Short-term policy recommendations:

First, make efforts to synchronously implement measures to control the Covid-19 epidemic, organize quick and effective vaccination against Covid-19 for both production and business enterprises and groups of business households heavily affected by restrictions and social distancing.

Second, due to limited financial resources, policies to support businesses and people during the pandemic need to be focused, thrifty and at the right address. It is necessary to early design a package of policies to stimulate and restore general production/business for all types of businesses and business households, support policies/credit guarantees, especially for small and medium enterprises/micro-enterprises as well as business households after the epidemic has been basically controlled. All subsidies on income tax or luxury spending should be eliminated. Public investment should only focus and accelerate on planned national key projects. Saving recurrent expenses is also an important orientation when Covid-19 is still a mystery, the future of the economy is still uncertain.

Third, monetary policy should pay special attention to controlling money supply growth and directing credit flows to the manufacturing sector. In addition, in the context of hot stock and real estate markets today, the control of credit flows into these markets should also be paid special attention to besides the problem of bad debt.

Policy recommendations in the medium and long term:

First, along with short-term policies being implemented to minimize the negative impact of Covid-19, Vietnam should stick with longer-term reforms to improve its macro fundamentals and mitigate risks in the future. In all situations, inflation, interest rates and exchange rates need to be maintained stable to prepare for the post-pandemic recovery period.

Second, enhancing competitiveness and improving the business environment is still a permanent requirement, in which it is necessary to identify and overcome barriers to improve rankings in the Global Competitiveness Index 4.0 (WEF). In particular, it is necessary to continue to improve the local business environment of enterprises through the pillars of the provincial competitiveness index (PCI), which not only supports the development of enterprises in general, but has also been shown to increase the total factor productivity (TFP) of the local manufacturing industries. Moreover, the TFP of private enterprises in both study sectors is low compared to foreign-invested enterprises and state-owned enterprises. As a result, to improve the internal strength of the economy, supporting policies to promote the development of private enterprises should continue to be promoted.

Third, Vietnam needs to take advantage of trade and investment to enhance its position in the international arena in the future. To do this, it is necessary to be aware of the particularly important role of free trade agreements (FTAs) in improving Vietnam's comparative advantage and added value in the global value chain (GVC), while creating an environment to promote effective FTAs. In parallel with this, to reduce possible negative impacts from integration, Vietnam needs solutions to increase the resilience of the economy based on continuing to diversify markets and goods based on the network of FTAs and comparative advantage. The participation of GVCs should be upgraded, especially recognizing and emphasizing the role and potential of the agricultural sector in improving Vietnam's position through increasing Vietnam's DVX.

Fourth, the Government needs to quickly improve the transport system to promote the circulation of international trade and investment activities. The government should take advantage of FTAs to reduce and simplify customs and administrative procedures to facilitate trade. Vietnamese enterprises need to improve their understanding and ensure their ability to meet international standards on product quality, origin..., affirm their position on the world's playing field. In addition, Vietnam needs to improve the level and quality of human resources to make benefit and optimal use of technology and science and technology transfer from foreign enterprises, on that basis, Vietnam can improve the productivity and production efficiency of domestic enterprises.

Fifth, to improve TFP through participation in GVC, Vietnam can through establishing and engaging with partners who are higher income and more developed countries. Vietnam should also consider participating in new value chains led by the EU (thanks to the EVFTA and through the EU's new trade strategy) and possibly by China (China has a strategy of economic-technological autonomy and building its value chains) instead of the traditional chains in the past.

Sixth, the trend of greening and digitization is promoted, opening up many new opportunities and new ways of doing things for most industries, so with the two industries of electronics and food, Vietnam can research new opportunities and new ways of doing things such as developing the segment of clean and organic products; trade methods for products (using trading platforms...).

Seventh, Vietnam's electronics industry should make good use of the role of FTAs to strengthen the connection with strategic partners both upstream and downstream; Diversify other partners outside of Asia to reduce the risk of being too dependent on certain countries in the region. Vietnam also needs to improve the localization rate for Vietnamese enterprises in electronic exports. In addition, Vietnam also needs to further strengthen its ability to specialize, focus on producing highly complex technological products, promptly respond to trends of supply and demand shifts in electronic technology input materials and technological and electronic products in the international market.

Eighth, to improve Vietnam's position in the indirect domestic value added (GVC) of the food industry, it is necessary to focus on 3 main pillars, including processing (better performing specific tasks), product (make a product of better quality, more complex or more expensive) and functional (acquire new skills in the value chain that the company has not done before). On the part of state management agencies: it is necessary to focus on promoting the implementation of commitments as well as signing agreements on mutual recognition and post-audit in the field of technical barriers to trade (TBTs); Encouraging the import and transfer of food processing technology; Promoting the implementation of the program to build Vietnamese brands for the food industry; Strengthening communication on incentives committed in food-related FTAs. On the business side: it is necessary to focus on researching tariff reduction roadmaps for Vietnam's food industry; Understanding, preparing and getting ready, adjusting production to meet the requirements of rules of origin; Learning and adjusting production to ensure that quality requirements are met; Brand building and promotion. In particular, this is an industry that Vietnam has advantages and Vietnam should focus on building large domestic enterprises strong enough to lead the domestic market.

>> Proceedings of the Conference of the 2021 Vietnam Annual Economic Report 

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