The country’s economic growth is still mainly based on low value-added industries and the exploitation of natural resources, whereas its other strengths, like agriculture and tourism, are being constrained, Nguyen Van Giau, chairman of the committee, said at the opening session of the NA meeting on Wednesday.

According to the report, growth in the first quarter was mainly due to higher contributions from the low value-added processing, manufacturing and mining (crude oil and coal) industries, while the growth rate of agriculture, forestry and fishing was still low, only about 2.14 percent, down 0.54 percent over the same period last year, Giau said.

Labor quality has not improved much as the national economy suffers a shortage of skilled workers, he added.

Some committee members are also concerned about the large trade deficit in the first months of 2015, Giau said.

According to the latest data, the trade deficit of the country topped US$2 billion in the first four months, chiefly caused by a decline in many key export items, including agricultural and fishing products, he said.

Meanwhile, the prices of commodities, including those Vietnam is good at making, also went down in the world market, he said. At the same time, imports remained largely dependent on a number of markets, particularly China.

"We forecast that export in 2015 will remain difficult, especially considering weak external demand and the devaluation of many currencies against the U.S. dollar, which may result in a rising trade deficit this year," Chairman Giau said.

Another worry is that the public debt continues to grow at high speed, in parallel with large debt repayment obligations, he said.

The equitization of many large state-owned enterprises have been carried out at a snail’s pace, making the process hard to be completed in the 2014-15 period as planned, he added.

Foreign direct investment (FDI) has continued to rise, but the impact of FDI on raising the production capacity and technology transfer for the Vietnamese economy is still unclear.

There is concern that if the FDI sector gradually withdraws from the market, it will be harmful to the sustainable development of the national economy, Giau said.

The bright side

A supplementary report of the government presented at the 38th session of the National Assembly Standing Committee around a fortnight ago outlined the bright prospect of the local business situation in 2014 and the first months of this year.

Minister of Planning and Investment Bui Quang Vinh, authorized by the Prime Minister to present the report, said the 2014 picture was rosier than in the previous year with 74,842 newly-established firms having a total registered capital of VND432.28 trillion ($19 billion), down 2.7 percent in volume but up 8.4 percent in registered capital.

In 2014, there were 9,501 enterprises completing the dissolution process, down 3.2 percent from the previous year. Most of this dissolved firms were small with a registered capital of less than VND10 billion ($461,400) each.

Meanwhile, 14,419 enterprises resumed their operations after suspending them, up 7.1 percent year on year.

"These numbers are encouraging, showing a positive signal of the economy in creating more investment opportunities for local firms,” Minister Vinh said.

Assessing the situation in the first quarter of 2015, the minister said there were still positives when the establishment of new businesses increased both in numbers and registered capital compared with the 2014 figures.

Specifically, there were 19,049 newly registered enterprises with VND111.2 trillion ($5.1 billion), an increase of 3.8 percent in quantity and 13.5 percent in capital.

Meanwhile, total decommissioned firms were 18,740, accounting for 3.6 percent of all operating companies, lower than the normal proportion of the market, at 12-14 percent, according to the government report.

Tuoi Tre News - May 25, 2015