Hanoi (VNA) – Vietnam has the potential to become a high-income country by 2045 if it remains steadfast in pursuing two strategic drivers: institutional reform and green development, according to the World Bank (WB).
Amid global challenges ranging from economic slowdown to climate change, two new reports launched by the WB in Hanoi – Vietnam 2045: Break Through – Institutions for a High-Income Future and Vietnam 2045: Greener Growth – Pathways to a Resilient and Sustainable Future – present a strong reminder of the urgent policy decisions Vietnam must take to realise its development vision.
Stronger institutions for sustained growth
The “Vietnam 2045: Break Through – Institutions for a High-Income Future” report underscores the need for Vietnam to strengthen its legal framework and investment environment in order to sustain high growth and avoid the middle-income trap. It notes that countries which have successfully transitioned to high-income status have done so by continuously improving institutional quality.
Mariam J. Sherman, the World Bank Country Director for Vietnam, Cambodia and Laos, emphasised that Vietnam’s journey toward high-income status by 2045 clearly illustrates the pivotal role of institutions in securing sustainable growth. She noted that while recent reform efforts are encouraging, what is now needed is a bold institutional push, a ‘breakthrough’, to unlock the full potential of the private sector in driving growth and creating quality jobs.
The report highlights that effective public investment management will be crucial, from project selection to implementation and oversight.
Legal and regulatory improvements are also needed to ensure a transparent, stable, and predictable business environment.
Local governance, the report notes, should be enhanced through greater decentralisation, clearer accountability, and stronger coordination among provinces and cities.
The WB also urges Vietnam to build a professional and efficient civil service with improved pay and clear accountability, supported by institutions that ensure due process, transparency, and independent oversight.
Climate adaptation
The second report, Vietnam 2045: Greener Growth – Pathways to a Resilient and Sustainable Future, stresses that investing in climate adaptation is key to reducing risks from extreme weather events that threaten agriculture, businesses, and production infrastructure.
Sea-level rise scenarios project that up to half of the Mekong Delta could be submerged by mid-century. Meanwhile, the WB’s 2024 survey shows that around 75% of businesses in Vietnam’s top export sectors – garments and electronics – operate in areas frequently affected by high temperatures, putting 1.3 million workers at greater vulnerability.
Without timely adaptation, climate change could slash Vietnam’s GDP by as much as 12.5% by 2050 compared to a baseline scenario, risking the country’s income aspirations.
Sherman called for immediate action to safeguard land, communities, and infrastructure from climate shocks.
She emphasised the importance of developing appropriate mechanisms and policies to encourage proactive adaptation by businesses and citizens, as well as integrating climate risk management across all sectors of the economy.
According to the report, effective adaptation measures could halve the projected GDP loss from 12.5% to 6.7% by 2050.
Leveraging green growth opportunities
Vietnam also has significant opportunities to reduce carbon emissions and work toward its net-zero pledge by 2050.
The private sector will play a central role, and the report recommends specific steps to accelerate the energy transition, including greater adoption of increasingly cost-competitive renewable technologies and improvements in energy efficiency, particularly in industry.
If implemented effectively, these efforts could foster innovation, generate new jobs, and fuel long-term growth.
Vietnam is also encouraged to harness its marine economy potential to support a green and climate-resilient future.
With over 30% of its population living along a 3,260-kilometre coastline and nearly half of its 100 million citizens depending on marine ecosystems for their livelihoods, sustainable marine development is an urgent priority.
The report notes the vast potential of offshore wind, up to 475 GW, alongside wave energy as viable pathways to reduce dependence on fossil fuels.
In addition, restoring mangroves, protecting seagrass beds and coral reefs will not only strengthen coastal resilience but also contribute to emissions reduction through their natural carbon storage capacity./.
