The Vietnamese economy will grow at around 6.2 percent this year, but continues to face a lot of challenges, heard a recent seminar.

Nguyen Xuan Thanh, Director of the Fulbright Economics Teaching Program, listed three reasons for why economic growth will speed up this year.

"Manufacturing and construction account for 46 percent of the GDP and this year the two sectors are expected to grow."

"Weak domestic demand has led to low imports, and has, along with high exports created a trade surplus.

"Public spending increased by 11.5 percent last year and this will take GDP growth above 6 percent."

The higher public spending had seen the revival of many stalled projects, he said.

But he said public debt had reached 60 percent of GDP and warned it would soon reach 65 percent above which it is not considered safe.

"If Vietnam continues with its old development model of borrowing for development, public debts would pose a risk, not high inflation or monetary policy."

Pham Chi Lan, a senior economist, said: "Vietnam grows thanks to high investment and not high productivity. This model should be stopped and changed to boost productivity."

While the economies of most members of ASEAN have moved to the innovation stage, Vietnam, along with Cambodia, Laos and Myanmar, has not yet been able to move beyond the production productivity stage, according to Lan.

She also called Vietnam's export structure poor since raw materials and semi-processed goods make up 70 percent of it. The corresponding figure is 49 percent for Indonesia and 13 percent for the Philippines.

"This is a warning ahead of integrating into ASEAN: other countries' products might dominate the Vietnamese market," Lan said.

She pointed out a worrying fact that in 2012 the amount of investment and number of workers in the private sector fallen to half size of 2002 levels.

"If the private sector cannot develop, the economy will not grow."

She said Vietnam faced hurdles to its efforts to achieve stable growth including poor human resources and slow restructure of the economy.

"In the medium and long terms, Vietnam still has huge potential to develop with its large population, rapid urbanisation, rising life expectancy and more mobile phones." she said.-VNA