VDPF 2015: Competition Sustains Growth

Speaking at the forum, PM Dung affirmed that Vietnam has obtained significant achievements on many socioeconomic fields in the past five years, thanks to the highest efforts and assistances of partners and international community. However, the economy is also poised to face enormous challenges.

 

Vietnam also places ambitious goals in the next five years 2016-2020 based on four pillars: Obtaining higher and more sustainable economic growth; developing culture, ensuring of social welfares, gradually improving quality of people’s life, considering human development and benefit of people being objective, motivation and centre of the development; protecting and improving life environment; and guaranteeing peace and stability. The country set the average annual growth of 5.9 per cent in the past five years, the target set for the next fives is higher, ranging from 5.6 per cent to 7 per cent based on a macroeconomic stability.

 

Minister of Planning and Investment Bui Quang Vinh said, in 2016-2020, Vietnam will continue developing market economy, creating conditions and new motivation for socio-economic development; improving quality of economic growth basing on productivity growth and contribution of science and technology; focusing on development of enterprises, including drastic equitisation of SOEs, creating favourable climate and incentives for development of Vietnam’s private sector; deploying three strategic breakthroughs on institution, infrastructure and human resources; taking opportunities and overcoming challenges in the international process. And, Vietnam will specially take advantage of opportunities from international cooperation and assistances from partners worldwide.

 

Ms Victoria Kwakwa, World Bank Country Director for Vietnam, said Vietnam has achieved a lot on each of the three pillars of the socioeconomic development strategy. Thus, the economic size almost doubles to US$200 billion. Poverty has continued to decline vary rapidly from 20.7 per cent in 2010 to 13.5 per cent in 2014, meaning that more than 6 million people have been lifted out of poverty in just five years (according to data from the General Statistics Office and the World Bank). As may as 95 per cent of children under five years old go to kindergarten. To increase access to health services, health insurance coverage increased to 71 per cent of the population in 2015.

 

According to the WB, however, the continued trend towards declining productivity growth is worrisome. Vietnam’s productivity growth rate is under 4 per cent and declining compared to over 7 per cent for China and over 5 per cent for South Korea when they were at similar levels of development as Vietnam is now. The WB warned that current productivity growth rates are unlikely to deliver the sustained rapid growth that could see Vietnam follow the development trajectory of countries like South Korea or Taiwan (China). What is needed to stem the decline in productivity growth is a broad framework to level the playing field between all economic actors and promote genuine competition and security of property rights. Vietnam’s market institutions reform agenda will need to be significantly stepped up to achieve this. 

 

In giving policy recommendations to Vietnam, Australian Deputy Ambassador to Vietnam, Layton Pike, said that in the next five years, the Government must develop and implement a thorough, comprehensive and transparent strategy to gradually give up State ownership in fields that the State does not need to be present and relocate its scarce resources to strategic areas such as infrastructure development and governance quality improvement.

 

Canadian Ambassador to Vietnam, David Devine, said one of ongoing hardships of Vietnam is its poor labour productivity which is stemmed from the under-performance of State-owned enterprises and the slow growth of the private sector. He however believed that, with its commitments, TPP can help raise Vietnam's GDP growth to 8 per cent, even a double-digit growth, until 2035.