IMPLEMENTING THE GROUP OF 8 SOLUTIONS: INITIAL CHANGE

After 3 months of implementing 8 solutions set forth by the Government to curb inflation, stabilize the macroeconomy, ensure social security and achieve sustainable growth, inflation rate in Vietnam is decreasing, export value rising, and trade deficit shrinking. These results have proved the correct direction of the Government’s policies, creating a momentum for the economy to develop for the rest of 2008 and the coming years.

Regarding inflation: according to Ministry of Planning & Investment, the inflation rate in June was 2.14%, the lowest in the last 6 months and a significant decrease compared to those in January (2.38%), February (3.56%), March (2.99%), April (2.2%), and May (3.91%).

          Savings on frequent spending 2,700 billion dongs: Industries, organizations, and governmental enterprises have strictly followed the government’s intructions to save 10% of annual frequent expenditure (spendings related to workers’ benefits excluded). So far, Ministries, industries, and localities have saved 2,700 billion dong, equivalent to 25% of total governmental reserved budgets for 2008, of which Ministries and industries saved 700 billion dong and the rest came from localities. The savings are sent to social security funds, natural disasters prevention and recovery activities, epidemic fight and other urgent issues.

Postponement and delay of nearly 2,000 construction projects: The total number of postponed and delayed projects in 2008 is 1,736, with a total capital of 5,625 billion dong, of which 290 projects with a total capital of 4,775 billion dongs belong to state enterprises and corporations.

          Strict regulation on imports and trade deficit reduction: Ministry of Industry and Commerce and Ministry of Finance have reviewed various administrative procedures concerning export activities, especially customs clearance and taxes. In regulating exports, Ministries and industries have implemented policies to raise exports, including rice. It is expected that Vietnam will export from 4 to 4.5 million tones of rice this year while maintaining ensured domestic food security.

Under direct impacts of some policies on restricting imports such as increased taxes on imported car and car accessories and strictly controling the use of foreign currencies for imports, the import of non-crucial items has declined

Significant increase in export value and initial decline in trade deficit: (Source: the last Parliamentary session) Export for June, the highest in the first half of the year, reached 6.12 billion USD surpassing the 5.15 billion USD value of May. The total export revenue of the first 6 months of 2008 reached 30.3 billion USD, an increase of 34.5% compared to the same period of 2007 whereas import expenditure was 6.8 million USD, 11.3% lower than that in May 2008, contributing to the decline in trade deficits (trade deficits in quarters I, II, and June of 2008 are 62.7%, 39.2%, and 23.6% of the export value respectively).

Eight export items valued over USD 1 billion (with 2 new commodities: electronics, PCs and rice and 2 items attaining over 4 billion USD: crude oil (5.6 billion USD) and textiles (4 billion USD), followed by footwear (2.3 billion USD), seafood (1.9 USD) and rice (1.5 USD), etc… Several exports with high potential growth include plastic products, gemstones, metals and cashew etc…

Enhancing production, ensuring demand-supply balance: Recently, Ministry of Agriculture and Rural Development has succeeded in reviving damaged paddy fields and cattle herds from the previous disasterous winter. Ministries and localities have tried to remove administrative difficulties in and barriers to the development of production and business. Therefore, prices of major commodities, especially rice and cement, have basically stabilized, ensuring demand-supply balance.  

Projecting over 7,300 billion dong for social security: Ministries and localities have rapidly dealt with food shortage, facilitating production, improving living standards of ethnic minorities and the disadvantaged, stabilizing school and hospital fees, ensuring loans for financially disadvantaged students, increasing support for medical insurance for the needy, and providing basic necessities.  

Bountiful rice harvest: Despite initial difficulties in agricultural production in the first 6 months, the value of agricultural, forestry and fishery production for this period rose 4.5% compared to the same period in 2007. This increase is due to the abundant yields of the Winter Spring harvest in the north and the Summer Fall one in the South. The Winter Spring crops harvested 18 million tones,  increasing 1 million tones compared to that in the previous year, contributing to the stability of local and export food markets.

Continued increase in foreign investment: FDI has been rising both in realized and newly registered capital, demonstrating continued attractive investment environment and investors’ confidence in mid- and long-term future of Vietnam, a secure destination for foreign investment and business.

After 6 months, FDI reached 31.6 billion USD (a three-fold increase compared to the same period of 2007) of which new project capital was 30.94 billion USD, 1.5 times higher than that of the entire 2007 and 4 times greater than the same period in 2007. The new FDI ventures mainly focus on industry and construction. Disbursement rate reached 4.9 billion USD, a 37.6% increase against the same period last year.