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PM orders building socio-economic development plans, budget estimates for 2025

The Prime Minister Phạm Minh Chính has signed a directive on the building of the socio-economic development plans and state budget estimates for 2025.

The directive notes that all plans for the next year are being drafted amid a rapid and unpredictable global changes, particularly in terms of the Ukraine-Russia conflict, Gaza, the Red Sea. Other influences on any directive include rising protectionism, inflation and major economies’ policy adjustments, supply chains and capital flow shifts.

Next year is a particularly important year domestically, when an all-level party congresses will be held on the threshold of the 14th National Party Congress.

Việt Nam’s stature and strength after nearly 40 years of ‘đổi mới’ (renewal) has become stronger. The political, social and macro-economic situation remains stable, many key national projects have been implemented and the business and investment climate has improved.

However, difficulties and challenges are still considerable, especially when it comes to fulfilling the targets of the five-year socio-economic development plan for 2021-25.

In that context, PM Chính requested that ministries, central agencies and localities identify the essential issues of the 2025 development plans.

They need to ensure the targets and solutions set for next year adhere to the overall plans, with three strategic breakthroughs, six focal tasks and 12 groups of main tasks and solutions detailed in the resolution of the 13th National Party Congress.

The plans need to effectively mobilise and use resources while promoting agencies and units’ self-reliance. They also have to closely connect the socio-economic development plans with the public investment ones.

Tasks and solutions must be detailed in terms of content, deadlines and progress, he added.

The building of the state budget plan for 2025, including budget spending and forecasts, has to be workable, so that there are as few revisions to those estimates as possible and that capital does not need to be transferred to the following year.

The drafting of local budget collection and spending plans for 2025 also has to comply with national and local socio-economic development targets and tasks, the five-year national and local financial plans and the medium-term public investment plan for 2021-25, according to the directive.

Main tasks include proactive and effective coordination of macroeconomic policies, including monetary, fiscal, investment and trade, to maintain economic stability, control inflation, promote growth and support business production.
Improving the socialist-oriented market economy; developing various markets; enhancing the investment and business environment, and promoting public-private investment partnerships, accelerating strategic infrastructure development, especially in transportation, major urban areas, seaports and airports, was another major task.

Focus should also be on restructuring the economy along modern growth lines, increasing productivity, quality, efficiency and competitiveness, from a quality work force to meet the demands of the Fourth Industrial Revolution and international integration; restructuring of public investment, state-owned enterprises and credit institutions, promoting digital, green, circular economies, e-commerce and new business models.

Establishment of high-quality, branded and competitive tourism centres, along with an advanced marine economy and development of coastal economic, industrial and eco-urban zone are also urged.

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OTHER NEWS

Việt Nam’s timber, wood product exports post positive growth in the first five months

The export value of timber and wood products in Việt Nam is estimated to reach over US$6 billion in the first five months of this year, an increase of 18 per cent over the same period last year, according to General Department of Vietnam Customs.

Notably, the exports of wooden products are expected to bring home over $4 billion, up 7.5 per cent compared to the same period last year.

Tô Xuân Phúc, Managing Director of Forest Trends’ Forest Policy, Trade, and Finance Initiative said that Việt Nam’s timber industry will gradually recover in 2024 as demand for the products is increasing.

According to Đỗ Xuân Lập, Chairman of the Vietnam Timber and Forest Products Association, said that Việt Nam is among the top timber exporters in the world. Vietnamese timber reaches 170 countries and territories worldwide, making deeper inroads in key markets like the US, Europe, the Republic of Korea and Japan, and marking greater presence in emerging markets like Middle-East and India.

Lập said that Việt Nam has affirmed its position in the global timber market thanks to its advantages in forestry development, support policies, and accession to free trade agreements.

Moreover, Vietnamese companies are investing in new technology and digital transformation to develop new products and services and increase competitiveness, efficiency and productivity.

