In a continuing conversation with VietNamNet, economist Pham Chi Lan warns that massive infrastructure spending without strong institutions risks short-term gains at the cost of long-term sustainability.

Many large-scale infrastructure projects are being launched. In your view, how can we ensure these projects go beyond short-term boosts and deliver long-term value to the economy?

Pham Chi Lan: Infrastructure is always a necessary condition for development - this is true for all countries. But infrastructure is not a sufficient condition.

A highway, a large bridge, or a modern airport only becomes truly meaningful when placed within a clear economic development strategy, connected to real value chains, industrial zones, service hubs, or economic corridors - where businesses, especially domestic ones, and local communities can participate and benefit in substantial ways.

After completing an infrastructure project, how many new enterprises are formed in that region? What new industries emerge? How many workers are retrained to meet new demands? How many Vietnamese businesses are able to enter the value chains linked to that infrastructure?

If we can’t answer these questions with data and concrete stories, then it’s hard to say that infrastructure has really turned into a growth driver.

Therefore, in my view, designing and selecting infrastructure projects must go hand-in-hand with policies to develop enterprises, sectors, and relevant economic and social fields. Infrastructure must be seen as a component of a broader ecosystem involving the economy, institutions, and people - not as standalone “projects.”

And once again, I want to return to the institutional issue: when project allocation mechanisms are transparent, accountability is clear, and project selection is based on serious cost-benefit analysis, then the chance that infrastructure will generate real value for the economy increases significantly.

Some argue that pushing investment to achieve high growth may return Vietnam to an extensive growth model. What is your take?

That concern is not unfounded. Vietnam has had phases of rapid growth fueled by increased investment, higher public spending, or widespread real estate and infrastructure development.

But in hindsight, not all projects delivered value proportionate to the resources used. Some created long-term burdens on the budget, public debt, and growth quality - not to mention environmental, social, corruption, and vested-interest issues.

Objectively, infrastructure remains one of the three major bottlenecks of our economy - alongside institutions and human capital. Weak infrastructure raises logistics costs, lowers competitiveness, and hampers the formation of new growth hubs.

So, infrastructure investment is needed - and in many cases, urgently needed - especially if we aim to enter a new phase of higher growth.

The question is not whether to invest, but how to invest in a way that creates lasting value. When institutions, project selection mechanisms, and accountability structures are in place, investment not only helps meet growth targets but also improves productivity and enables a shift toward deeper, more efficient growth.

I’ve always maintained that reform must come first, and investment should follow on that foundation. When the institutional environment is improved - more transparent, with clearer accountability - the same investment capital will have a far greater impact, because it will be allocated to the right places, at the right time, aligned with the economy’s true priorities, and executed by capable, responsible actors.

Conversely, if investment comes ahead of reform, risks will return - and ultimately, the burden of inefficient decisions will fall on taxpayers and businesses, today and in the future.

In this context of intensified reform and decentralization, how would you assess local implementation capacity?

I strongly support decentralization, because experience shows that an overly centralized system can’t keep up with the pace of social and economic development.

Local issues can’t always wait for central approval. Businesses also can’t afford to navigate long-winded procedures simply because everything needs higher-level sign-off.

However, I believe decentralization isn’t just about “sharing power” - it must come with a redesigned responsibility framework.

If we merely assign more authority without clarifying accountability, strengthening local capacity, improving information systems, ensuring data transparency, and establishing independent oversight, then abuse of power becomes a real risk.

In that case, businesses might end up “far from the center but not close to the law.” Laws remain laws, but how they’re applied depends too much on local interpretations, capacities, and goodwill - something that seriously concerns any responsible investor.

A healthy decentralization model must answer a few basic questions: Who gets to decide? Who is accountable if the decision is wrong? How can citizens and businesses monitor decisions? And what systems ensure that deviations, if any, are detected and corrected promptly?

If these questions aren’t addressed, decentralization will remain theoretical - or worse, create new layers of red tape at the local level, something businesses have struggled with for years.

Given global geopolitical, technological, and trade shifts, what opportunities and risks do you see for Vietnam?

The world is entering a period of major transition. Geopolitics and geoeconomics are evolving rapidly. Global supply chains built over decades are being reconfigured in light of economic and national security concerns. Technology is advancing fast and reshaping every field. Trade relationships are being adjusted to new standards - on environment, labor, technology, and governance.

In this context, countries with political stability, favorable geography, and clear commitments to institutional reform, innovation, and openness will stand out.

Vietnam, in many respects, has that opportunity to raise its global economic profile.

But opportunity doesn’t automatically become advantage. Global competition is intense. Investors have many choices. They care not just about labor costs or tax breaks, but increasingly about institutional quality: governance capabilities, transparency, contract enforcement, policy stability, and predictability.

If we don’t improve these areas, we might lose out to faster reformers - even if we start from a better position.

In my view, Vietnam’s opportunity right now is significant. The key lies in how well we seize it - by implementing reform faster, more decisively, and more meaningfully. Only then can reform commitments become real changes in our economic life.

As the business environment becomes more transparent, stable, and predictable, investor and business confidence will grow. That trust is the foundation for sustainable, long-term development.

Tu Giang – Lan Anh