Illustrative image (Photo: VNA)

To boost the domestic market and stimulate consumption at the year end, the Prime Minister has requested ministries, sectors and localities to implement a series of appropriate solutions to increase aggregate demand, stimulate domestic consumption and promote trade and investment activities.

People are expected to take advantage of spending opportunities during Christmas and New Year holidays, said Deputy Minister of Planning and Investment Tran Quoc Phuong.

According to the Hanoi Centre for Investment, Trade and Tourism Promotion, many trade promotion and stimulus activities will be carried out to support trade connections and encourage the consumption of Vietnamese products. They include the Hanoi Safe Agricultural and Food Fair 2024 and the Fruit and Agricultural Products Week of provinces and cities in Hanoi.In addition, the 15th National Assembly approved an extension of the 2% value-added tax (VAT) reduction until June 30, 2025.

The continued reduction of VAT is also expected to stimulate consumption for the longer term, creating economic growth momentum for 2025.

Dinh Thi Thuy Phuong, head of the Department of Trade and Service Statistics, General Statistics Office (GSO) said that reduction in VAT will have the greatest impact among the stimulus solutions.

It impacts all consumers, and also reduces input costs of businesses, contributing to lower sales prices of both goods and services, Phuong said.

This helps businesses expand their business activities, create jobs, thereby increasing income for workers, creating encouraging conditions for people to increase spending.She also noted that, in addition to existing stimulus, it is necessary to promote disbursement of public investment, accelerate disbursement of public investment projects, especially in terms of transport infrastructure projects. That will create momentum of development for related industries such as construction, material production and logistics, and also promote convenience in the circulation of goods.

Stimulating consumption is not only a short-term solution but also a strategic step to restore and develop Vietnam’s economy over the longer term, she added.

Deputy Minister Phuong said: “Domestic consumption of goods has shown positive signs, but the growth rate has not met expectations.”

According to GSO, the total retail sales of goods and services in November 2024 was at 562 trillion VND (22 billion USD), up 8.8% over the same period last year. Of which, revenue from accommodation and catering services increased by 12.9%, while tourism and travel service revenue also rose by 12.5%, due to the high number of foreign visitors to Vietnam and Vietnamese people travelling abroad compared to the same period last year.

In the first 11 months of 2024, the total retail sales of goods and services was at 5.8 quadrillion VND, up 8.8% over the same period last year, lower than 9.7% growth rate in the same period of 2023. Excluding the price factor, it increased by 5.8%, lower than the rate of 7% in the same period of 2023.

Consumers are still spending cautiously, especially across the service and tourism industries. Although the number of domestic and international visitors increased sharply over the past months, their spending did not increase, causing difficulties for revenue in the tourism industry.

Deputy Minister of Industry and Trade Nguyen Sinh Nhat Tan said the overall implementation of many solutions and promotion programmes this year is expected to achieve the goals on stimulating domestic demand and increasing the total retail sales and services. Those will promote production and business, increase corporate competitiveness and stabilise prices and the market.

Deputy Director of the Institute for Economic and Policy Research, University of Economics, VNU Dr. Nguyen Quoc Viet, said the recovery in the domestic market, which has not grown as strongly as hoped, has also not been truly sustainable.

Therefore, reforming tax policies in the future, especially in terms of personal income tax, is also required. It is necessary to create conditions for a growing number of middle class, thereby contributing to the growth momentum for domestic services and consumption./.