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Vietnam's prime minister says he's confident of 6.7% growth goal

Monday, May 29, 2017 - 09:58

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Vietnamese Prime Minister Nguyen Xuan Phuc said he is confident economic growth this year will meet a goal of 6.7 per cent without adding to inflation, despite weak expansion last quarter.

[HANOI] Vietnamese Prime Minister Nguyen Xuan Phuc said he is confident economic growth this year will meet a goal of 6.7 per cent without adding to inflation, despite weak expansion last quarter.

Vietnam is taking steps to bolster the economy as the nation seeks to retain its status as one of the world's fastest-growing economies, the premier said in an interview at the Government Office in Hanoi on May 27.

"Main economic indicators in May are all very good with a strong pickup in exports, foreign investment and agriculture production, laying ground for faster growth in the third and fourth quarters," Mr Phuc said in an interview with Bloomberg Television's Haslinda Amin. The growth target of 6.7 per cent "is difficult but it is possible" he added.

The government must balance efforts to spur gross domestic product growth while ensuring inflation doesn't exceed its 2017 target of 4 per cent, according to Mr Phuc. "We must curb inflation at the mandate number as we have committed to the National Assembly," he said.

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Mr Phuc said tourism is expected to grow 30 per cent, agricultural exports will beat the US$32 billion shipped last year, and electronics exports are going to surge - counter forces to the economic headwinds the nation faced in the first quarter.

Growth eased to 5.1 per cent in the three-month period after Samsung Electronics cut production, underscoring the nation's reliance on exports.

FAULTY PHONE

"The first quarter growth slowed due to a few reasons. Firstly it's because of a drop in our crude oil price," Mr Phuc said. "The second reason is because of the electronics industry - we suffered a loss of about US$1 billion worth of exports from Galaxy Note 7" when Samsung recalled its faulty smartphone last year, he said.

Samsung helped to turn Vietnam into an electronics manufacturing hub almost single-handedly with US$15 billion in investments from the technology giant and its affiliates, including battery-maker Samsung SDI Co. The South Korean company is Vietnam's biggest exporter. Mobile phones and components accounted for 27 per cent of Vietnam's exports last year, or almost US$40 billion, according to Samsung.

The government is preparing strategies to increase exports of its two key products - electronics and agriculture, the prime minister said.

"We have made detailed plans to bolster each industry, down to the product level with thorough studies of different markets to boost exports," he said. In April, the premier called the slower first-quarter growth "very worrisome" and ordered ministries to find solutions, according to a posting on the government's website.

'DOI MOI'

Vietnam, which has completed about 16 free trade agreements, began tethering itself to global trade after introducing market-oriented "doi moi" reforms in the 1980s.

Exports surged to a record US$177 billion last year, with US customers accounting for about US$42 billion of that - more than double compared with five years ago.

The government is also speeding up the restructuring of its banking sector with stronger reforms in underperforming lenders, according to Mr Phuc. He reiterated Vietnam's plans to sell out from the more troubled banks.

"We will allow foreign investors to take over those banks if there is anyone interested to buy," Phuc said.

Vietnam's economy grew 6.21 per cent in 2016, the second consecutive year of more than 6 per cent expansion, defying a regional slowdown to remain one of the world's best performers, as its exports remained resilient to a global trade slowdown.

"I'm quite optimistic about the economic outlook of Vietnam this year," the premier said.

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