For the first time, numerous leaders of the country and National Assembly (NA) officials have voiced the common concern of risks looming large, threatening to derail the economy. At the meeting of the National Assembly Standing Committee in Hanoi this week, worries take center stage.

Signals of the economic slowdown have become clearer, says Nguyen Van Giau, head of the NA Economic Committee. The former governor of the central bank, citing an economic review prepared by his committee, says in Vneconomy that key pillars of the economy are crumpling. Industrial production growth in the first quarter was 4.93%, the lowest in as many years, while mounting inventories remained the bottleneck for growth, Giau says at the meeting.

Phung Quoc Hien, chairman of the NA Finance-Budget Committee, points to the cash flow being choked off. “Credit growth (in the first four month) was only 1.44% while deposit growth was 5%, showing the capital absorptive capacity of the economy was very weak,” Hien is quoted in Sai Gon Tiep Thi. He furthers that in order to achieve a gross domestic growth rate of 5.5% as per the target, the credit growth for the whole year should be 14-15%, a highly-unlikely level.

Phan Trung Ly, chairman of the NA Law Committee, iterates that “there must be breakthroughs with radical solutions to the financial and monetary issues to address the current problems of capital shortage, bad debts and inventories.”

Vice State President Nguyen Thi Doan, who rarely speaks out her view on economic issues, also voices concerns about the deteriorating conditions.

“My comrades, it is frozen now, all due to the cash flow; money shortage; stagnant production; so how can assets and materials for the society be created?” she ponders at the meeting. The vice president, according to Sai Gon Tiep Thi, calls for measures to address the stonewalled cash flow “to avoid the dead end.”

NA Chairman Nguyen Sinh Hung is also among those leaders who pinpoint the worsening scenario, according to Tuoi Tre.

“The situation is gloomy. I think as many as 100,000 enterprises have died, not just tens of thousands (as reported), while the proportion of those entities incurring losses could well exceed 65%,” says the NA chairman in the paper.

He furthers that “the financial situation like this, in my opinion, is very bad.”

The downbeat comments are raised at the NA Standing Committee’s meeting after Minister of Planning and Investment Bui Quang Vinh, on behalf of the Government, delivers a report on the overall socio-economic situation.

Though the report, as usual, mentions achievements in the Government’s socio-economic management, Vinh admits that problems now abound.

“The purchasing power in the economy can hardly bounce back in the near term as both employment and the people’s income are coming down… while the number of enterprises scaling down production or shutting down business and inventories stay high,” the minister is quoted as saying in Tuoi Tre.

Vinh also reasons that if bad debt is not tackled, credit growth can hardy inch up, and “if above-mentioned difficulties are not removed, then the GDP growth target of 5.5% as endorsed by the National Assembly for 2013 is unrealistic.”

In its report delivered at the meeting, the NA Economic Committee also highlights the confusing numbers relating to bad debt, as “data on the amount of bad debt made known to the public are conflicting, giving way to doubts.” NA officials also cast down on numerous other figures supplied by the Government, and “suggest that the Government be sincere in its data,” according to Tuoi Tre.

“The economy is worsening, enterprises are dying, and workers losing jobs, but why is the proportion of poor households falling?” questions NA Vice Chairman Huynh Ngoc Son.

The economic committee’s chairman, Nguyen Van Giau, doubts the tax refund numbers. “The VAT refund was reported at VND20 trillion, but just a few days later, the amount is raised to VND33 trillion today. That’s incredible!” he notes.

In an interview with Vneconomy, Mai Xuan Hung, vice chair of the NA Economic Committee, observes that the Government has not really looked into real problems in the economy.

“I think that the Government’s assessment of the economy in many aspects are overoptimistic and seemingly out of touch of the reality,” Hung says.

As mentioned early on, the widespread perception among the country’s leaders about the deteriorating economy is rare. But such a change in the authorities’ attitude towards the economy, though revealing a gloomier picture with numerous risks ahead, is positive. It is expected to help find out solutions.

As the problems are now established, it is time for the National Assembly to join forces with the Government to map out remedies.

Given worsening conditions, “if the National Assembly in the meeting (next week) fails to introduce drastic measures to rescue the economy, then the problems will be further aggravated,” says Vice State President Nguyen Thi Doan in Tuoi Tre.

Source: VEN.