Vietnam Economy 2035: Focusing on Performance, Fairness and Responsibility Pillars

Mr Sandeep Mahajan, Lead Economist for the WB in Vietnam, said Vietnam’s future economic development orientation needs to focus on five basic elements: Encouraging industrialisation and modernisation along with developing a knowledge-based economy and protecting the environment and natural resources; developing a socialist-oriented market economy; building a traditional and modern culture; developing humans improving people's lives, and improving social justice; performing independent, proactive, peaceful, friendly external relations and development cooperation; actively advancing international integration; and building a socialist state of law of the people, by the people and for the people.

 

He added that the Vietnamese economy is transitioning to a market economy. Therefore, it is hard to avoid imbalanced development, primarily focusing on some fast-growing, rapid capital-recovering sectors. However, foreign capital-grabbing sectors like real estate, banking, finance and construction have the lowest productivity in the eyes of the experts. Hence, to deal with industrialisation issues, Vietnam’s economy needs to raise labour productivity of domestic private sector by focusing on strengthening market institutions, liberalising market inputs, and creating a level playing field with State-owned enterprises (SOEs). In the short - medium terms, Vietnam needs to expand its participation in global value chains, look for some domestic businesses potentially becoming leaders of global value chains in 2035, develop modern services and support export-driven manufacturing; modernising agriculture and producing more with fewer resources, enhance State roles and addressing fragmentations in supply chains. In the medium to long term, Vietnam needs to increase innovation, acquire and maximise benefits of urbanisation process.

 

Stressing fairness, a report by the World Bank in Vietnam said many children of ethnic minorities are more disadvantaged, illustrated by the drop-out rates at secondary and high-school levels, access to good hygiene and infant mortality. To create equitable opportunities, according to the WB, the Government of Vietnam needs to resolve and endeavour to tackle inequality triangle (education, nutrition and sanitation) for three vulnerable groups: minorities, people with disabilities and migrant workers in urban areas; carry out commitments on social integration for handicapped people; separate the provision of services from required permanent residence status for migrant workers; universalise secondary education for all citizens, and equip necessary skills in a modern market economy. Besides, it needs to basically reform the pension finance system to provide sustainable protection for elderly people, a fast-growing population; look to provide high-quality health insurance for the entire people; and ensure employment, reasonable protection and voice of workers.

 

With governance and accountability orientations with a view to 2035, WB experts in Vietnam recommended that Vietnam create a civil society attached to citizenship rights and treated as an equal partner with the State and the market to contribute to national development and prosperity. Accordingly, the degree of citizen participation is high in Vietnam but yet to reach the degree of a state ruled by law where citizens can fully exercise their rights. From now to 2035, it needs to adopt information access rights, enhance operating environment for civil society organisations, strengthen the legal framework for citizens assembly so as to solve their issues and their rights; and increase regulations allowing citizens' organisations to take part in decision-making process.

 

Mr Bui Quang Vinh, Minister of Planning and Investment, said Vietnam 2035 Report must be a really scientific report that straightforwardly raises existing internal weaknesses and limitations of Vietnamese economy. On that basis, relevant agencies of Vietnam will cooperate with WB economists in Vietnam to seek troubleshooting ways and introduce development orientations and solutions consistent with its economic development “practices”, he said.

 

In addition, Minister Vinh highly agreed that Vietnam will not be able to develop without a profound renewal. However, report contents must focus on analysing important concepts like determining current economic situations with trade deficit expressions, budget imbalances, rising debt and increased fees; enhance transparency and accountability in governance; transform resources-driven economic development to innovation-led development; and clarify reasons for declined labour productivity and determine characteristic products of Vietnam’s industry.