However, Việt Nam’s timber industry is also facing many difficulties, especially when major importers have been imposing stricter requirements on origin, green production, reduction of greenhouse gas emissions, and the Carbon Border Adjustment Mechanism (CBAM) – a carbon tariff on carbon-intensive products imported to the European Union (EU).

Last year, the EU adopted a regulation to curb the market’s impact on global deforestation and forest degradation around the world, as well as protecting the rights of indigenous people. The EU Deforestation Regulation (“EUDR”) mandates extensive due diligence on the value chain for all operators and traders dealing with certain products derived from cattle, cocoa, coffee, oil palm, rubber, soya and wood.

According to this regulation, businesses exporting rubber wood furniture to Europe have 18 months for large companies or 24 months for small and medium companies to prepare to meet the requirements of the EUDR.

Lap added that the internal capacity of Vietnamese businesses is also a limitation as most of them mainly produce following orders and designs of foreign distributors.

Production and export have grown continuously for years but still rely on cheap labour and raw materials, and the added value of products is not high.

He noted that most businesses are small in scale and do not have enough capacity to build brands. Small businesses can be weak in responding to sudden and continuous fluctuations in the market. Vietnamese products are rarely distributed directly to customers but via foreign distribution channels and foreign businesses, Lập added.

Nguyễn Liêm, Chairman of the Bình Dương Furniture Association, said that exports of Vietnamese timber and wooden products to the US increased in the first months of this year, pushing the industry’s growth.

US importers highly value and consider Việt Nam an important timber and wood product supplier in the world, Liêm said, adding that if businesses can make use of this advantage, they can create breakthroughs.

However, focusing too much on a key market is also a weakness, Liêm said, emphasising that Vietnamese timber producers need to diversify markets and increase exports to other potential markets.

VN aims to build a modern, sustainable, efficient logistics industry

The Ministry of Industry and Trade is speeding up the development of a strategy to create a modern, sustainable and efficient logistical service industry in the 2025-35 period with a vision to 2045.

Trần Thanh Hải, deputy director of the ministry’s Import-Export Department, said that the domestic logistics industry remains uncompetitive.

He said that around 89 per cent of existing logistics enterprises in Việt Nam are domestic and hold a market share of just around 30 per cent. About 95 per cent of domestic enterprises are SMEs, while Việt Nam’s logistics come at a much higher cost than in other countries, estimated to be equivalent to 18 per cent of GDP, compared to the global average of 14 per cent.

Improving the competitiveness of the domestic logistics industry is critical in the context of rapid international integration, an indispensable part of production and business along with the rapid development of science and technology, he said.

Việt Nam needs a long-term development strategy for the logistics industry. “A development strategy to 2035 with a vision to 2045 will link logistics with the development of goods production, import and export, transport infrastructure and information technology in a sustainable, modern and efficient direction,” Hải said.

The draft strategy has set a target that the logistics industry will contribute 5-7 per cent to GDP by 2035, from a current 4-5 per cent. The annual growth rate needs to reach 12-15 per cent per year with the logistics cost to fall to 12-15 per cent of GDP.

Việt Nam aims to rank among the top 40 in the world by the logistics performance index (LPI). It wants to have around 80 per cent of domestic logistics companies using digital transformation solutions and half of vehicles used in the logistics sphere should be using green energy.

To achieve these goals, the draft strategy sets out measures including improving the investment environment, speeding up logistics infrastructure development, promoting the development of the logistics market, improving competitiveness of domestic companies and increasing the use of science and technology.

Deputy Minister of Industry and Trade Nguyễn Sinh Nhật Tân said that the focus should be on ensuring the consistency with other development plans and enhancing the links between logistics services among regions and localities.
In addition, the strategy should focus on enabling domestic firms to expand market shares and compete with foreign rivals.

Stressing the importance of logistics over the next term, Tân asked the development of the strategy to be accelerated and submitted to the Prime Minister early.

