Credit and Tax Reduction to Boost Private Sector Growth
Scale Up Forum 2024 – Endeavor Vietnam
In recent years, both the global and Vietnamese economies have faced many difficulties. To help the economy stay strong, the Vietnamese government has introduced different solutions. Among these are tax cuts and easier access to credit, especially to support the private sector, which is a key part of Vietnam’s economy.
Many Factors Support Growth Goals
According to Mr. Tuan, Vietnam’s economy is showing good recovery in production, but the consumer sector is still unclear. This could affect economic growth in the near future.
“However, we are seeing strong determination from the government to develop the economy even more in the future.”
The government has set very ambitious goals, such as achieving GDP growth of 7.5-8% between 2026 and 2030. This is the highest target we have ever seen in history.
The current policies and actions of the government are supporting these goals. Therefore, setting high targets will create better economic growth drivers in the future,” Mr. Le Anh Tuan shared at the Scale Up Forum 2024 seminar recently organized by Endeavor.
Notably, he said that shortening the time to complete key projects, from decades to just 5-10 years, will bring growth more quickly. For example, the changes in the high-speed rail project show new thinking, which is very promising.
In 2024, many factors are supporting efforts to achieve high growth. In June 2024, credit growth was surprising but showed low capital absorption. Now, however, credit growth is clearly recovering.
In addition, public investment has been slow, but it is expected to grow strongly in the last quarter of the year. Inflation remains stable, and foreign direct investment (FDI) is strong.
“Unlike before, the approach to reaching high growth targets is no longer in conflict. The missing piece is still a growth driver, which is the private investment sector,”
Mr. Tuan emphasized.
Boosting Fiscal and Monetary Priorities
According to the General Statistics Office, private sector investment makes up 55-60% of total social investment. When this sector recovers and grows, it helps drive overall economic growth. In the first quarter of 2024, private investment grew slowly, continuing the trend from 2023, with the private economy still weak. However, in the third quarter of 2024, private investment showed signs of recovery, reaching a growth rate of 8% for the first time after two years of decline.
Recently, the government has consistently introduced policies to stimulate and support the recovery of businesses, especially the private sector, as a key driver of economic growth. On October 24, the government issued Resolution 188/NQ-CP from the September 2024 monthly meeting and an online government-local meeting. The Prime Minister assigned tasks to central and local agencies, focusing on continuing tax, fee, and charge reductions or extensions to ease difficulties for citizens and businesses.
Following the Prime Minister’s directions, the State Bank of Vietnam (SBV) will coordinate flexible monetary policies to adjust exchange rates and interest rates to fit the economic situation and goals. It will also promote credit growth to support businesses, people, and job creation.
The SBV will encourage commercial banks to reduce operational costs and use technology to reduce loan interest rates, directing credit toward key areas of production and economic growth. It will speed up the implementation of the social housing credit program under Resolution 33/NQ-CP and boost a 60 trillion VND credit program for forestry and fisheries. Banks are also directed to control credit quality, ensure system safety, and manage bad debt risks effectively.
The Prime Minister asked the Ministry of Finance to consider extending tax and fee reductions where possible, helping businesses and citizens. The ministry will review laws on non-agricultural land use, land use fees, and rent, suggesting adjustments to help businesses use land for investments and increase competitiveness.
Recently, the Ministry of Finance completed a draft decree to reduce 2024 land rent by 30%, based on feedback from agencies and local authorities. Experts say that the quicker this decree is issued, the sooner it will help the private sector, especially as the last quarter of the year may reveal full impacts from Typhoon Yagi.
Despite challenges, recent international reports are optimistic about Vietnam’s economic growth, especially after strong GDP growth in the third quarter. Standard Chartered Bank raised Vietnam’s 2024 GDP growth forecast to 6.8% from 6.0%.
According to Standard Chartered experts, Vietnam’s growth drivers remain strong, with improvements across exports, retail, real estate, tourism, construction, and manufacturing. Looking forward, trade recovery, increased business activity, and foreign direct investment will be main growth drivers in 2025 and beyond.
We would like to express our special thanks to Nami Foundation and AWS for their generous sponsorship and support for our program. Your contributions and partnership have been invaluable, and we are truly grateful for your dedication to our shared goals. Thank you for standing with us and making this journey possible.