Chinese economic expert Kwok Chuen Kwok warned about the possible waste and corruption that a poorly distributed stimulus package could bring about to countries like China and Viet Nam yesterday in Ha Noi.

Kwok, a leading economist for the Hong Kong government, was invited to make presentation on China’s experience in dealing with economic crisis and challenges in Viet Nam to the National Financial Supervision Commission and the DBS Group Holdings.

“We want to learn from China, and see how their experience can be applied in Viet Nam,” said Le Xuan Nghia, deputy director of the commission.

Kwok said that the wealth loss from global stock markets alone was around US$20 trillion, losses from property sectors keep rising while consumer and investor confidence is weakening.

Many governments in the world, such as the US, tried to solve the trouble by capital injection, loans and buying up the troubled assets or cutting interest rates, increasing Government expenditures and supporting selected sectors, said Kwok.

He said the trend of artificially propping up distressed industries could lead to another crisis in the future.

Kwok felt it was ill-advised to try to save all the big enterprises; some should be allowed to fail, because “it was unfair” to those still operating successfully despite the downturn.

His suggestion was to focus on helping medium and small-sized enterprises, which would be better able to cope with the situation.

The economist suggested Viet Nam focus on the diminishing value of Government bonds, saying that the decline of bond value around the world is difficult to control.

Kwok stated that the crisis is far from over; it should be viewed as a chance to implement changes and reforms, because people would more easily change in this situation.

The domestic export market was predicted to continue to be vulnerable due to weaker overseas demands, more projectionist pressures, subsidies and less foreign direct investment (FDI).

Administrative, budgetary and taxation reforms are important to Viet Nam now, said Kwok. He stated that “pursuing structural reforms is a long-term solution for short-term macro-economic problems.”

China is currently responding to the crisis by expanding monetary, fiscal and other policies to stimulate the economy, aiming at a growth rate of 8 per cent. China is also supporting export enterprises, particularly the small and medium-sized ones and working to internationalise its own currency.

China has decided on a stimulus package amount of $586 billion; however, there are still debates on where and how the money should be distributed.

Dao Van Hung, member of the National Financial Supervision Commission and teacher at the National Economics University praised Chinese policies to help the SMEs in export as “intelligent”; yet, he stressed that the situation of the two countries was not the same.

The stimulus package should go to the export sector here, which would create a lot of jobs in Viet Nam and give them resources which would boost their consumption levels, said Hung.

Hung said it was hard to define which sectors need more financial support, but the Government might concentrate on the agricultural areas and less in entertainment industry.

Hung also said the Government should not give enterprises interest free loan, but should only give them partial support to avoid the possible waste and corruption. (VNS)