Illustrative image (Source: VNA) Hanoi (VNA) – With its outstanding achievements over the past three decades, Vietnam is a development success story and continues to perform well even in the pandemic on a range of indicators, including trade, growth and human capital, Victoria Kwakwa, Vice President for East Asia and the Pacific at the World Bank, has said.
Addressing the third Vietnam Reform and Development Forum (VDRF 2020) themed “Vietnam: Actions to Recover Growth towards Inclusiveness and Sustainability”, Kwakwa stressed that there is notable room for further improvements in global value chain (GVC) development to meet Vietnam’s ambitious long-term development goal of becoming a high-income country by 2045 and narrow the development gaps with the advanced economies.
According to her, Vietnam’s participation in global and regional value chains remains limited, despite being “one of the most open economies in the world”.
Vietnam’s level of participation in GVCs remains well below its ASEAN peers such as Singapore, Thailand, Indonesia, Malaysia, and the Philippines, she said, noting that in 2018, the country earned only 20.4 billion USD through GVCs, ranked 55th out of 174 countries. This is less than one quarter of the next ASEAN peer, the Philippines, which earned 84.8 billion USD and ranked 34th.
The level of Vietnam’s participation in sophistication also remains low. The World Bank estimates that a 1 percent increase in GVC participation boosts per capita income levels by more than 1 percent - about twice as much as conventional trade, so strengthening GVC participation will be important for accelerating Vietnam’s productivity and growth.
To be well prepared for strong recovery and make most of the new emerging opportunities, Kwakwa said that in the short term, Vietnam needs to continue to contain the coronavirus and consolidate activities that can accelerate a strong recovery.
She said she believed that Vietnam should continue to ease entry and operational FDI restrictions.
In the medium term, being well-prepared for the “new normal” of GVCs is important. Supply chains cannot be established overnight, and companies still have to overcome the expensive and time-consuming process of relocation.
In the longer term, Vietnam needs to narrow the productivity gap and move towards the productivity frontier.
For Vietnam, emphasis need be placed on skills development and R&D capacity building, as well as effective implementation of Vietnam’s breakthrough on institutional reform.
Vietnam needs to be prepared for the future shift in GVCs and mitigate potential adverse impact of accelerated adoption of technology on labor markets.
“As we approach the traditional Mid-autumn festival, I would like to offer a special Moon cake recipe for Vietnam’s success for the next decade. The recipe includes: a vibrant and innovative Private Sector with strong linkage to FDI, effective Institutions and quality Education. And we hope that every Vietnamese get a fair share of this cake” she said./.
VNA
