economy and the Government to achieve the recent results in macroeconomic management. It is a coordination in policies when managing macroeconomics, especially a smooth combination in fiscal policies and monetary policies. It can be seen that when we need to control inflation, we must implement many solutions related to monetary policy to keep inflation at a target level or below the target level.
In order to promote support for the economy, we must solve with the expansion fiscal policy as the policies that Mr. Cuong stated. It is to delay taxes, reduce taxes, reduce land rent, many taxes ... for businesses and people. Then we strengthen, expand public investment, invest in infrastructure, highway system and other infrastructure. Besides, we also need to solve pandemic problems. How to achieve these two policies, I think that the achievement of the government has achieved in the past time. From the perspective of the Ministry of Finance, the advisory agency for the Government, the National Assembly and the Party on the fiscal policy, I assess the fiscal policy in recent years as the fulcrum and pedestal for us to perform other macro tasks. Mr. Cuong also said we still have room, and we are still using it.
Update the fiscal situation, the results in 2021-2022 have been publicly announced. As a result, in 2022, the state budget was still achieved as the estimate, although it decreased compared to the same period, but the decrease was not much. We are still reporting to the Government and implementing solutions to ensure the right, sufficient collection and achieve the goals of the fiscal policy. National financial security, public debt, as Mr. Cuong has just reflected, we even reduce public debt. This is a very bright point and we must always be aware of the coordination between different macroeconomic policies, especially fiscal policies and monetary policies.
With the goal of controlling inflation that Mr. Dung just said, to achieve that I think these two policies need to be connected together. If we make the deficit, the State must continue to borrow more, the interest rate may increase. Interest rates, the interest rate of government bonds must increase, will affect the entire interest rate system, because the government interest rate is the base interest rate. So based on the experience and results recently, we need to pay close attention to the policies. When we harmonize the policies, we will achieve the desired results, including inflation control.
PhD. Nguyen Si Dung : Thank you Deputy Minister Nguyen Duc Chi! It is clear that the harmony between policies is also a solution to stabilize the general macroeconomic and inflation control. Please hear the opinion of Deputy Minister Tran Quoc Phuong on inflation and its impact on economic development!
Deputy Minister of Planning and Investment Tran Quoc Phuong : Regarding the importance of inflation, we can easily see, both in theory and practical aspect. I would like to not talk about the theory, in the subjects of economics and macroeconomics. Report to Mr. Cuong, in our school, we have lectured a lot. But in practice, I would like to emphasize the two ideas.
In the past, we also witnessed the times when suffering of high inflation as the 80s and 90s of the last century or the 2008-2011 period with the impact of the world economic crisis. With the effects of such inflation, as the problem has posed is that we will take a lot of time and resources to overcome its consequences, as well as return to a good economic development state. The consequences are very heavy, growth, even recession, until the lives of people are greatly affected, then unemployed, poverty, including the breaking of environmental resources. All these consequences we can analyze caused by inflation.
The second reality I also want to emphasize that now we know, society is very interested in inflation. People also understood that inflation hit their family's rice cooker, hitting their pocket. Therefore, they are very interested in how to control inflation, because once inflation increases, the story of life is turned upside down, spending, costs greatly increases and will affect life. Therefore, the importance of inflation control is increasingly placed in a higher focus.
Another idea that I would like to be supplemented is our inflation control results in the past time, especially in the price control policy, etc. However, there is still public opinion that with such good results, is it due to our data story? With the functional perspective of the Ministry of Planning and Investment and the General Department of Statistics, the general agency and publication of data on inflation, we would like to confirm once again the calculation and announcement of Vietnam's inflation index is completely reliable and internationally evaluated.
PhD. Nguyen Si Dung: When inflation is pulled to a low level, within the National Assembly allowed, in the direction, administration, the Government, the Prime Minister prioritized the growth target. How does Mr. Hoang Van Cuong evaluate this?
Prof. Dr. Hoang Van Cuong: It is really good to control our inflation. But there is an issue that needs attention because inflation control must go hand in hand with limited resources pumping to the market, such as currency. If we are too concerned about inflation, continue to tighten money, limit capital supply to businesses, businesses do not have resources for production and business. In the world, inflation pressure has decreased but the trend of large central banks is slowly increasing the operating interest rates. Obviously, the pressure of world inflation in Vietnam is less but the pressure of recession is higher and more worrying. If we do not act early, wait for the recession and then pump money into relief, it is difficult to recover. "Body" that is too weak, add tonic can not recover.
