Many enterprises complain they are grappling with too many newly-emerged challenges in the nation's evolving economy. What is your comment on this issue?

Recent developments have had a great impact on enterprises, and the way they operate.

Firstly, interest rates have been on a steady rise and remain high at the moment. Bank loan interest rates have climbed to around 15-17 per cent, a level that only a handful of firms can afford. Meanwhile, input spending for businesses is still high. This is a really big challenge for enterprises.

Secondly, the US dollar exchange rate is high, at around VND20,000-21,000 per dollar, increasing the cost of imported raw materials, which also affects enterprises.

Thirdly, inflation is likely to increase, which also makes life harder.

How are these challenges affecting the way enterprises do business?

The increased interest and exchange rates are challenging enterprises' access to capital and foreign currencies. At the same time, other factors such as institutions, infrastructure and human resources have not been improved.

One can say the negative influences are on the rise while the potential positives have not been effectively brought into full play, not to mention fluctuating securities and property and gold markets which cause public insecurity.

Do you think such adverse impacts are an unusual development in the national economy?

It is unusual, first and foremost, because of the psychological factor. For example, when the world gold market had a slight upheaval, the local gold market witnessed a fierce fluctuation. Secondly, our forecast are not always correct.

Did the fact that banks were pressed to lower interest rates not long before they were allowed to float the rate make the situation more difficult?

Such governance can produce a stir in society. For example, the Government decided to lower interest rates to 11 per cent this month, but the following month it allowed the interest rates to be floating. Sudden moves like this one in governance have caused certain difficulties.

What are the solutions needed to address these difficulties?

The solutions are the very measures that the Government has committed to, such as intervention in the gold and US dollar market and interest rate management to stop adverse developments.

That is the Government's commitment to stabilising foreign exchange rates. From producers and businesses to the public and speculators, they all know that the exchange rates will not change from now until the end of the year. The State has made positive moves to stabilise the US dollar and gold markets.

These measures should be implemented promptly, efficiently and synchronously.

At the same time, the Government must be able to manage prices while controlling inflation, overspending, credit levels and the trade deficit.

The most important factor is the Government's management ability. For example, if the Government fails to manage prices, the people's lives and production are both affected.

But these measures are just short-term, aren't they?

Yes, these measures don't help sustain the economy. In the long term, we need to restructure the economy, improve infrastructure and enhance the quality of human resources.

We need to combine short-term and long-term measures. If we just pay attention to the current situation, additional challenges are likely to emerge once the situation is under control.

Source: Vietnamnews