Vietnamese government seeks to boost growth after a slowing in Q1

Vietnam is looking for solutions to gain back growth momentum.

Vietnam should try to boost more investment and expand the mining industry to gain back growth momentum after a slowdown in the first quarter, while it still has to avoid letting key economic sectors fall into foreign hands, Prime Minister Nguyen Xuan Phuc said.

Government officials should look at ways to raise the total investment for development to 35 percent of the gross domestic product  (GDP), from 32 percent now, Phuc was quoted in a government statement as telling a cabinet meeting on Monday.

January-March GDP rose an estimated 5.1 percent from the same period last year, the slowest pace recorded for the first quarter since 2014, when it rose 5.06 percent, due mostly to a trade deficit, weak industrial sector growth and lower fossil fuel output, government statistics showed.

Vietnam has set a target of pumping only 12.28 million tons (247,000 barrels per day) of crude oil this year, down 19.2 percent from 2016 and first-quarter crude oil output fell 15 percent from a year ago to an estimated 3.44 million tons.

The government has targeted an annual economic growth of 6.7 percent for 2017.

While raising the country's overall investment for development, Phuc also urged government officials to make sure "foreign countries will not take over Vietnam's key sectors", the government statement said without elaborating on upcoming measures.

In September 2015 the Vietnamese government has lifted the 49-percent foreign ownership in a number of sectors to help boost foreign investment. But even with the recent listing of several major firms such as national carrier Vietnam Airlines, budget carrier VietJet Air as well as top breweries Sabeco and Habeco, the opening remains slow.

The state still holds a majority stake in Vietnam Airlines, and it has yet to remove the 30-percent foreign ownership cap in domestic banks. Major firms in the telecoms and energy sectors such as Vinaphone, MobiFone, Viettel, PetroVietnam and Vietnam Electricity are still off limit.

While the actual inflow of foreign direct investment (FDI) led by South Korea rose 3.4 percent in the first three months from a year ago to $3.62 billion, and pledges also increased based on government data, most of the FDI has been poured in manufacturing and processing, real estate as well as wholesale and retail sectors.

In mid-January premier Phuc told Bloomberg that Vietnam will increase the limits of foreign ownership in banks in 2017 to quicken the overhaul of the nation’s banking system and further lure overseas investments to boost economic growth.

By VnExpress