Currently, success in controlling inflation is good, but the reality of the world market has narrowed after 2 years of pandemic, uncomfortable goods and no orders, so businesses are difficult. I have just read information on the report of 10,000 businesses, the proportion of businesses is difficult and have to cut labor is over 80%, about 20% must be cut by half, more than 50% need capital support. Obviously, the market is difficult, the capital is stagnant if it cannot be sold.
In the future, the world may have two trends: one is recession, crisis; The other is starting to have a recovery signal. If waiting to recover and then produce is "slow foot". Should be calculated in advance the "articles" to respond. Therefore, this is a period of increasing resources for businesses. The current source of capital is based on two sources: the traditional bond market and the market is the capital supply system from credit banks.
We consider balancing inflation control policies (loosening monetary), redirecting capital support for manufacturing and business enterprises, to create growth and jobs. Our goal is not the growth to create wealth, jobs, people with income and improve their lives. Enterprises operating stably will help maintain macroeconomic balance. I think the Government's direction in this period is to focus on growth, not as the previous year is macroeconomic stability, inflation control.
Dr. Nguyen Si Dung : The opinion of Professor. Hoang Van Cuong is that we need to move to promote growth. Please listen to TS. Vu Minh Khuong. Observing countries around the world and in the region, how do you assess the situation in Vietnam compared to other countries?
PhD. Vu Minh Khuong : I have an interesting test, take a taxi from home to Noi Bai airport, then return from the airport. The price is very stable, not up, even though the price of gasoline, the driver is still polite, there is no complaint about the price. It is a test of life. Of course, there are items somewhere increasing but basically taxi prices as well as consumer goods are not too high.
Regarding the survey of GS. Cuong, also should be noted that businesses fluctuated with higher proportions, less volatile businesses have no time to give much comment. Currently, businesses may "headache" seriously, but maybe the problem is not so serious. We need more scientific surveys, for example, selecting 10,000 businesses is very good, but the problem is how to choose. Usually businesses are more affected will participate more, so it can create a relatively "gray" picture. Additional surveys are required.
In terms of growth, it is necessary to grasp the trend of the era, such as electric cars, green electricity ... how can be double the output, electricity capacity in the near future, if exploiting wind energy, endless solar energy.
This capital mobilization does not take too much effort, because the interest rate for green conversion is only 3%, or lower than usual. Basically the VIII electricity planning is very timely and or or. How to make Vietnam a shining point of renewable energy, green conversion, realizing the commitment to net emissions = 0 of the Prime Minister at COP26 as soon as possible. The whole system needs to be involved. Vietnam must improve and remove for Vietnamese enterprises in the near future.
Experience in Korea, Ireland, Singapore focused on supporting corporate strategy. Do not think businesses have a good market. Without advice, they may not be in the right direction. For example, the export of shrimp and Vietnamese businesses always want to expand more, do not think of higher added value, reduce export but higher value content. With high -end markets such as Europe and America, it is necessary to calculate more carefully, especially in the coming time to face the competition from countries such as India, Bangladesh ...
The second is a higher level of labor. They have enough salary, ever raised from 10 million to 15 million/month? This is an urgent issue, otherwise it is impossible to go far.
The third is the issue of technological innovation.
These are problems that need to be the side of ministries, localities, governments ...
We have not focused on consulting experts, consulting policy beneficiaries. I hope the Government and National Assembly how to come up with the next time, people feel more excited and excited than inhibition, discomfort, shock ...
In addition, the macroeconomic results are quite good, but giving propaganda is not really good. Communication of macro results is not good, to make the black plaques more. This is also easy to understand about people who are interested in daily concerns. We need to identify and present more clearly, for society to see more clearly.
This is a whole article of the whole society, not only the National Assembly and the Government; General problem, the problem of renewing the comprehensive growth model, not merely innovating, abandoning old behaviors, preparing new behaviors ... We have had 40 years of innovation, need breakthroughs in the near future.
