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| Economist Pham Chi Lan |
“The Government gives with one hand and takes back with the other, but it takes more than it gives,” she told the Daily in an interview.
While tax reductions are awaiting approval of the National Assembly, local enterprises are burdened with fees.
Directly impacted by the road use fee, transporters are seeking to raise charges, while producers have to cope with higher transport charges and production costs, as power and water prices are also up.
Citizens are suffering more. Due to higher power and water prices, they will likely curtail spending during the upcoming Tet holiday, said Lan.
“The Government fully realizes this paradox, but still allows ministries to do so. If generating revenues for the State budget is given as an excuse, it is totally unconvincing,” she stressed.
The reason why the State budget revenue was off target in 2012 lies in the desperate trouble of local enterprises, she explained. Fee hikes create more difficulties for them when they are unable to sell goods and raise prices as purchasing power is very poor.
“Ministries are making unwise moves. When it is necessary to nourish sources of revenue, they do the opposite. This shows that they are indifferent to people’s livelihood and difficulties of businesses,” said the economist.
She expressed concern that many enterprises could not survive 2013 and as a result, a lot of workers would be jobless. Then, consumption would further weaken and so the vicious circle would continue, she noted.
High inflation will remain a headache in 2013, she predicted. The consumer price index (CPI) will likely rise at a same rate, but what matters is the reason behind it, she noted.
By the end of 2012, CPI had picked up 6.81% against end-2011. Still, the average growth rate in 2012 against the average rate in 2011 was still some 10%.
“In comparison with other countries in the region, CPI in Vietnam is higher, yet growth is lower. The reason is shrinking consumption rather than improved productivity and efficiency,” she said.
The key solution for this problem, according to Lan, is economic restructuring, in which the central task is to reallocate resources to all economic sectors in a transparent way. The resources should not be prioritized for State-owned enterprises any longer.
Restructuring of State-owned enterprises, the banking system and public investment must continue to be done. Meanwhile, in the short term, ministries should cut back on their spending and investment, she suggested.
