Vietnam has room to climb up global value chains despite COVID-19 hinh anh 1The third Annual Vietnam Reform and Development Forum (VRDF 2020) takes place in Hanoi on September 29. (Photo: VNA)

Hanoi (VNA) – Though Vietnam has done exceptionally well in quickly containing COVID-19, the pandemic has taken unprecedented toll on its economy. However, it is notable room for the country to further accelerate reforms and climb up global value chain to meet its long-term development goals, heard at a forum on September 29.

The third Annual Vietnam Reform and Development Forum (VRDF 2020) was co-held by the Ministry of Investment and Planning and the World Bank (WB) in Hanoi to discuss how to harness opportunities emerging from the COVID-19 to support a robust recovery and sustain long-term growth.

In his remarks at the event, Minister of Investment and Planning Nguyen Chi Dung said despite the negative economic impact of COVID-19, Vietnam’s GDP grew 2 percent in the first half of this year and FDI inflows into the country are bouncing back after being stagnant in the first few months of the year. Vietnam was the 12th strongest financially out of 66 emerging economies following the devastation caused by the pandemic, he added.

To protect its development gains, Vietnam must be well prepared for strong recovery and make most of the new emerging opportunities, according to Dr. Vu Thanh Tu Anh, Senior Lecture at HCM Ciy-based Fulbright School of Public Policy and Management.

Anh pointed out the fact that despite being one of the most open economies in the world, Vietnam’s participation in global and regional value chains remains limited. Vietnam’s level of participation in global supply chains remains well below its ASEAN peers, such as Singapore, Thailand, Indonesia, Malaysia, and the Philippines, he said, adding that the level of Vietnam’s sophistication in participation remains low, particularly in manufacturing and the country needs to move up to improve productivity.

Anh cited a WB report as saying that a 1-percent increase in global value chain participation boosts per capita income levels by more than 1 percent – about twice as much as conventional trade, so strengthening global value chain participation will be important for accelerating Vietnam’s productivity and growth.

He suggested that in the short-term, the diversification of multinational corporations depends on the recovery prospects of alternative production bases. “In the medium-term, being well-prepared for the ‘new normal’ of global value chains is important,” he said. “Supply chains cannot be established overnight, and companies still have to overcome the expensive and time-consuming process of relocation."

For that, Vietnam can take measures to enable stronger linkages between FDI and domestic enterprises. In the longer-term, Vietnam needs to narrow the productivity gap and move towards the productivity frontier, he stated./.