Minister of Planning and Investment (MPI) Vo Hong Phuc talked with the Communist Party of Vietnam’s Online Newspaper about the upcoming implementation of the Government’s stimulus package to combat the economic downturn, maintain economic growth and ensure social welfare.

Can you tell us about the Government’s stimulus package for socio-economic development in 2009?

This is a right and timely policy. Prime Minister Nguyen Tan Dung asked the MPI, the Ministry of Finance (MoF) and the State Bank of Vietnam (SBV) to set up a plan to use US$ 1 billion to create an effective stimulus package, in order to create opportunities for economic growth. The US$ 1 billion stimulus package will be used as a “catalyst”, and will be primarily focused on stimulating domestic consumption among consumers. Total funding for the stimulus package is equivalent to about 1.2% of Vietnam’s GDP; thus, it must be used for the right purposes. It must be target solely at businesses, but, instead, at individuals.

The SBV is determined to support agriculture and farmers, and will continue to provide them with a lending interest rate of 11.5 percent per annum in order to further develop agriculture and rural production. The MPI, the MoF and the SBV will co-ordinate with each other to manage and allocate the stimulus package to make sure it reaches the right subjects.

The amount of US$ 1 billion will help to stimulate enough growth to consume a large volume of building materials, cement, and iron and steel, of which large stockpiles are building up, helping to solve difficulties for building materials producing businesses. Although this amount money is not so big when compared to other countries, it will contribute to creating millions of direct and indirect jobs.

How should the US$ 1 billion stimulus package be allocated in order to best address the current economic situation?

To do this well, in my opinion, the money must be prioritized and steered towards organizations operating in major investment sectors capable of consuming currently stagnant products, which are seriously affecting the livelihoods and salary of workers, and towards organizations suffering econmically from he global economic crisis. Moreover, the money should also be used for building houses for workers and students, as well as infrastructure and public transportion.

How long do you think it will take Vietnam to over come the current economic difficulties?

It all depends on the world’s economic situation. The soonest would most likely be in the fourth quarter of 2009, when the world’s economy, especially the US economy will resume helping other countries’ economies, including Vietnam’s, to “stand up”. The impact of the world economic crisis has impacted Vietnam less than the rest of the world, because agriculture still constitutes the major sector in our national economy, and the greatest part of the country’s population lives in rural areas. Therefore, in spite of slowing growth, Vietnam’s economy has still kept up a fairly high rate of growth.

The Government forecasts that Vietnam’s economy will grow around 6.5 percent depending on circumstances, and could possibly grow 6-7. The Asian Development Bank (ADB) forecasts that Vietnam will achieve a GDP growth of nearly 6.3 percent in 2009, while the World Bank’s forecasted figure is 6.5 percent.

It can be said that in 2009, Vietnam’s economy will have to face many difficulties but thanks to suitable and timely policies, the country is still expected to promote its domestic strengths, and take full advantage of outside forces to develop in next year. Maintaining current growth impetus will be needed for development in following years, as the world’s economy recovers.

Could you talk about the major tasks which have been set in the draft resolution on solutions for carrying out the socio-economic development plan and the state budget forecast for 2009?

In 2009, the socio-economic situation will continue to cause many difficulties and challenges, requiring a common and united effort by all relevant government agencies and the people in carrying out solutions comprehensively in order to reach the targets of the socio-economic development plan which was approved in the 4th session of the 12th National Assembly. This plan will focus on the very urgent tasks of preventing economic recession, promoting production, businesses and exports, stimulating investment and consumption, ensuring social welfare and striving to reach a national economic growth of around 6.5 percent.

Other major tasks which need to be carried out for socio-economic development in the coming time are stabilizing macroeconomics, preventing a recurrence of inflation, and mobilizing and using investment capital effectively. (CPV)