PhD. Nguyen Si Dung : TS. Vu Minh Khuong noted that the communication has not met the requirements over the past time, making it many times the left side of the face. In the coming time, this stage needs to be improved.
GS. Hoang Van Cuong, corporate bond market is a channel of capital mobilization for businesses to develop production and business. Please ask GS. Hoang Van Cuong, do you assess the current health market health market now?
Prof. Dr. Hoang Van Cuong : We see that corporate bonds are a very important capital market for businesses. In 2021 and early in the beginning of 2022, we witnessed the very vibrant TPDN market. However, in early 2022, when there were incidents of some businesses falling into a legal crisis, many investors found risks. That risk, a part we see very clearly that the enterprise itself issuing bonds is not controlled, leading to the issuance of unfounded money and factors to ensure the value of bonds. But there are also factors that investors themselves. That bond is mostly bonds issued individually, according to the law, it is only for professional investors or organizational investors. But in fact, most individual investors buy bonds with the thought that it is like sending a bank.
When such an incident occurred, the TPDN market was in difficulty. The first difficulty is the mobilization of the new bond issuance. Even many enterprises capacity are quite good, but because of the psychology of investors, the release is reduced.
The second difficulty is that many bonds have not yet expired that the Dau Tu house has wanted to withdraw. Then there are many weak -competent enterprises, so in the period, the bond maturity, now no new lots have no sources to maturity. It is a factor that creates risks and creates great pressure for many businesses ... Perhaps I think that during this period is a quite difficult period for the bond market.
16:21 on May 28, 2023
PhD. Nguyen Si Dung : The stock market and bonds in 2022 have many difficulties in part from the increase in the bank interest rate, the trust of investors and the domestic market liquidity decreased, the cautious psychology of investors against the unstable and positive prospects of the world situation. Particularly, the TPDN market is also affected by the confidence of investors due to the violations of some enterprises that have been handled ... Before the difficulties of the market, please, Deputy Minister Nguyen Duc Chi said the Government, the Prime Minister, the authorities have deployed artillery to remove difficulties for the TPDN market?
Deputy Minister Nguyen Duc Chi: I totally agree with the assessments and judgments of GS. Hoang Van Cuong on the situation of our TPDN market today. I think we are very fortunate to witness the formation and development of the common stock market, in which there is the TPDN market. The TPDN is slower and shorter, it starts for businesses as well as investors to be interested and use the TPDN market for businesses to mobilize capital for production and business, and capital investors are transferred to people who need capital as businesses. Between investors and businesses shared their benefits through interest rates, and the commitments between businesses issued and investors.
We see that the TPDN market began to develop strongly from 2019 to the first months of 2022 and quickly achieved the scale of 1.2 million billion dong, according to the balance until December 31, 2022. We also see that, from the Party's guidelines and policies to the government's decisions is to develop the stable, sustainable, transparent and indispensable budget market in our socialist -oriented market economy. We have implemented this through the system of law provisions. And the market when developing has brought about the effects of capital derivatives. But besides that, it shares capital supply activities for businesses, for the economy, especially to help credit institutions reduce the burden of term risk. That is, credit institutions mobilize deposits of organizations and individuals are short -term; When businesses need to use medium and more long -term capital without this channel, the use of short -term capital will also have a term risk. Recently, the term risk is also quite serious, which has occurred in developed markets such as the United States, Europe ... certainly we still have to continue developing it.
And the difficulty of the market in the second half of 2022 and until recently, we also see very clearly. It comes from many causes, including objective reasons affecting Vietnam's economy and affecting the policies we have discussed in the content of macroeconomic stability just mentioned above.
It also affects the production and business activities of the business. The issuance of bonds and bond use is only an activity of production and business, investing in capital mobilization of enterprises, so it is certainly affected. Such unpredictable effects, such difficult impacts also affect the issuance of the business and make our bond market difficult.
In addition, it must be affirmed that our market is very young, began to form and make sure the entities in this market are also young, along with that formation and development, including publishing businesses, investors to the state management agencies themselves for this field. In different reports, the Ministry of Finance has reported quite well and also informed investors and social information. From there, the cause of the market is very difficult, we have to find solutions to solve that cause.
