Productivity key to economic growth

Hanoi (VNA) - Renovating the growth model and raising productivity are the key tasks to develop Vietnam’s economy, said Vu Tien Loc, chairman of the Vietnam Chamber of Commerce and Industry (VCCI), at a conference held in Hanoi on January 22.

The issue of competitiveness is increasingly receiving the attention of governments in many nations. Raising Vietnam’s competitiveness is also a major concern of the Vietnamese Party and the State.

A country’s overall competitiveness is affected by many factors, such as the brands, market share, productivity, living standards and institutional quality.

However, according to VCCI’s research results, productivity is the core driving force that accounts for the difference in competitiveness among nations, Loc said.

Despite the increase in its competitiveness ranking, Vietnam’s labour productivity is only equal to 87 percent of that in Laos. In addition, exports of Vietnamese rice are lower than in Cambodia, although Lao and Cambodia are two of the least developed countries in the region. Loc said this situation is a big problem for Vietnam.

Because many criteria affect the economy’s competitiveness, VCCI proposes to formulate an analytical framework for Vietnam’s national competitiveness, including economic factors and the strengths of the country. This framework will aim not to create a new ranking but to provide solutions to promote the productivity and competitiveness of Vietnam, Loc added.

VCCI’s chairman also proposed to conduct research on six issues to improve productivity for the national economy.

The first issue is policy. Currently, the Government has taken drastic action on legal reform and reform of administrative procedures.

The second area is industrial policy and the development of markets, which are ineffective and unable to lead the economy at the moment.

The third topic is the transfer of public services. Fourthly, the equitisation and restructuring of State-owned enterprises (SOEs) is an important issue because SOEs are currently not operating effectively.

Fifth, shifting agricultural activities to industry and service is a key factor because 40 percent of GDP and 60 percent of labour is in agriculture. If the shift is to be successful, it is important to promote productivity.

The sixth issue is the transformation of individual business households into enterprises, as this could help improve labour productivity in the country.

Loc also suggested training programmes to enhance the management capacity of the leaders of small and micro businesses, as such enterprises will be the drivers of the world economy, especially with the development of the Industrial Revolution 4.0.

The event was organised by VCCI in cooperation with the Central Theoretical Council.- VNA