Quickly decisively bring policies to life


Quickly, decisively bring policies to life
Prof. Dr. Tran Tho Dat

How do you assess the role of fiscal policies to support people and businesses in the context of the serious impact of the Covid-19 pandemic over the past two years?

– In the difficult context of the current recovery momentum of the world economy, Vietnam’s economy is considered a bright spot, a fairly resilient recovery in the face of the impacts of the “headwind” when it still maintained a fairly high growth rate in the second quarter of 2022.

GDP growth of 7.72% is the highest of the second quarter over the same period from 2011 to now. This result is due to the tax and fee exemption and reduction policies that have contributed to supporting people and businesses to restore production and business, and overcome the difficult period of income decline.

Therefore, the timely and more effective implementation of the economic stimulus and support packages is necessary for the economy to get out of the bottom and keep pace with the recovery of the world economy, and the role of the economic policies for people and businesses is recognized.

Notably, despite a lot of pressure from high world commodity prices, the average CPI in the second quarter of 2022 rose 2.96% compared to the second quarter of 2021. On average, in the first six months of 2022, CPI increased by 2.44% year-on-year.

This is a great effort of the agencies operating the fiscal and monetary policies in the context that the domestic gasoline prices rose by 54.92% year-on-year. While production depends on imported raw materials, fuels and materials with high prices, major economies and countries in the region are facing galloping inflation, the inflation control of Vietnam’s economy has great significance in stabilizing the macroeconomy.

In implementing the socio-economic recovery and development program promulgated by the National Assembly under Resolution 43/2022/QH15, the Ministry of Finance plays a significant role when the policies on tax and fee exemption and reduction gradually increase in scale, sir?

– I highly appreciate the efforts of ministries and agencies, including the Ministry of Finance, in implementing support packages for economic recovery and development. According to the Government’s report, in the support package of more than VND300 trillion, VND64 trillion is tax exemption or reduction. The Government also issued Decree 15/2022/ND-CP on the reduction of Value Added Tax from February 2022 from 10% to 8%. In addition, on the basis of the proposal of the Ministry of Finance, the Government developed two decrees in May on reducing excise tax on automobiles and some other taxes.

The Ministry of Finance has made efforts to implement the view that fiscal support is not necessarily increased support spending, but prioritizes cost reduction such as tax and fee reduction (value-added tax reduction, reduction of taxes and fees for gasoline, oil, etc.).

The implementation of the policies has also been made faster, stronger and more drastic. The policy of tax and fee exemption and reduction has contributed to increasing people’s incomes, and increasing consumption, thereby releasing goods for businesses in the context of the current weak purchasing power.

In particular, the increasing costs due to input material prices have created a huge burden on businesses that have been already exhausted due to the pandemic. Therefore, the promulgation and implementation of policies to stabilize the price of input materials for production, the cost of circulation, and transportation is very necessary.

The issuance and implementation of policies to stabilize the prices of input materials and fuels for production by the Ministry of Finance is very timely and effective. Photo: VNA
The issuance and implementation of policies to stabilize the prices of input materials and fuels for production by the Ministry of Finance is very timely and effective. Photo: VNA

In the context of budget balance facing many difficulties, the implementation of tax exemption and reduction policies is really a problem for the Ministry of Finance. What do you think about this issue?

– It can be seen that the budget revenue in 2021 reached the estimate, but decreased by about 9% compared to 2020. The structure of state budget revenue by tax shows that the revenue mainly comes from corporate income tax and value-added tax of domestically produced goods and taxes on imported and exported goods.

The structure of state budget revenue continues the direction that the proportion of revenue from domestic is the highest, followed by the proportion of revenue from import and export activities, revenue from crude oil is decreasing. With this trend, if the economy recovers slowly, budget revenue will be greatly affected.

In terms of budget spending, in 2021, the budget spending scale will decrease by about 4% compared to 2020 and even lower than that of 2019. In the context of spending for the Covid-19 pandemic in 2021 3 times higher than the previous year, this is the result of the Government’s efforts to cut expenditures, cut spending on wage reform through many measures such as restricting the administrative apparatus, suspending salary increase from July 1, 2020, cutting many unnecessary spending tasks.

In 2022 and the whole of 2023, the Government will continue to implement a series of fiscal policies to support the economy, aiming at three main contents: supporting businesses, supporting social security and increasing public investment. In the context that revenue is limited by the difficult economic situation and policies to support businesses while spending needs tend to increase, I think that ensuring the balance of the state budget is a big challenge.

In that context, recurrent expenditures, which currently account for more than 60% of the budget, need to be reviewed, unnecessary expenses such as travel, meetings, overseas work should be cut. It is necessary to strengthen financial discipline, administrative reform, thrift practice, waste combat and increase development investment spending and improve the efficiency of public investment disbursement.

In addition, it is necessary to continue to accelerate the disbursement of public investment by removing institutional bottlenecks and creating a specific mechanism to focus on large projects, national key projects which have regional connectivity and spread, such as transportation, energy, climate change response, telecommunications, digital transformation projects. Furthermore, it is also necessary to build develop a special mechanism to manage the disbursement to ensure quick disbursement but high efficiency, avoiding waste, loss and corruption.

In the process of improving budget spending, it is necessary to focus on the changing structural trends of the post-pandemic economy through digital stimulus packages, investments in digital technology and infrastructure that play a supporting role for the economy, accelerating reforming and digitizing the economy, and financial support policies for startups. At the same time, this is also an opportunity to consider a number of taxes to encourage digital transformation, smart production, the development of green – clean energy, and ecological agriculture.

Thank you


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