Obviously, we are in a state, the context is difficult businesses and difficult bonds. When used, businesses should have been issued to get cash flow to pay offers when due but the market is difficult. Then the production process is difficult, the cash flow has difficulty and difficulties both in fulfilling the responsibilities and obligations of the publisher.
From analyzing the causes of the difficulties of the corporate bond market in recent times, I would like to mention, some of this main solution like this.
The first is that we must affirm that macroeconomic stability, keeping interest rates, exchange rates, inflation ... then we manage flexibly and effectively fiscal policies, monetary, and solve difficulties. If we keep it now and continue that process, it is the fulcrum for businesses to continue working better and more effective, thereby returning to development.
The second is that we must have the legal provisions directly related to this bond market. It must be behaved flexibly and effectively, promptly responding to practical developments. Recently, the Government has also had policies, promulgating and handling the pressing requirements of this market. In a very short time, the government issued two Decree No. 65/2022/ND-CP and 08/2023/ND-CP. These latest legal provisions have been promptly helped businesses issue, and then investors have conditional and legal tools, have time to solve the immediate difficulties in cash flow, liquidity, collateral, and solve other relevant issues ... On the principle of transparency are harmonious benefits and sharing risks. The issuer is responsible for the same obligations as their commitments to investors. The State supervises businesses and monitors the market to ensure the performance of tasks in accordance with the law. Investors themselves must respect the provisions of the law so that the State can support and supervise this market transparently and ensure the harmony of the benefits and interests of the parties.
Thirdly, we talk about the current difficulties of businesses issued in different fields, from production and business to an area we talk about a lot in recent times of real estate and construction. When the real estate market situation faces difficulties, the Government has many different solutions to support and help businesses release. The Government has had a policy to relax debts, transfer debt groups of businesses, then reduce interest rates, relax taxes, reduce taxes ... I think these solutions are solutions that influence the market of the bonds, support the budget market to continue stabilizing and sustainable development.
Fourthly, I think that the state authorities of the recent time also strengthened supervision, inspection, even inspection to ensure this market transparent and comply with the provisions of law. But besides that, the government's message is clearly not criminalizing economic relations. Enterprises must respect the agreements of the issuing enterprise with investors in accordance with the law and must enforce their responsibilities. The State ensures that it is done.
The final point talks about the media. During the past 1 year, the communication on the bonds and policies has been done, and have good steps. On that basis, we raise the awareness of all market participants, from the issuing business, investors, services providing services and even the state management agency itself is more fully and more accurate about this market. Since then, people perform their responsibilities and obligations according to the provisions of the law and that is what we are very lacking, in need, but over the past time, we have done it.
I also agree with the opinion of TS. Vu Minh Khuong is still having to continue to do and do better, even to train the market a strong bravery. All entities when participating in the market are receiving benefits and sharing risks, then we have a really stable and sustainable bond market. Besides other capital leading channels, it will help the economy synchronize and develop effectively.
PhD. Nguyen Si Dung : Thank you Deputy Minister Nguyen Duc Chi. Mr. Chi presented very detailed solutions and policies of the Government to remove difficulties for the TPDN market. From the general angle of the world, please hear the review of TS. Vu Minh Khuong. How do you evaluate the solutions and policy reactions of the Government, the Prime Minister, the Vietnamese authorities in handling difficulties for the corporate bond market?
PhD. Vu Minh Khuong : Regarding the government's policy reaction, I found that the Government has always been with the business to remove all the difficulties currently entangled. I would like to pay more attention to the problem of creating the foundation for the future because it is clear that we are aware of the role of bonds is the channel that mobilizes an especially important capital source, not only for businesses but also the government.
Looking at the countries that have created miraculous developments, bonds play a very important role, up to 100% of GDP, of which about 50% of the enterprise and 50% of the Government. For example, in Korea, 18 localities issued bonds to build railway, subway, and construction works. Investing in what creates valuable, we do not regret investing, not regret to borrow money if we can really create value. When a copper is invested in accurate things, in the right direction, it will create many profits, helping grow very fast, very miraculous. Therefore, I think we need to attach special importance to building a healthy bond ecosystem. We must turn challenges into opportunities for our will, determination and efforts to build the foundation, the bond system becomes a world -class in the near future.