Việt Nam’s logistics performance index (LPI) reached 3.3 points in 2023, up from 3.27 points in 2018, ranking the country 43 out of 154 countries worldwide and fifth among ASEAN countries. Logistics revenue was estimated at around US$42 billion, increasing 14-16 per cent per year on average.

Twenty-nine renewable energy projects connected to national grid

Twenty-nine renewable energy projects with a total capacity of more than 1,577 MW have been supplying energy to the national power grid, according to Việt Nam Electricity.

To date, these projects have generated a total of 2,597 kWh to the national grid.

EVN said that 81 out of 85 renewable energy projects with a total capacity of more than 4,500 MW have submitted documents for electricity pricing negotiations.

Seventy-two projects temporarily proposed prices at 50 per cent of the ceiling prices regulated by the Ministry of Industry and Trade, out of which 63 received the ministry’s approval.

The ceiling prices for solar power are VNĐ1,185-1,508 per kWh and VNĐ1,587-1,816 for wind power.

A report by the Electricity Regulatory Authority of Việt Nam showed that the national load increased about 11.4 per cent from the beginning of this year.

EVN said it has made preparations for a variety of electricity system operation scenarios to ensure a stable power supply this summer.

VN focuses on revitalising aggregate demand and sustainable growth for 2024 economic prospects”

Việt Nam’s economic prospects for 2024 involve revitalising aggregate demand, promoting sustainable growth, and improving the investment environment to drive long-term development.

A national scientific seminar titled “Việt Nam Economy in 2023 and Prospects for 2024” was held in Hà Nội on Wednesday. The seminar, organised by the National Economics University (NEU) in collaboration with the Party Central Committee’s Economic Commission, marked the release of the annual publication “Việt Nam Economic Assessment 2023” under the theme “Promoting Aggregate Demand for Economic Growth in the New Context.”

During the seminar, experts assessed the current state of aggregate demand and its components, identified achievements, limitations, and underlying causes. They also evaluated the contributions of different factors to economic growth and proposed directions and policy recommendations for economic management in 2024 and beyond, with a focus on promoting aggregate demand and ensuring sustainable economic growth in the changing landscape.

Professor Phạm Hồng Chương, the Rector of the National Economics University, emphasised the challenges faced by the Vietnamese economy in 2023. He highlighted the difficulties arising from global economic slowdown, high global inflation, tightened monetary policies in many countries, and increased geopolitical tensions. These factors led to lower economic growth compared to the pre-COVID-19 period, particularly due to weakened aggregate demand, consumption, and investment, as well as a lack of improvement in growth quality.

Aggregate demand plays a vital role in determining economic activity, employment levels, and overall growth. A decline in aggregate demand indicates the risk of an economic recession, impacting industrial production, employment rates, and people’s income and expenditure.

To address these challenges, the Government and relevant entities must promptly implement appropriate measures to strengthen the drivers of recovery and create conditions for economic development in the new context. Restoring aggregate demand is essential for Vietnam’s economic stability and growth.

Dr. Nguyễn Đức Hiển, Deputy Head of the Central Committee’s Economic Commission, emphasised the decline in aggregate demand, which affected all three components: investment, exports, and consumption. Social investment in 2023 saw a modest increase of 6.2 per cent compared to the previous year. State sector investment from the budget reached only 85.3 per cent of the annual plan, while non-state sector investment and foreign direct investment (FDI) also experienced slower growth.

Furthermore, both exports and imports witnessed significant declines in 2023, attributed to reduced demand from major markets such as the United States, ASEAN, the EU, and certain East Asian countries. Consumer spending also decreased, with retail sales of goods and consumer service revenues growing at a slower rate compared to the previous year.

Professor Tô Trung Thành from the National Economics University suggested that in 2024, the government should focus on demand-oriented policies to revive consumption, investment, and exports in the short term. Fiscal policy should play a central role in providing support, while monetary policy can complement these efforts.

In the long term, the government needs to improve the investment environment and facilitate private investment as the primary driver of sustainable economic growth, as relying solely on public investment is not a viable solution, he said.

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