Stimulating economy? The most important thing is implementation method

Vu Khoan, former Prime Minister 

Besides the package measures to rescue the national economies, worth hundreds of billions of dollars, that many nations have announced, they are also concurrently applying three other ‘economic levers,’ namely tax reductions, interest rate lowering and exchange rate adjustment.

In terms of cutting taxes to stimulate the demand and production, Thailand proves to have the sharpest tax cut of up to 70%.

Vietnam has officially done two of the three measures; it has adjusted the exchange rate and interest rates. The specific characteristics of Vietnam are that it has limited resources, while it has to fight against inflation and consider stimulating the demand at the same time. Therefore, before stimulating the demand, it is necessary to stimulate the supply, helping enterprises operate well, so that laborers have stable incomes, and farmers can sell their products. Export companies need to provide favorable conditions to consume their products in the context of the import countries’ crisis.

The measures of loosening the monetary policies have been bringing positive results. What the Government needs to do, is to speed up the implementation of selected investment projects.

Cao Sy Kiem, former Governor of the State Bank of Vietnam, now Chairman of the Small and Medium Enterprise Association

The package measures drawn up by the Government will have a good impact on the national economy in general, and the stock market in particular. The loosened monetary policies will help the monetary market prosper. Specifically, the delay of the personal income tax for securities investors, if approved, will help lure investors back to the stock market.

Dr Pham Thai Quoc, Head of the Transition Economies Analysis Division under the Economics and Politics Research Institute

The measure drawn up by the Government proves to be very necessary in the current conditions of the national economy. However, I think that it is necessary to give more details of each measure, for example what echelons and sectors need to do, and how the sectors can cooperate with each other. Moreoever, it is very important to slash lending interest rates, so as to make small and medium businesses able to access bank loans.

Vu Duy Thai, Chairman of the Hanoi Industrial and Commercial Association

The basic interest rate cuts do not really have a big significance, as banks themselves had slashed lending interest rates before. The lower rates have not helped speed up the disbursement of loans. Businesses have been facing increased difficulties, the export markets have been narrowed, and export prices have been forced down, while the export turnover has increased inconsiderably.
 

Businesses wish that the Government would apply measures to stimulate the consumption soon, and support the domestic market.

Tarek S. El Awar, Regional Director, Zamil Steel Vietnam

Neighboring countries in the region, including Thailand and Cambodia, have cut taxes to help businesses overcome the difficulties caused by the crisis. Vietnam should also consider adjusting tax policies.

Alain Cany, Chairman of Eurocham

The most important thing now is to control trade deficit. Vietnamese businesses need to receive necessary support to maintain competitiveness while the demand in the world for consumer products has been decreasing. Exporters need to have the right to credit access with reasonable costs.

Huynh Anh Tuan, General Director of SJC Securities Company.

As some industries and sectors have been facing difficulties, the Government can raise import taxes in order to support the consumption. If the petrol price decreases further, this can lead to price decreases of many other products, thus helping stimulate the demand. Interest rates should be lowered more rapidly in order to help businesses start new business period.