I see the world experience, bonds issued 3 types. One is to buy insurance. When buying insurance, people are very assured to buy, because insurance has carefully checked the level of bonds.
The second type is bond issuance but guarantee. I bought this piece of land, how to build the subway project, completely guaranteed, guaranteed by my own property. This is also a good formula, meaning that we have to create a very scientific foundation.
The third type of bond is absolutely no guarantee, without insurance, there must be at least two companies to assess experience, capacity and evaluation to help people feel secure.
Looking at the international reports of Vietnam recently issued, the interest rate is too high in the context of a stable Vietnamese currency compared to the USD, I find Vietnamese businesses may have difficulty. For example, the interest rate of 13% compared to the world is very high, so it is very difficult. If using too high leverage, ie most of the bonds, it is even more difficult to invest in construction, because the high interest will make it easy to make losses. Therefore, it is necessary to have a survey, helping them carefully.
I want to mention 3 defense lines in supporting businesses to avoid criminal issues. The first defense line is business leaders when preparing to understand carefully about corporate governance. The second defense route is to ensure legal issues, rescue reactions. The third defense route is an annual auditor, because the economic situation changes very quickly, so it is necessary to update regular and continuous recommendations.
It can be seen that some countries do not pay attention to investing in upgrading the ecosystem for bonds, so it is difficult to develop, such as Indonesia or the Philippines still hanging around US $ 30 for bond businesses. That level is difficult to go, while in Korea, they can release trillions of dollars.
In general, building a foundation for a healthy financial system for Vietnam's future is a very urgent issue. I believe that the government this term can do that problem and consider the current challenge we encounter a strategic determination for Vietnam to create a very good foundation in the near future.
The actions are quite timely and methodical
PhD. Nguyen Si Dung : TS. Khuong said that issue was very important, related to the corporate bond market, including guaranteed, insurance, piloted bonds, with 3 rooms of protection, rescue reactions, and regular audit. Next, please hear the opinion of Mr. Hoang Van Cuong! How do he evaluate the solutions and comment more about the opinion of TS. Vu Minh Khuong?
Prof. Dr. Hoang Van Cuong: I agree with the opinion of Mr. Khuong. The bond market is not a common market of goods trading. Bonds are a financial market, requiring participants to be competent and have a legal environment to create an ecosystem as Mr. Khuong said.
The first thing is that we must have a legal framework to manage, support and supervise.
Secondly, the market participants themselves, including bond issuers such as businesses, must also see how to comply, how risky can be? Customers participating and buying on this market must also get that capacity. I think that perhaps many businesses recently issued bonds have not really understood. If people know that released like that falls in the labor cycle, they probably won't do it. Perhaps they are not knowledgeable about that. Our warning, our control is not timely. If we promptly prevent early, do not let the situation rampant, causing such serious consequences.
I agree with customers, individual investors investing in this market are also really not knowledgeable. There is no profit, the interest rate issued 13, 14, 15%, the bank is mobilizing with 6, 7, 8% and the bond market is ten percent. A very clear rule is that the higher the profit, the greater the risk, so of course the risks will be. How risky assessment is, there are evaluation information or not. I think all of the above factors are completely true.
It is true that in Vietnam, Mr. Khuong warned that he was not careful, he fell into the market like the Philippines. The bond market that could not be restored to the bond, this was a failure to mobilize resources for development. But Vietnam I think is not so worrisome because we have recently had a bond crisis, the Government has taken quite timely action. We prevent risks early, do not let that situation sink deep anymore. So far, we have not seen the owners lost bonds. I think there are quite timely and methodical actions. We issue Decree 65 to enhance the standardization of bonds, but then we see standardization right now, we issue Decree 08 to adapt gradually. It is very quick to handle so that we can not allow the release to be unfounded, but not too tight.
I think we still need more appropriate response measures, most importantly, the owners feel faith and no one will lose their hands. For example, we extend the payment time and conversion from bonds to property. I think it is not a loss of money but sometimes we have more chances.
In particular, we see that most Vietnamese businesses are businesses investing in real estate. The desire of Vietnamese individual investors has a very different feature compared to many world investors. Many world individual investors on the stock market do not understand that they invest in funds and indirect investments, but Vietnam loves to invest directly, buy itself, how to feel the profit itself. If we switch to this convertible bond field, I think it is a pretty good channel to mobilize each individual's capital to become investor's capital.
