More investment in construction to prevent economic downturn

The key task for 2009 that Prime Minister Nguyen Tan Dung urged ministries and departments to implement is to prevent economic depression. The solution is investment encouragement.

Minister of Planning and Investment, Vo Hong Phuc said that to prevent economic depression and achieve an industrial growth of 7.4 percent in 2009, Vietnam should directly encourage investment in construction and construction materials. It means that the country must consume all materials in stock and remove difficulties for businesses involved in the field.

What capital will be used for investment encouragement? Mr Phuc said the National Assembly (NA) has approved a State budget of VND112,000 billion, with allocations for provinces remaining at their current levels and those for the public investment sector decreasing.

The State will stop funding State-owned enterprises and only invest in public service corporations and businesses which get involved in generating electricity for the Central Highlands and developing railways and seaports.

The NA has also agreed to add VND6,000 billion to Government bonds. Vietnam should accelerate disbursement of Government bonds which is currently being implemented very slowly to ensure material consumption for businesses.

The Government has also demanded accelerating the disbursement of ODA capital which at present only meets 70-80 percent of donors’ requirements. If this is done it will enhance the capital flow.

Other key sources include the investment credit of State-owned groups and businesses, individual capital and foreign investment capital. The Government should create fabourable conditions for investors to disburse hundreds of billions of US dollars of FDI capital that has already been committed.

In terms of strengthening business in the private sector, Minister Phuc said that Government will provide more support to businesses and put the small- and medium-sized enterprise credit guarantee fund into operation as soon as possible.

Another issue drawing great attention of the Government is poverty reduction. This year due to the high inflation rate, the number of poor households rose. In the near future, the Government will approve a resolution on providing assistance to the 61 poorest districts, mainly in the northern mountainous and central provinces.

Minister Phuc emphasised that if poverty reduction is not given due attention, in the context of economic downturn, the real problem is sure to come home to roost.