Post-Covid-19: Many Economic Bottlenecks Needed to Be Removed

9:23:11 AM | 6/16/2020

As one of a few countries that have basically controlled the epidemic, Vietnam is entering the stage of “new normal” economic development. But, a lot of economic bottlenecks need to be removed after the Covid-19 epidemic.

Three bottlenecks

While the world is struggling to cope with the Covid-19 pandemic, Vietnam has well exercised control measures. However, many economic problems have turned clearer and/or become more urgent in the pandemic time. They are becoming bottlenecks that need to be completely addressed to quickly revive the economy.

At the workshop themed “Identifying bottlenecks to development after Covid-19: Some institutional requirements” held recently by the Central Institute for Economic Management (CIEM), Dr. Tran Hong Minh, CIEM President, stressed that now is the time for us to review bottlenecks in economic development to take remedy measures to develop the economy. In fact, these gridlocks had existed before the Covid-19 epidemic but yet to have been addressed. Due to Covid-19 epidemic effects, these tailbacks have become more visible and need to be cut off.

Mr. Nguyen Anh Duong, Director of Macroeconomic Policy Department (CIEM), said, Vietnam is faced with three bottlenecks: Institutions, infrastructure and human resources. Specifically, in institutional quality, visible obstructions include e-government (a step toward digital government), effective coordination and use of public resources, inclusive and sustainable development, and behaviors toward investors. In particular, the behaviors toward investors is not only about cutting unnecessary procedures but also imposing standards to effectively attract FDI into the fields it needs.

Regarding digital infrastructure, Vietnam ranked No. 65 in the EIU Technological Readiness Ranking in 2018-2022 (versus No. 67 in the 2013-2017 period), he said. As this improvement is insignificant, an inclusive internet progress is still a requirement.

On human resources, Vietnam's labor productivity is low and slowly improved in relative to actual needs, said Mr. Duong. Its adaptability to working conditions in the value chain and its adaptability to “major changes” (such as online working) remain weak.

In addition, according to the CIEM representative, there is a need to raise the mindset about priority sectors for post-Covid-19 development, food security goals, sustainable development, infrastructure development, and new economic patterns.

Three economic puzzles

According to economist Vo Tri Thanh, the Covid-19 epidemic poses three issues, and also the biggest challenges to be solved, to Vietnam. The first is controlling the Covid-19 epidemic and living with its risks. The second is ensuring economic performance and recovery. Finally, Vietnam needs to keep restructuring.

Mr. Thanh said, to solve these three matters, Vietnam needs to move fast and have its own specific mechanisms. With the first issue, the Covid-19 pandemic is still very complicated around the world and Vietnam needs to control it well. In order to partially solve the second drawback, Vietnam necessarily handles outstanding issues, including inactive projects, rising bad debts and budget deficit. For the third snag, Vietnam needs to continue to renovate institutional reforms and restructuring.

To draw more FDI flow, Vietnam must move fast and actively, said Dr. Vo Tri Thanh. The investment flow is changing the course of movement and we will miss it if we are not active enough. “We are moving from a passive position to an active status. We must be moving faster and getting better to catch the fancy of international investors,” he stressed. Besides, Vietnam needs to develop the private sector at the same time, he noted. Developing domestic businesses must be seen as an important task.

Sharing this view, former CIEM President, Dr. Le Xuan Ba ​​said that Vietnam is still heavily dependent on FDI. The country should particularly consider favorable mechanisms for private sector development and domestic business development. Moreover, Vietnam needs to study and make early forecasts on medium and long-term globalization trends and big games for the economy. Most importantly, Vietnam is still reforming its economic institutions for the time being.

On the business environment, with the good control of the Covid-19 epidemic, Vietnam is proving its stable business environment and good governmental administration, said Mr. Dau Anh Tuan, Director of VCCI Legal Department. In the coming time, Vietnam needs to further reform administrative procedures, more strongly and more substantively.

Regarding some orientations for economic recovery and development, Mr. Nguyen Anh Duong said that Vietnam needs to develop and launch an economic recovery plan; restructure the economy, perfect industrial policies and attract FDI flows; improve the business environment, and clear bottlenecks against businesses. In addition, it needs solutions for infrastructure development (including hard and digital infrastructure); develop adaptive skills for businesses and workers; effectively enforce FTAs (especially new CPTPP and EVFTA); and adopt new economic models: sharing economy, circular economy.

By Ha Linh, Vietnam Business Forum