PhD. Nguyen Si Dung : Recently, on April 25, 2023, Prime Minister Pham Minh Chinh presided over the Government Standing meeting with ministries and branches on the situation of corporate bond market operations. The Prime Minister emphasized that it is important to offer tools, methods and methods for businesses to issue conditional bonds and solvency to the owners in accordance with the law; enhance the confidence of the market. What specific measures will the Ministry of Finance continue to implement?
Deputy Minister Nguyen Duc Chi : Continuing to orient and build institutions, take actions for the bond market to operate stably and develop sustainably, I think we still have a lot of work to do. I totally agree with TS. Vu Minh Khuong on market standards
Decree 65 clearly stipulates the standards. Firstly, investors participating in the market must sign a commitment to understand all the issues related to the bonds they invest and take risks when deciding to invest.
In addition, Decree 65 also stipulates 6 months periodically, the bond issuing enterprise has an audited report by an independent auditing agency, confirming the money collected from bonds used for published purposes with investors. This is an appropriate, clear and transparent regulations of the issuing enterprise with state management agencies and investors.
In addition, the standards of bonds, forms that can be issued such as payment guarantee, third party guarantee, collateral with clearly specified from Decree 153.
Regarding the establishment of a credibility coefficient, in Decree 65 stating that the issuing enterprise must have a credibility assessment from one service provider. However, as Mr. Cuong said, assessing the specific situation of this translation of Vietnam is still limited. Therefore, Decree 08 temporarily stopped this regulation in the immediate future as of December 31, 2023.
It can be said that the government's policy and decision response is very flexible, based on the science, principles, regulations and practical requirements today, to make the above regulations.
I would like to share that since Decree 08 was issued on March 5, 2023, we had 15 enterprises that issued a volume of 26.4 trillion corporate bonds to the market. While the previous period, at the end of 2022 and in the first 2 months of 2023, almost no businesses have issued bonds to the market.
This is a positive sign that the policy impact helps businesses and investors have faith and begin to return to the market.
On the other hand, after Decree 08 was born, many businesses have successfully negotiated with investors in handling problems about liquidity and cash flow when bonds are due. According to the report of the Stock Exchange, 16 enterprises negotiate successfully to solve the bond volume of nearly VND 8 trillion (7.9 trillion dong). I can mention a number of large issuers such as Bulova Real Estate Group, Hoang Anh Gia Lai Joint Stock Company, Hung Thinh Land Joint Stock Company ...
Thanks to the new Government's regulations, businesses and investors have implemented parts such as negotiation, extension, conversion into property, ... successfully.
Another point I want to mention is that Decree 08 allows to stop implementing new conditions of professional investors and bond ranking until 2023. This regulation is considered to help businesses and investors meet the conditions and standards of Decree 65. If not, we apply immediately shock, shock, capable not to make the market not better but also worse.
After obtaining Decree 65 and Decree 98, the awareness and awareness of the entities participating in the market greatly, understanding their responsibilities and obligations when participating in the market. Organizations for issuing and providing serious service to provide information to investors.
Thus, with new government regulations, we have achieved very positive initial results. In the coming time, the market will have adjustments and start going up sustainably.
PhD. Nguyen Si Dung : Perhaps we end today's talks with a positive point that the corporate bond market is recovering, having a sustainable foundation for development. Within nearly 120 minutes of the program, we exchanged content about macroeconomic stability and developing corporate bond market. The speakers all asserted coherently and certainly we have kept the macroeconomic stability - the biggest achievement, the most remarkable, the most important foundation for economic development. Experts have compared in the overall context of the world, the achievement we achieve is positive and we need to communicate properly to see all efforts and efforts to strengthen beliefs in the business.
In particular, we have discussed the difficulties of the stock market with very timely solutions of the Government. Decree 65 creates a basic foundation for developing a healthy bond market, developing according to international standards. Along with that is the timely and flexible policy reaction of Decree 08. These quick reactions have begun to bring clear results like 26.4 trillion corporate bonds that have been issued.
(According to the Government Electronic Newspaper)
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