Do not be complacent or satisfied with the results achieved.

President Nguyen Xuan Phuc cautioned that we must not be complacent with the results achieved. Photo: VGP/Nhat Bac

During the group discussion on the socio-economic situation on the morning of May 25th at the National Assembly, the issue of inflation risk and solutions to control it was frequently raised by National Assembly deputies.

Despite acknowledging many positive initial results, delegates also discussed several existing risks that Vietnam faces.

Facing many challenges

In his remarks, President Nguyen Xuan Phuc reminded us not to be complacent or satisfied with the results achieved. He noted that the prolonged impact of the pandemic has depleted almost all of people's savings, business accumulations, and state funds.

The President warned of signs of inflation as Vietnam's economy is highly open, and rising input costs are leading to many general difficulties for the economy.

Meanwhile, the stock market, a crucial channel for raising capital, has seen billions of dollars "evaporate" recently. Therefore, better measures and methods are needed to support the stock market, stabilize this channel, help capital flow to businesses, create jobs, and promote growth.

Regarding the economic stimulus package, the Party and State have adopted a policy to address a number of issues and recognize the difficulties faced by businesses and workers. However, the President noted that some implementation has been slow; businesses and workers have benefited only slightly. "Therefore, it is necessary to strongly promote these stimulus packages to ensure their effective implementation."

"We need to focus on addressing issues at all levels to reassure the people amidst a turbulent social environment. We shouldn't be overly optimistic, but we mustn't be complacent either…," the President noted.

President Nguyen Xuan Phuc reiterated the goals set by the 13th Party Congress: by 2025, Vietnam will move out of the lower-middle-income country category; by 2030, it will be an upper-middle-income country; and by 2045, it will become a developed, high-income country. To achieve these goals, we must have sustained high growth, a heavy responsibility, because with a growth rate of 6-7%, we will only reach the size of South Korea's current economy by 2045. We have already failed to meet our growth targets for two years (2020-2021). Therefore, to achieve the goal of a strong, developed, and high-income country, we need strong solutions with more comprehensive and decisive policies and mechanisms to accelerate growth.

Institutions, policy mechanisms, and human resources are crucial issues. The President suggested that attention should be paid to the following: "Training human resources is an extremely important issue that needs to be addressed at every level and in every sector."

"Developing with a focus on the people, so that they can overcome difficulties and hardships, is our task. The difficulties faced by the people remain a matter of continued concern, ensuring that everyone, every household, and every business has vitality, income, and savings. Therefore, policies and mechanisms must be relevant and strive to remove difficulties and obstacles. Policies must build trust among the people and businesses. Many socio-economic issues require synchronized management, administration, and direction so that localities can have renewed vitality," President Nguyen Xuan Phuc emphasized.

Fuel prices need to be controlled immediately.

Representative Tran Hoang Ngan (Ho Chi Minh City) warned that, with its high degree of economic openness, Vietnam faces many challenges in the current volatile context, especially the Russia-Ukraine conflict causing high oil prices, and China's "zero COVID" policy leading to difficulties in raw material supply...

Mr. Ngan also recalled the many periods of inflation that our country has faced, forcing us to use "high-dose medicine" such as tightening fiscal policy and strict monetary policy to stabilize the macroeconomy and ensure social welfare.

Given the current context of continuously rising fuel prices, Mr. Tran Hoang Ngan believes that the National Assembly and the Government need to speak out to quickly control fuel prices.

"We accept market mechanisms, but we need tools to control and curb the increase in gasoline prices, such as continuing to reduce environmental protection taxes on gasoline," Mr. Ngan said, raising the issue of not applying excise tax at this time when gasoline is an essential commodity.

Mr. Tran Hoang Ngan also suggested that the National Assembly should dedicate a session to discussing this issue, because if gasoline and diesel prices are not controlled, it will create a "domino effect" causing other goods to increase in price.

Regarding the financial market, delegate Tran Hoang Ngan suggested that it needs to be "reformed" to ensure transparency, openness, and clear legal frameworks to reassure investors. Along with that, there needs to be a supervisory body to thoroughly address violations and ensure transparency.

Meanwhile, delegate Phan Van Mai (Chairman of the People's Committee of Ho Chi Minh City) suggested that credit to the real estate sector should be tightened appropriately to avoid affecting projects that need to be implemented, because when investment capital flows into that sector, it will create jobs and have a significant impact on the socio-economic situation.

A clear assessment of the global situation affecting Vietnam.

Concerned about external impacts, Standing Committee member of the National Assembly's Economic Committee, Nguyen Manh Hung, suggested a clearer assessment of the global situation and its potential impact on Vietnam.

For example, China is Vietnam's largest trading partner and most important market, so its "zero COVID" policy and internal difficulties will have a significant impact on Vietnam.

Along with the International Monetary Fund's (IMF) forecast of slower global growth in 2022, Mr. Hung also warned of rising prices and the risk of imported inflation in Vietnam.

He cited the World Bank's forecast that energy and fuel prices in 2022 could increase by about 50% compared to 2021, and food prices by about 23%.

Noting the rising global prices, the Standing Member of the National Assembly's Economic Committee stated that, given Vietnam's open economy, imported inflation is a very real risk and needs to be considered in order to develop appropriate countermeasures.

Furthermore, domestic gasoline prices have just increased to over 30,000 VND/liter. Despite the government and National Assembly's efforts to control gasoline prices through the price stabilization fund, tax policy adjustments, and supply assurance, complete control remains difficult.

Instead, Representative Hung suggested that the Government pay attention to controlling the prices of other input materials, such as electricity. "EVN committed to not increasing electricity prices in 2022, but fulfilling this commitment is very difficult because the input costs of electricity, such as coal and gas, have already increased significantly. Countries like Singapore and Malaysia have already increased electricity prices by 6-9%, and some European countries have also raised electricity prices," Mr. Hung stated.

Based on the factors mentioned, the Standing Member of the National Assembly's Economic Committee recognizes that achieving the target of keeping the CPI at a maximum of 4% this year is a major challenge.