Vietnam is confronting challenges in the process of restructuring the public financial sector, Deputy Minister of Finance Do Hoang Anh Tuan said during a forum on Thursday.
Tuan gave his assessment of the process at Viet Nam Finance Forum 2018 in Ha Noi. The forum’s theme was “restructuring the national financial system in a fast, comprehensive and sustainable way.”
About 300 delegates joined the event, representing the Party Central Committee’s Economic Commission, the Ministry of Finance, the State Bank of Viet Nam and the Ministry of Planning and Investment.
The United States Agency for International Development, the European Union and the World Bank also sent participants.
“As much as 82 per cent of State revenue currently comes from domestic collection, but this is not yet sustainable because a substantial portion of local revenue comes from the sale of public assets and land use rights,” Tuan said.
“Transfer pricing, tax evasion and trade fraud are still problems for the country’s financial sector,” he said.
State budget management remains cumbersome, Tuan said. He added that the Government must improve its methods for managing national public assets.
The Government’s outstanding debt sits at 61.3 per cent of the country’s GDP and foreign debt is 50 per cent. Although public debt has been controlled, challenges remain. Tuan cited exchange rate risks and Government guarantees for private sector loans as major issues.
“The business community is reliant on credit,” Tuan said. “Outstanding bank loans amount to 1.4 per cent of GDP, much higher than the recognised acceptable level of 0.6-0.8 per cent. This is obviously a challenge for the financial sector.”
“We need to find an abundant and sustainable source of capital for the corporate sector,” he said, adding that the restructuring efforts could not be delayed. The Ministry of Finance has tried to consolidate the country’s budget and expenditures.
According to USAID Mission Director for Viet Nam Michael Greene, impressive growth has transformed the country’s economy into that of a middle-income country.
“USAID will continue to actively support Viet Nam in financial institution reform for rapid and sustainable economic growth, with the overall goal of promoting national self-reliance,” said Greene.
Bruno Angelet, head of the European Union delegation to Viet Nam, said the EU considers the country’s public finance reform an important issue.
He said the EU hopes to help Viet Nam address climate change, pollution, taxation and financial management as it transitions to a green economy.
Dang Van Thanh, chairman of the Viet Nam Association of Accountants and Auditors, said financial and tax policies must be oriented towards long-term economic development. They should reduce fees and taxes for businesses to create incentives for growth, thus expanding the source of State budget, he said.