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‘Price fever’ not likely to occur in 2009   2009-03-04 - TBKTVN


What made Vietnamese people feel insecure in 2008 were the regular price fluctuations. However, Dr Tran Du Lich, a member of the National Assembly’s Economics Committee, believes that a ‘price fever’ will not occur in 2009.


Lich said:


Dr Tran Du Lich, a member of the National Assembly’s Economics Committee

In 2008, two extremes existed at the same time, fire and ice. Fire broke out due to the price increases of three main types of commodities: food, foodstuffs and metal. Meanwhile, the financial market fell into a recession, that was the ice. Since the end of 2008, the fire has become smaller, while the ice bigger, which has signalled a recession.


The very good thing is that despite this, Vietnam’s economy has remained stable. This should be seen as a big achievement attained by the government’s measures.


However, as the ice has become bigger, we need other measures. Therefore, I think that we need to think of measures to prevent economic recession instead of another price fever.


I don’t think that the 2008 price fever will be repeated. Our task for the time to come is to settle inflation and deal with economic growth slowdown.


In 2008, Vietnam underwent big difficulties due to the global financial crisis. Meanwhile, experts believe that bigger difficulties are waiting in 2009. What is your viewpoint?


The global financial crisis has entered a new stage, the global economic recession – the thing that worries the world the most.


As for Vietnam, the economic recession will have impacts on three fields. First, exports will decrease. Second, foreign direct investment will be influenced. After getting licences, investors will begin mobilising capital. However, in such conditions, no one can mobilise capital. Third, it will affect portfolio investment. In 2008, investment funds in Vietnam incurred losses, some reporting losses of up to 40-50%.


Vietnam has been successful in fighting inflation; however, deep-rooted reasons still exist, like low investment efficiency, low added value in products. It will take time to settle the problems. Therefore, the possibility of high inflation still exists.


However, hasn’t the government has been implementing five measures in order to prevent economic recession?


I think that the implementation of the measures proves to be a bit late. In the first two months of the year, the retail turnover dropped dramatically.


In HCM City, for example, if excluding price increases, the retail turnover of commodities and services increased by 3.2% only (the figure was 19.9% last year). Meanwhile, the demand stimulus measures have not helped encourage consumption.


The sharp falls of the stock market in recent weeks also prove to be a bad thing for the national economy’s health. I think that we need to be prompt to act and implement the five measure packages initiated by the government. If we are slow, the situation may become more difficult in the last months of the year.


What do you think Vietnam should do to turn the dangers into opportunities?


In order to turn the dangers into opportunities, we need a medium-term economic plan for 2009-2010, while we should not just continue the previously set 2006-2010 socio-economic targets.


We need to associate the currently applied demand stimulus policies with the restructuring of the national economy, replace growth targets which focused on development in quantity with targets focusing on quality development; I mean we should focus on increasing added value, investment efficiency and productivity.


If the current demand stimulus package only aims to ensure GDP growth in 2009, we will still meet difficulties in coming years. It is now the right time for Vietnamese businesses to restructure their businesses which can help them advance steadily in the integration process.

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