Changing Growth Model

 

Mr Dao Quang Thu, Deputy Minister of Planning and Investment, said the Ministry of Planning and Investment was assigned by the Government to develop a project “Major guidelines and policies to change growth model and improve growth quality, labour productivity and economic competitiveness” in 2016. This meeting aimed to collect expert opinions for further improvement of project contents. Deputy Minister Thu said the draft project was reported to the Government at a meeting held on August 18, 2016. Accordingly, the objectives of the scheme were to assess implementation results of the Resolution of the 11^th Party Congress and the 10^th Conclusion of the Party Central Committee (for 2011-2015 phase), and to elaborate and implement policies of the Resolution of the 12^th Party Congress (in the 2016 - 2020 period).

 

Dr. Nguyen Dinh Cung, Chairman of CIEM, said that growth in the 2011 - 2015 period has made a good step forward over the 2006 - 2010 period. Specifically, basic indicators of the Vietnamese economy such as labour productivity and competitiveness rankings improved. However, he also pointed out weaknesses in Vietnam's current growth model such as slowing growth and clear risk of regression because the State administrative apparatus had not changed their mindset. Therefore, he proposed that, to change the growth model, Vietnam should continue to ensure macroeconomic stability, increase growth pace, effectively implement three strategic breakthroughs, supplement public sector restructuring, build and develop the private sector in Vietnam, and enhance the efficiency of Sate operations, among others.

 

Meanwhile, with a more straightforward and critical viewpoint, economist Pham Chi Lan noted that growth resources of Vietnam have been almost used up; thus, it is very difficult for Vietnam to achieve its desired growth. She added that although the Government of Vietnam focused on changing the growth model in the past five years, the result was very poor. Academically, the current growth pattern of Vietnam can develop in dimension driven by cheap capital and cheap labour. Meanwhile, the world is changing according to added values, knowledge and technology in relation to weakening external conditions and internal forces. In a different perspective, she pointed out that the domestic sector is taking a huge trade deficit, having high investment rate but low capital investment efficiency. The domestic sector is weak in competition and integration.

 

Remarking on measures to improve Vietnam's growth paradigm, Dr. Lan said that it is crucial to change the mindset that the State is a free source of milk and the State economy is primary. It is important to end the thinking that capital and resources are based on the State economy. Meanwhile, State-owned enterprises (SOEs) do not operate according to market discipline on the market, while public spending and public investment lack close supervision. Hence, to change the growth model to raise economic efficiency, we must essentially reallocate resources evenly according to market principles and we need stronger approaches. Currently, new-generation free trade agreements (FTAs) are producing intense pressure on the agricultural sector and service industry of Vietnam if we do not adapt ourselves to new developments. For example, the Red River Delta and the Mekong Delta – the two largest rice bowls of Vietnam – are coping with more challenges due to climate change. Hence, we must change ourselves to improve when old ways are ineffective, Lan said.

 

Giving a remark on expertise opinions, Deputy Minister Dao Quang Thu asked research teams to analyse those ideas to tune up the project and submit it to the Prime Minister in September.