Victoria Kwakwa, the World Bank’s regional vice president for East Asia and Pacific, has described macro-economic stability as a key driver for Vietnam’s sustainable growth and called for the Government to not always focus on growth.

Ms. Victoria Kwakwa

Kwakwa told reporters before leaving Vietnam late this week that Vietnam’s macro economy was volatile in the past as it grew too fast and then cooled.

This reality forced the Government to adjust its policy to cope with the rapid change.

The macro economy has stabilized over the past three years, with the balance of payment improving, foreign currency reserves increasing and the foreign exchange rate between the U.S. dollar and the Vietnam dong stabilizing.  

However, challenges remain as budget deficit is a high risk factor for the economy and interest rates have not been governed by market forces, according to Kwakwa.

As private firms have not been strong in Vietnam, Kwakwa underlined the need to prop up the sector.

“A country will not grow strongly if the private sector is weak,” Kwakwa said, exhorting the Government to consider it as a pivotal driver for growth if the country wants to develop a market economy.

“The private sector can take the leading role in Vietnam’s economy as it has done in developed countries. Vietnamese have a lot of business ideas and a high level of entrepreneurship but there are not many strong and active private firms in this country,” she said.

There should have been more big businesses in Vietnam but data of the Vietnam Chamber of Commerce and Industry (VCCI) showed that the number of small and super small enterprises is on the rise.

The entrepreneurship of Vietnamese people has not been unlocked and this is a major challenge.

The Government needs to ensure that enterprises in different economic sectors can gain equal access to land and capital if it wants stronger growth, Kwakwa said.

She also expressed concern over the widening gap between the rich and the poor and many people have become rich quickly.

They eat out, go on holiday overseas and send their children abroad for study, but many people have not benefited from the country’s development, she noted. “That is a risk.”

She suggested the Government improve transparency and accountability as these are requirements of a modern society.

Vietnam has made great strides but should make greater efforts to move forward in the coming years, said Kwakwa, who has traversed frequently between Hanoi and Washington since she was appointed the WB’s regional vice president for East Asia and Pacific in mid-April this year.