Stimulus package should be effective: foreign experts
It matters how the money will be spent, Ayumi Konishi, Vietnam country director of the Asian Development Bank (ADB), said in response to a question about whether the US$6-billion stimulus package was fairly higher than the country’s gross domestic product growth at a business luncheon in HCMC on Thursday.
Konishi underlined the efficiency of the package in relation to how Vietnam’s economy was growing at this stage. But, he acknowledged he did not “really know what the US$6 billion means.”
The local media quoted Deputy Prime Minister Nguyen Sinh Hung as saying at a dialogue with young entrepreneurs in Hanoi last weekend that the Government’s stimulus package would amount to VND105 trillion, or US$6 billion.
The package, which is expected to come from different sources including Government bond sales, includes US$1 billion in cash the Government announced earlier this month and aims to help both people and enterprises to rev up the economy in the face of the global economic slowdown.
However, EuroCham chairman Alain Cany said he doubted the possibility of raising and allocating US$6 billion efficiently, and questioned how the money came from the current economic slowdown.
“I believe a US$2-3 billion stimulus package is probably more realistic in comparison with Vietnam’s GDP,” Cany said. He stressed it was better to spend money gradually and carefully so as to see how it would work before more money was disbursed.
“I want to see and where the support is going to be being provided rather than the amount. I’m interested in how the Government implements the stimulus package,” Cany told the Daily after the luncheon entitled “The Global Financial Crisis: Vietnam’s Prospects in 2009 and Beyond.”
He noted that implementation remained one of Vietnam’s weaknesses and that the economy would be worse if the US$6 billion was spent wastefully. “So, we have to make sure that the money goes to the right spots so that it really helps the economy.”
Cany said the money would be channeled to proper and good infrastructure projects, not the projects whose work lasts too long or the mega projects inadequate for Vietnam currently. The money should support the right State-owned enterprises, private small and medium enterprises and those firms that help boost exports, maintain employment and create new jobs.
Cany said inflation in Vietnam was coming down because commodity prices were down, but this was not the end of the story. He clarified the world’s prospects were difficult next year and Vietnam would not be safe from the global economic slump.
Cany warned that as Vietnam had its own problems, inflation would probably be up again if the country was trying to achieve too high growth. “The Government should be careful with growth and have it balanced… and make sure that the growth will not go too fast.”
Sharing Cany’s view, Konishi of ADB said “supply constraints” would contribute to the inflation comeback in Vietnam. He said the bank was financing infrastructure development as well as training to help Vietnam counter the shortage of skilled workers.
Konishi confirmed with the Daily after the business luncheon organized by EuroCham that the bank planned US$1.5 billion per year to support Vietnam’s development in the coming years.
Konishi said ADB in November projected Vietnam’s GDP growth of 5% for 2009, which is lower than 6% that the bank forecast in September. But he said Vietnam’s growth prospects were very strong in the medium term.
Cany said 5% was too low for Vietnam’s growth in the long term, but this rate for only one year was not a matter of great concern, if the economy would rebound strongly after that.
