Dinh Tien Dung, Minister of Finance: Interview

Dinh Tien Dung, Minister of Finance

Interview: Dinh Tien Dung

What measures need to be taken to sustain economic growth and stabilise Vietnam’s economy?

DINH TIEN DUNG: Within the economic objectives for 2016-20, the government is aiming for a five-year average GDP of 6.5-7% per year. Furthermore, the scale of annual public debt should not exceed 65% of GDP; government debt should not exceed 54%; and foreign debt of the country should not exceed 50% of GDP. The average of total social investment capital is to be about 32-34% of GDP and the state budget’s deficit should reach 3.5% of GDP by 2020.

We will also continue the restructuring of our financial markets to ensure a rational structure between money markets, capital markets and insurance markets. Furthermore, because it is suitable for the new stage of Vietnam’s development, we are focusing on rapidly expanding our capital and insurance markets, which will be done by developing a healthy stock market that is associated with the revamping activities of the money market. Lastly, we will continue the restructuring of credit institutions associated with the reduction of bad debt to ensure a safer system when applying new banking measures under international standards.

Throughout 2017 the government aims to ensure macroeconomic stability and create positive changes by implementing three strategies. The first is economic restructuring associated with the growth-innovation model. Second, we will improve productivity, quality and efficiency of Vietnam’s production and businesses. Lastly, we plan on enhancing the competitiveness of the economy, encouraging entrepreneurship, growing enterprises and improving economic autonomy.

What channels is the Ministry of Finance (MoF) exploring to increase state revenues?

DUNG: The government needs to increase the efficiency of tax collection so that it complies with tax administration reforms. We especially need to reform the tax policy so it includes the expanded revenue base and new revenue sources. To avoid state budget losses, the Customs and tax authorities need to strengthen inspections and audit against smuggling, trade fraud and tax evasion. There should be strict management of value-added tax refunds and active supervision of tax debts and state budget revenues to minimise debts. The government needs to promptly deal with violations of the law on management, revenues and expenditures of the state budget. Lastly, for those goods entitled to preferential tax rates under free-trade agreements, we need to enhance post-clearance checks and check the origin of imported goods. These activities are intended to ensure fair and balanced competition, improve the business environment, and promote production and business development for enterprises.

How will the MoF better manage the rise in public debt brought on by economic headwinds?

DUNG: It is necessary to separate public debt management from fiscal policy in order to ensure flexibility and proactivity in the management of public debt. In addition, innovative government guarantee mechanisms must be developed so as to narrow the scope of subjects, and prioritise guaranties for important national investment projects decided by the National Assembly. We also need to strengthen the management of local government debt to meet the needs of investment capital. In the long term it will be essential to establish a debt management office to consolidate all of the operations and functions of public debt management into a single contingent. This should help by reducing fragmentation in government and by enhancing the coordination of debt management under an international model of professional public debt management agency.

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Dinh Tien Dung

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The Report: Vietnam 2017

Economy chapter from The Report: Vietnam 2017