VietNamNet Bridge – The Government should offer farmers a support package, deputy director of the National Centre for Socio-economic Information and Forecasting Ta Dinh Xuyen told Nong thon Ngay nay (Countryside Today).

Last month, the consumer price index (CPI) hit the lowest level in 10 years. Many experts suggested the Government introduce a stimulus package to boost consumption and investment. For example, lower-interest-rate loans would enable producers to lower production costs, so consumers could buy cheaper products. What do you think?

Low CPI is an indication of slow commodity consumption and heavy stockpiles in warehouses. Low CPI also indicates that the income of most people has not improved. It is also a signal that economic restoration takes place slowly, making people tighten their belts.

Should the Government introduce another consumption demand package?

I think that the package has already been introduced under different forms. For example, the Government reduced and even exempted taxes for enterprises and the people and the banks have gradually offered lower lending interest rates for enterprises.

However, I don't think the Government should use money, as other countries have done, to boost consumption. If a package is introduced, it must be able to stimulate the national economy and the people's consumption demand as well as production.

Many experts have suggested the Government should focus on agro-forestry and fishery development. In Viet Nam, about 80 per cent of the people live and work in the countryside. Do you agree?

In my opinion, the problem does not lie in interest rates or capital. but the output for products and production, particularly in the countryside. Small consumption demand has forced farmers to sell their products at cheap prices or to use as animal feed.

I think the Government should introduce a package to help farmers, particularly in processing, exports and in production input costs as well as marketing activities.

The Government has adopted some measures to help enterprises restore their normal production and to raise consumption. However implementation has been very slow. Do you think this is a hurdle that needs to be overcome?

As I have mentioned, it is unlikely the Government will introduce another package to support the interest rate as happened in early 2009. (In 2009, the Government introduced US$1-billion stimulus package to make up four per cent of the interest rate for enterprises and production households who borrowed from commercial banks – meaning that if the interest rate was nine per cent a year, borrowers paid five per cent and the Government paid four per cent.)

By now, lessons have been drawn on the impacts of the policy. In my opinion, if the Government decides to deliver another package, it should go to areas that can help with the "outputs," not to enterprises or households.

At present there is a big gap between wholesale and retail prices for agricultural products. If the gap was narrowed, do you think the farmers we would be able to create a big domestic market?

I think, the problem is the result of the weak linkage between different parties and inefficient supporting policies. For example, we have 14 main agriculture products, and the Government has issued many policies to promote their production and consumption.

However, their impacts are limited. I think it is time for ministries and sectors to work together to help farmers promote exports. This is the only way to help the farmers overcome the existing difficulties and challenges.

If the Government agrees to introduce a new package for the countryside, how should it be done to meet the designed objectives?

The Government's package policy is good as it is designed to help enterprises and people overcome difficulties and challenges. But, poor implementation makes the package fail to meet its objectives. For example, if the package this time is for the countryside, the money should be spent on the investment in irrigation, transport, electricity or areas that will create "outputs" for the farmers.

In addition, the beneficiaries of the package should include enterprises from different economic sectors engaged in helping the farmers expand their production and services in both the domestic and foreign markets. Indirect or direct investment support through commercial interest rate is the primary important measure of the Government.

Source: VNS