Conducting institutional reform to drive competitiveness will be one of Vietnam's most important activities next year.
Economic institutional reform and the development of the domestic private sector are the key targets of the Vietnamese Government in 2015. Vietnam expects to equitize 432 State-owned enterprises, strengthen institutional reforms to drive competitiveness, and develop the private sector next year. Of these, institutional reform is the top priority.
The announcement of the targets formed part of the address given by Prime Minister Nguyen Tan Dung to the Vietnam Development Partnership Forum (VDPF) 2014 on December 5. The forum, which used to be known as the Consultative Group meeting and is jointly organized by the Ministry of Industry and Trade and the World Bank, this year focused on economic institutional reform and the development of the domestic private sector.
Speaking at the Forum, Ms. Victoria Kwakwa, World Bank Country Director for Vietnam, said that the increased attention to institutional reform in Vietnam is wise and timely. Vietnam’s next years as a middle-income country will coincide with several important processes, the preparation of the next five-year socio-economic development plan, and the preparation of key documents for the 12th Party Congress in early 2016. “This is a unique opportunity to generate a new wave or a second generation of institutional reforms that will build on earlier achievements to help deliver the higher productivity growth Vietnam so desperately needs, contribute to the process of economic and social modernization, as well as build a more inclusive society,” she added.
She also said that institutional reform is not new in Vietnam. All of Vietnam’s development in 2014 has delivered a strong investment environment for the country relative to its peers and provides the first spurt of institutional reform in the country. They produced spectacular results, giving Vietnam the second-fastest per capita GDP growth in the world over the last 20 years.
Despite the fast growth, Vietnam still faces many difficulties relating to the domestic private sector and public debt. Ms Kwakwa emphasized that the domestic private sector has struggled and the bad debt level is still high. “If leaders and policy makers at all levels can solve the troubles it will be an important determinant of Vietnam’s success as a middle-income country,” she said. “It will also be critical to how quickly Vietnam can begin to lay the foundation for achieving its aspiration of becoming a high-income country.”
Besides solving issues relating to public debt and the domestic private sector, the pace of structural reforms are also an important activity for the government next year. According to Mr. Sanjay Kalra, IMF Resident Representative in Vietnam, structural reforms must be accelerated significantly. “Reform delays undermined confidence, have contributed to higher public debt, prolonged productivity stagnation of the past several years, and kept growth at levels insufficient to create jobs for a growing labor force,” he said.
Institutional reforms should be associated with sustainable growth. “As Vietnam embarks on its next phase of structural and institutional reforms, we would encourage your sustained efforts to include strategies which promote inclusive and sustainable growth, allowing all the people of Vietnam to benefit from economic progress,” said Ms. Nuala O’Brien, a representative from the Embassy of Ireland.
For his part, Prime Minister Dung pledged to accelerate institutional reforms, creating many favorable conditions to develop the private sector. He also expressed his appreciation of the cooperation of partners in the Forum this year and affirmed that Vietnam would continue to cooperate to make all efforts more coordinated, effective and efficient.