Prime Minister Nguyen Tan Dung at the press briefing in Hanoi Wednesday.

With appropriate government action, the economy could start gathering momentum from May this year, Prime Minister Nguyen Tan Dung told a press briefing in Hanoi Wednesday.

But even though Dung said Vietnam’s economic slowdown could be turned around by June, he said there was still a high risk of more economic difficulties this year, pointing to the sharp falls in industrial production, exports and foreign direct investment (FDI) inflows in January compared to the same period last year.

Last month the value of exports fell 24.2 percent year-on-year to US$3.8 billion because of falling demand and prices. FDI pledges into Vietnam totaled $185 million in the month, only 11 percent of what was promised in the same period last year, according to the Ministry of Planning and Investment.

Dung said with the current economic difficulties, local firms needed to invest in upgrading technology and production. The economy needed restructuring so that it was no longer so reliant on natural resources and labor-intensive industries, he said.

The prime minister asked all government agencies and localities to implement the economic stimulus package and boost production this month.

Vietnam should also develop power plants to facilitate development when the economy recovers, he said.

This year Vietnam should focus on combating the economic slowdown, ensuring social welfare, and keeping economic growth at about 6 percent, Dung said.

The country then needed to strive for stronger economic growth in 2010 when the world economy was expected to recover, in order to fulfill its 2006-2010 social and -economic development target, he said.

Dung said 2008 was a year with many challenges. However, Vietnam had basically stabilized macroeconomic development, curbed inflation, ensured social welfare and national defense.

The country posted gross domestic product growth of 6.23 percent last year, ranking second in Asia, after China, he said.

At the press briefing, Minister of Finance Vu Van Ninh said the government had proposed the National Assembly temporarily extend the date that new personal income taxes will be collected until lawmakers decide who will enjoy tax reductions and exemptions.

However, those who have infrequent incomes and foreigners who work in Vietnam and leave the country before May, when the National Assembly next meets, will still have to pay the tax, he said.

Reported by Bao Van