The focus of the government’s $1 billion economic stimulus package announced earlier this month would be interest rate subsidies for small and medium businesses like the cooking oil factory pictured above, Minister of Planning and Investment Vo Hong

In the face of a dramatic global slowdown and raging inflation earlier in the year, Vietnam’s economy has proved resilient.

The full-year economic growth rate just missed the government’s most recent target of 6.7 percent – lowered from an original target of 7 percent – and was slower than last year’s 8.5 percent growth rate.

Phuc told a press conference in Ho Chi Minh City the nation’s 2008 year-on-year inflation rate was 19.9 percent, significantly lower than the 30 percent touted earlier this year by some economists.

Foreign investment pledges to Vietnam this year exceeded US$60 billion, with around $10 billion disbursed, Phuc said.

Phuc said he hoped even more foreign investment would be pumped into Vietnam next year as a result of the favorable investment environment the government had rolled out.

The trade deficit this year stood at $17 billion, compared with the government’s target of $20 billion, Minister of Industry and Trade Vu Huy Hoang said.

The value of exports this year is expected to hit $63 billion, a 29.5 percent increase on last year, Hoang said, while the value of imports are estimated at $79.91 billion for the year, up 27.5 percent from last year.

Small, medium enterprises targeted

Phuc used the press conference to reveal more details of the government’s $1 billion economic stimulus package announced earlier this month.

The focus on the package would be interest rate subsidies for small and medium businesses, Phuc said. The subsidies would represent a 4 percent discount on the current commercial bank loan interest rates, he said.

Proposals to set the interest rate subsidies at 5 percent will be examined by the ministries of planning and investment and finance, Phuc said.

The stimulus package will also include funding for unemployment reduction programs and support for housing development.

The government plans to expand the package to $6 billion, including $1.2 billion to be raised by the sale of government bonds. The extra spending will be directed to tax exemptions and rebates or credit guarantees for offshore loans.

Phuc said in case of an emergency, the package could be funded by Treasury reserves. He Sstressed any drawing on the reserves would be fully transparent.

The National Assembly (NA) will decide whether the income tax law, set to take effect on January 1, will be delayed, Minister of Finance Vu Van Ninh said.

The government has referred the proposed delay to the NA Standing Committee, which is now in session, for a final decision, Ninh said.

Reported by An Dien