GDP growth-rate expected to reach record 8.5 per cent by end of year

Posted on 24 October 2007

Source: Vietnam news, October 23, 2007

Viet Nam's Gross Domestic Product was expected to grow by 8.5 per cent this year – the highest growth in 10 years, Prime Minister Nguyen Tan Dung told the National Assembly when it began its last session for the year in Ha Noi yesterday.

The high growth rate meant the country was likely to meet many targets set for the 2006-2010 five-year-plan by next year, he said.

The target for next year was to have GDP grow by between 8.5-9 per cent compared with 2007 with a value of about $83 billion and a per capita income of about $960.

A feature of the record growth had been the service industry which had surpassed that of GDP for the first time.

Export revenue increased by 20.5 per cent.

The prime minister described 2008 as: "The pivotal year in the 2006-2010 five-year plan.

"We should rise from being a "developing country with the lowest income," he said.

But the prime minister conceded that Viet Nam's development was yet to match its potential.

"High economic growth has not been accompanied by a corresponding improvement in quality," he said.

Inadequate economic institutions, administrative procedures, socio-economic infrastructure and human resources were barriers to rapid, sustainable development.

Opportunities would have to be exploited and challenges met to all but accomplish the key targets of the five-year plan two years early.

High growth, improved quality, efficiency, competitiveness and economic sustainability were imperative to achieving the target.

"We will mobilise various sources to invest in development, particularly socio-economic infrastructure in 2008," he said.

"We will focus on developing human resources, science and technology. We will continue our administrative reforms, intensify the fight against corruption and bureaucracy, practice thrift and combat waste.

"We are also determined to deal with issues of culture, society and the environment and to stoutly defend our national sovereignty, political security and maintain law and social order."

The prime minister forecast that about 1.7 million new jobs would be created next year and about 85,000 guest workers despatched beyond Viet Nam.

The percentage of poor households would be reduced to 11-12 per cent; the percentage of malnourished children under five, to less than 22 per cent; and the number of hospital beds raised to 25.7 for each 10,000 people.

Per capita living space would be 12sq.m.

The Government also planned to supply 75 per cent of rural Viet Nam and 85 per cent of the urban population with potable water.

It was intended that 60 per cent of pollution-generating enterprises be relocated and forest cover increased to 40 per cent.

Deputy Prime Minister Hoang Trung Hai said inflation in the first nine months could be largely attributed to global factors, particularly oil which had shown increasing volatility.

"Production depends heavily on commodities imported from around the world," he said.

"To curb inflation, the Government has adopted monetary tightening, tax reduction and price control measures."

Hai warned rising prices had seriously impacted low income households and should be monitored vigorously. He called on the public and companies to help address the issue.

The NA also heard reports on State Budget spending in 2007 and plans for 2008, and opinions on a draft law regarding personal income tax.

According to the NA Finance and Budgetary Committee, the Government has made positive efforts to collect revenue for the State Budget, a process complicated by a changing socio-economic environment.

The report, though, sited problems in collecting income and customs taxes.

The number of delinquent payments is high, which has hurt State Budget spending.

Commercial fraud, tax evasion and illegal business transactions have also become more and more sophisticated, according to Phung Quoc Hien, director of the Finance and Budgetary Committee.

In terms of public expenditures, the Government has applied positive measures that have contributed to fulfilling socio-economic goals, ensuring national security and reducing waste.

The committee suggested some principles in allocating the 2008 budget so as to meet economic targets and accommodate ministerial needs.

The committee asked the Government to give priority to remote and mountainous regions where ethnic minority groups live, and to provinces for infrastructure improvements.

After hearing the report on public opinions regarding personal income tax, the majority of NA deputies agreed to the draft law, however there were differing views on items subject to the law, exemption, rates and collection.

Significant inheritances and gifts will be taxed. The NA Standing Committee also listed nine other items that will be subject to the law.

The committee suggested personal income tax should not be levied on overtime salaries. The committee also agreed with a tax exemption on dependants of VND1.6 million per month per person

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