The scale of the national economy has greatly expanded. In 2023, Vietnam’s GDP reached $430 billion, while its income per capita rose to $4,300, or 43 times higher than in the 1990s.

Vietnam has become the fifth largest economy in ASEAN and the 35th largest economy in the world.  And it aims to become a higher middle-income economy ($7,500) by 2030.

From an isolated and embargoed country, Vietnam now exports products to over 200 countries and economies all over the globe.

In 2008, when Vietnam joined the group of economies with an average income, the World Bank then gave a shocking warning that Vietnam still had a long way to catch up with neighboring countries.

The institution estimated that Vietnam will need 51 years to obtain an income equal to Indonesia’s, 95 years to Thailand’s, and 158 years to Singapore’s.

Under another calculation method, the World Bank predicted that it will take 15 years to catch up with Indonesia, 22 years with Thailand, and 63 years with Singapore.

In the last 15 years, since the predictions were given, Vietnam’s economy has made spectacular progress.

Doi moi (renovation) turned the single-sector economy into a multi-sector economy, where people can freely do business.

However, problems still exist. The achievements in 2023 were encouraging, but this was the third consecutive year the GDP growth rate was below the average levels set in the 5-year economic development plan (6.5-7 percent) and the 10-year strategy (7 percent).

Vietnam’s GDP per capita increased ($4,300), but it was still far from the target of $4,700-5,000 by 2025. Reaching the 5-year targets has been a difficult task.

Lagging behind, which economists warned about in 1991 and has been mentioned many times, remains a challenge. The middle-income trap, an aging population, and the possibility of missing the golden-population period are visible risks.

Meanwhile, industrialization and modernization has not kept up with the requirements of global development trends and national development. Vietnam has failed to become a country with industry being modernized by 2020.

The fundamental factors related to institutions, workforce and technology are still below the requirements for industrialization and modernization.

The productivity gap between Vietnam and other countries remains wide. Experts said Vietnam’s productivity was $20,400 in 2022 (2017 PPP), just 11.4 percent of the figure for Singapore, 35.4 percent of Malaysia, 64.8 percent of Thailand, 79 percent of Indonesia, and 94.5 percent of the Philippines, and is nearly equal to Laos ($20,000).

The figures will be lower compared with large developed economies, 15.4 percent of the US 19.1 percent of France, 21.6 percent of the UK, 24.7 percent of South Korea, 26.3 percent of Japan, and 59 percent of China. 

The development of fundamental industries, priority industries, and key industries has been slow.

The goals of becoming a country with industry being modernized by 2025 and a country with modern industry by 2030 have been challenging.

The political and economic conditions of Vietnam and the world have witnessed big changes after Covid-19.

With an income per capita of $4,300, Vietnam is now in the group of higher middle-income countries ($4,046-$12,535), according to World Bank criteria.

Economists have warned that most countries, after hitting the threshold for higher middle-income economy, begin seeing growth slowing down with structural economic problems unsolved, while they have to cope with an aging population, social security problems, environmental degradation and natural resources exhaustion. 

As a result, very few countries can overcome the middle-income trap to become developed high-income countries.

The efforts to reform and develop a market economy made since 1986 have turned Vietnam from an underdeveloped country into a country with GDP among the world’s top 40 largest economies.

It is now the time for Vietnam to reconsider and assess its market economy institutions to prepare for the next development stage.

Lan Anh