Building Foundation for Higher Productivity

The Vietnam Competitiveness Report 2010, prepared by the Vietnam Central Institute for Economic Management (CIEM), Singapore-based Asia Competitiveness Institute (ACI) and Professor Michael Porter, a leader in competitive strategy, was launched in Hanoi on November 30, 2010. The report offers the Vietnamese economic overview, growth model analysis and recommendations for the Vietnamese Government and business community to find proper development models for the current context.

 

According to the report, at the current level of national competitiveness, nearly all factors in both macro and microeconomic scopes are rated medium or lower. In particular, macroeconomic policies are given a red indicator.

 

Also according to the report, low sophistication in the export sector and Vietnamese dong depreciation, coupled with strong domestic demand are driving trade deficit growth.

 

Significant capital inflows fuel domestic demand growth and inflation while expansionary fiscal and monetary policies worsen inflation rather than control it. The falling ratio of GDP growth to investment increases the need for capital inflow to maintain the growth rate.

 

According to Professor Michael Porter and his associates, Vietnam needs to map out a new strategy with three fundamental guiding principles: A new orientation towards competitiveness; a structural transformation of the role of the private sector; and a new role of Government to create competitive advantages for the economy. Authors also proposed setting up a national council for competitiveness control in Vietnam, like successful examples in the South Korea and other nations.