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The way forward

Released at: 01:29, 19/06/2014

The way forward

Economic reforms and international integration are expected to provide fresh impetus for Vietnam's rapid and sustainable development in the future.

by Hai Bang

No one can doubt the efforts Vietnam has made in transforming its economy and society over the last 30 years. Once an underdeveloped country, Vietnam has emerged as one of Asia’s great success stories over the last quarter of a century or more. It has secured a place in the group of middle-income countries and recorded average annual economic growth of 7 per cent in the 1986-2011 period, faster than any other Asian economy apart from China.

Vietnam has benefited from an historic shift in strategy, known as “doi moi”, which promotes macro-economic stabilisation, decentralised economic decision making and opening up the economy to international trade and foreign investment. The country has prospered since joining the WTO in 2007, normalising trade relations with the US and ensuring it is consistently ranked as one of Asia’s most attractive destinations for foreign investors.

Opening an international conference on economic reforms for inclusive and sustainable growth held last month in Hanoi, Deputy Prime Minister and Minister of Foreign Affairs Pham Binh Minh hailed the progress the country has achieved. “For Vietnam, reaching middle income status is the result of 30 years of renovation,” he told the gathering. “But escaping from the middle-income trap and moving towards a sustainable and inclusive economy requires even stronger reforms in development thinking and vision as well as the determination of the economy as a whole.”

Impressive as they may be, the gains made by Vietnam over the last 30 years only represent the initial stage of a long process. For the near future Vietnam must cope with a generally uncertain global environment and its economy may continue to face a state of heightened risk because of macro-economic pressures. In the longer term, the country may face an even greater challenge. Its economic growth has been largely unsustainable because of low productivity and competitiveness, a high proportion of untrained workers, and a range of health-related and environmental challenges.

To obtain sustainable growth Vietnam has no choice but to accelerate economic reform and renovate its growth model, with priority given to quality, efficiency and competitiveness. The majority of participants at the seminar believe that targets will only be realised when socio-economic development goes together with environmental protection, cultural development, and social equality and progress. Humanity is the key factor behind development and the State should ensure human rights and create optimum conditions for people to stimulate their creativity and develop comprehensively.

Deputy PM Minh confirmed that Vietnam will do its utmost to renew institutions, complete policies and laws, improve economic competitiveness and enhance communications and competitiveness during integration. The country, he said, is undertaking its Socio-economic Development Strategy for 2011-2020 and three strategic breakthroughs: developing a market economy, guaranteeing a high-quality workforce, and modernising infrastructure.

The Deputy PM also asked participants, which included domestic and foreign scholars, to focus discussions on five crucial issues: the promotion of the State’s role in a market economy, the establishment of a modern economy for inclusive and sustainable growth, the relationship between short-term stabilisation of the macro-economy and mid and long-term mechanism reforms, the role of agriculture in inclusive and sustainable growth, and economic connections in the global value chain and production network.

UNDP Administrator Helen Clark emphasised that Vietnam has many advantages, including a young workforce, abundant natural resources, and a prime geographical location at the centre of a dynamic development region. “Vietnam should choose an inclusive and sustainable growth model in the reform process,” she suggested, pledging the UNDP’s strong support for Vietnam’s reform efforts.

Ms Clark, who addressed the conference, also highlighted critical areas that may be considered in the reform process in order to achieve inclusive and sustainable growth. These include adopting more measures to improve the productivity and quality of agriculture and aquaculture, undertaking a progressive upgrading of the economy towards higher value sectors overall to establish new comparative advantage and create better jobs, expanding opportunities through access to quality, relevant education, building a modern social protection system and investing in disaster risk reduction and in climate change adaptation to build greater economic and social resilience, and adopting more transparent and accountable public resource allocation and management processes.

To start with, lifting the quality and quantity of production in agriculture and aquaculture should be an integral part of Vietnam’s wider growth strategy, she suggested. “Attention needs to be given to adding value to agricultural and aquaculture production so that it can command higher prices,” she said. “Farmers and the economy would benefit from a more systematic provision of agriculture extension services, better quality assurance and certification, and better branding for Vietnamese products.”

Overall, participants believe that Vietnam can act decisively to head off short-term risks and embrace a productivity-led agenda. If the country does so, it can build on its many strengths, such as a young workforce, abundant natural resources, and political stability, to name just a few, to create a second wave of growth and prosperity. There are challenges, for certain, but with smart policy choices Vietnam’s future is bright.

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  • economic reform

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