Nguyen Van Be, HCM City, said the high Consumer Price Index had eroded the people’s confidence in the Government.

"In his report, Prime Minister Nguyen Tan Dung said a major contributor to the high inflation was the poor ability to forecast," the deputy said.

"So who in the Government are in charge of this mission? If they failed to accomplish their assignments they must be penalised."

Tran Du Lich, HCM City, asked: "Why did the Government’s report say the monetary policy had put a direct pressure on the inflation and leave it an open question?"

The deputy reminded the National Assembly that early this year the Industry and Trade Ministry had said the trade deficit was under control.

But it had been reported at US$11 billion just four months later.

"It’s almost impossible for any nation to absorb such a high import surplus," the deputy said. "So why had the Industry and Trade Ministry claimed the trade deficit was under control?"

Nguyen Ngoc Dao, Ha Noi, proclaimed: "The securities market is a failure." Who should take responsibility for it?" he asked.

The deputy said he did not entirely agree with the Government’s explanation for the high inflation: Higher world prices and natural calamities.

Le Thanh Binh, HCM City, attributed the Government’s inability to forecast economic developments to the bureaucratic practice of its officials.

When increases in the CPI and worker strikes were reported to the National Assembly at its last session in late 2007, the Government kept saying "the situation is under control," he said.

Truong Thi Anh, HCM City, said the voters with whom she met were all very worried about the high inflation.

"The Government said the prices for essential commodities likes electricity, petrol and coal were well under control," she said.

"But for how long would the price be dictated by the market," she asked?

"We need to give the people answers."

Nguyen Ngoc Dao, Ha Noi, said: "We have numerous research institutes but they were unable to provide accurate forecasts. It means that we must do something to strengthen their capacity."

Nguyen Ba Thanh, central Da Nang Province, suggested the creation of an emergency authority to deal with rises in the price of rice.

The reply

Deputy Prime Minister Nguyen Sinh Hung conceded a weakness in economic forecasting but that was not relevant to the structural inflation that had existed for sometime and was part of high economic growth.

The pharmaceutical industry provided an example of how world-prices influenced the economy.

About 50 per cent of pharmaceuticals were made in Viet Nam but most of the ingredients to do so were imported. The same applied to crude oil. "One hundred per cent of petrol was imported although our own crude oil is exported," he said.

The deputy prime minister said the Government had given thorough consideration to its proposal that the target for the growth of Gross Domestic Product be reduced to 7 per cent.

The decision stemmed from both subjective and objective reasons.

The deputy prime minister forecast that inflation rate would not drop to the 2007 rate before the end of this year or in early 2009.

The economy would be stabilised with single-digit inflation by 2010, he said.

The deputies were assessing the Government’s socio-economic report for 2007 and the first four months of 2008 and the balance sheet for 2006 and 2007.

Round two

The parliament began its second day of sittings yesterday listening to appraisals of the proposed Value Added Tax Law, the Corporate Income Law and the Petrol and Gas Law delivered by the Standing Committee.

The Finance and Budget Committee recommended the adoption of preferential policies for agricultural production in its appraisal of the proposed changes to the Value Added Tax Law.

These included a suggestion that the farm produce should be VAT free and that the VAT for agricultural goods and services be limited to five per cent.

Finance and Budget Committee chairman Phung Quoc Hien argued this would raise production costs and reduce farmer income when the majority of Viet Nam’s farmers were poor.

It would also undermine the competitiveness of the country’s agriculture.

The chairman said further details were needed to be included in the proposed changes to Corporate Income Tax to ensure its proper enforcement.

He asked the drafting committee to review articles 11, 14 and 15 to make sure they were in accord with the country’s legal system.

Economic Affairs Committee Chairman Ha Van Hien said that up to 25 per cent of State revenue was provided from oil and gas.

But the chairman, who appraised the proposed Petrol and Gas Law, said that apart from the Corporate Income Tax Law there was no special regime to say how much of the industry’s after-tax-profit should go to the State.

The industry had made major profits after paying tax, he said. "In 2005 the profits stood at VND 5,025 billion ($ 314 million) and in 2006 the figure was 4,824 billion ($ 302 million)".

As a result, he wanted the drafting committee to write a guiding principle for the division of profits.

The deputies held group discussion of the proposed changes to the Value Added Tax Law and the Corporate Income Law during the afternoon.

Source: VietnamNews