Workers at a water pump factory in the northern province of Bac Ninh. (Photo: VNA) That's the view of economists and policymakers speaking at a recent conferenceat the National Economics University (NEU).
Prof. Pham Hong Chuong, head of the NEU, said a key objective for the SoutheastAsian economy in the coming years remains to figure out how to break out of themiddle-income trap, an issue shared by neighbouring countries includingThailand, Malaysia and Indonesia.
Economist Ngo Thang Loi said Vietnam must align rapid growth with qualitygrowth, stressing the importance of creating a balance between economicdevelopment and social progress. This is considered very challenging as torealise Vietnam’s high-income objective, the economy must maintain an averagegrowth of 7% in the next 20 years, he said.
Thecurrent robust development of digital technology, including artificialintelligence, has been providing Vietnam’s economy with ample opportunities forgrowth, improved competitiveness and ability to produce high-quality productsand services. At the same time, they pose major challenges including increasedunemployment, political and social challenges, infrastructure issues andgreater risks related to information safety and security.
To make matters worse, the country looks at an ageing population and risingwages against a backdrop of slowdowns in global trade and increasingly stricterenvironmental standards. Meanwhile, environmental degradation, climate change,and major outbreaks such as the COVID-19 pandemic have stronger impacts thatcan undermine the country's development process.
He called for a fairer playing field for all economic players, with a strongerfocus on policies for the private sector.
"Global experiences show that countries can achieve middle-income levelsthrough liberalisation, privatisation, and international integration, but toreach higher income levels, policy efforts are required to stimulate thedynamism of the private sector," he said.
Prof. Tran Van Tho from Japan's Waseda University said in recent decades, ViệtNam has made significant progress including income growth, poverty reduction,education improvement, mortality rate reduction, economic structuraltransformation, and successful policies attracting FDI and signing free tradeagreements. There are several successful large corporations, namelyVinGroup/Vinfast, Viettel, and FPT.
"But Vietnam needs to do better than that," he said.
According to Tho, despite remarkable development in the 1990s, the country hasnot achieved a high development stage, or 10% annual growth rate sustained forten years. During the demographic golden age, Việt Nam's industrialisation rateremained low, and the size of the economy's informal sector remains significantwith too many micro and small enterprises.
He emphasised the importance of economic policies to accelerate structuraltransformation to increase productivity, formalise the informal sector,increase the scale of enterprises to boost capital accumulation andtechnological innovation, reform and develop production factor markets toallocate resources efficiently and promote structural transformation, focus onproviding skilled labour and encourage R&D activities.
He said in the next decade, industrialisation expansion, industrialrestructuring, and institutional reform to allocate resources efficiently willserve as productivity boosters for Vietnam. At the same time, the country mustprepare for a growth era based on innovation and creativity for the 2030s andbeyond.
Prof. Kenichi Ohno from the Japan National Graduate Institute for PolicyStudies (GRIPS) said Vietnam’s challenge is that growth is slowing down at themiddle-income level too early instead of accelerating. In addition, the countryheavily relies on FDI for exports, technology, and economic restructuring, butits participation in the global value chain is limited. It has also been slowin building a modern transportation system.
Kenichi said there are signs of Vietnam falling deeper into the middle-incometrap, including slow growth at the middle-income level, a shortage of skilledengineers, innovators, and high-skilled workers, average labour productivityand total factor productivity. He advised the Vietnamese Government to quicklyaddress said issues by improving leadership capacity, and economic policy andpromoting technology and innovation with fewer administrative barriers.
Economist Can Van Luc said the country's economy is on the path to recovery, butas a highly open economy, external challenges and internal difficulties impactits growth and resilience.
He called for additional stimulus for economic growth, including effectivepublic investment disbursement, strong and sustainable development of theprivate economic sector, and boosting domestic consumption./.
To make matters worse, the country looks at an ageing population and risingwages against a backdrop of slowdowns in global trade and increasingly stricterenvironmental standards. Meanwhile, environmental degradation, climate change,and major outbreaks such as the COVID-19 pandemic have stronger impacts thatcan undermine the country's development process.
He called for a fairer playing field for all economic players, with a strongerfocus on policies for the private sector.
"Global experiences show that countries can achieve middle-income levelsthrough liberalisation, privatisation, and international integration, but toreach higher income levels, policy efforts are required to stimulate thedynamism of the private sector," he said.
Prof. Tran Van Tho from Japan's Waseda University said in recent decades, ViệtNam has made significant progress including income growth, poverty reduction,education improvement, mortality rate reduction, economic structuraltransformation, and successful policies attracting FDI and signing free tradeagreements. There are several successful large corporations, namelyVinGroup/Vinfast, Viettel, and FPT.
"But Vietnam needs to do better than that," he said.
According to Tho, despite remarkable development in the 1990s, the country hasnot achieved a high development stage, or 10% annual growth rate sustained forten years. During the demographic golden age, Việt Nam's industrialisation rateremained low, and the size of the economy's informal sector remains significantwith too many micro and small enterprises.
He emphasised the importance of economic policies to accelerate structuraltransformation to increase productivity, formalise the informal sector,increase the scale of enterprises to boost capital accumulation andtechnological innovation, reform and develop production factor markets toallocate resources efficiently and promote structural transformation, focus onproviding skilled labour and encourage R&D activities.
He said in the next decade, industrialisation expansion, industrialrestructuring, and institutional reform to allocate resources efficiently willserve as productivity boosters for Vietnam. At the same time, the country mustprepare for a growth era based on innovation and creativity for the 2030s andbeyond.
Prof. Kenichi Ohno from the Japan National Graduate Institute for PolicyStudies (GRIPS) said Vietnam’s challenge is that growth is slowing down at themiddle-income level too early instead of accelerating. In addition, the countryheavily relies on FDI for exports, technology, and economic restructuring, butits participation in the global value chain is limited. It has also been slowin building a modern transportation system.
Kenichi said there are signs of Vietnam falling deeper into the middle-incometrap, including slow growth at the middle-income level, a shortage of skilledengineers, innovators, and high-skilled workers, average labour productivityand total factor productivity. He advised the Vietnamese Government to quicklyaddress said issues by improving leadership capacity, and economic policy andpromoting technology and innovation with fewer administrative barriers.
Economist Can Van Luc said the country's economy is on the path to recovery, butas a highly open economy, external challenges and internal difficulties impactits growth and resilience.
He called for additional stimulus for economic growth, including effectivepublic investment disbursement, strong and sustainable development of theprivate economic sector, and boosting domestic consumption./.
VNA
