VietNamNet Bridge - Despite the sharp fall in crude oil prices in the world market, Vietnam still has achieved the highest GDP growth rate this year in the last five years. However, this is still not enough to drown the worry of staying behind other regional countries such as Thailand, China and Indonesia.

 

 

Despite the sharp fall in crude oil prices in the world market, Vietnam still has achieved the highest GDP growth rate this year in the last five years.

“Lagging behind’ was the first thing mentioned by Nguyen Tu Anh, a researcher from the Central Institute of Economic Management (CIEM), when presenting a report on the implementation of the 2011-2015 economic restructuring plan in late December.

“The risk of lagging behind other countries is obvious,” Anh said. “If Vietnam can obtain the 5 percent GDP growth rate, its GDP per capita by 2035 will be just equal to 75 percent of that of China and 83 percent of Thailand at present.”

And if Vietnam cannot proceed, it will still not be able to catch up with other regional countries in 20 years.

Also according to Anh, there are four weak points in the Vietnam’s economy 1) the growth rate is low 2) the productivity is low 3) the public debt is high and 4) the macroeconomic uncertainties continue.

Meanwhile, the state’s resources are getting more limited with a high budget deficit, the expenditures on investment and development on the decrease, and the public debt nearly hitting the allowed ceiling level.

“The risk of lagging behind other countries is obvious,”  Nguyen Tu Anh, a researcher from the Central Institute of Economic Management (CIEM)

The infrastructure system is where the lag can be mostly clearly seen. Citing the report of the World Economic Forum, Anh said, except the railway, the quality of inland transport, air services and electricity in Vietnam is worse than in Cambodia. 

This might be a surprise to many people that Vietnam is 54 grades below Cambodia in inland transport and 44 grades below in port services.

Vietnam’s productivity is just equal to half of ASEAN, 1/3 of Thailand and China, and 1/7 of Malaysia.

Regarding the restructuring in public investment discipline, according to CIEM, Vietnam has tightened investment, but not thought of solutions to heighten investment efficiency.

Regarding the state-owned enterprises (SOEs) reform, the equitization process has been going at a very slow pace, while the preferences offered to SOEs have ‘distorted’ the market economy. 

Nguyen Xuan Thanh, director of the Fulbright Economics Teaching Program (FETP), commented that Vietnam’s economy still cannot resume high economic growth rate of 7 percent Vietnam once gained in 2000s. And this is because economic restructuring still cannot be implemented thoroughly.

There are three big things Vietnam needs to do in 2016-2020.

First, creating more jobs, especially in the private economic sector. Second, improving  efficiency in investment resource allocation. Third, renovating the management agencies by creating most favorable conditions for private businesses to develop.

Pham Huyen