The report, entitled “Vibrant Vietnam: Forging the Foundation of a High-Income Economy”, comes as the country’s Government is preparing its socio-economic development strategy for 2021-2030 and a socio-economic development plan for 2021-2025.
It suggested that a productivity-driven development model – combining innovation with balanced development and allocation of private, public, human and natural capital – will be key for Vietnam to achieve its goal of becoming a high-income economy by 2045.
Some of the forces that have propelled Vietnam’s growth are now slowing. The country’s demographic dividend is fading, and global trade is declining, while other challenges – such as pollution and the rise of automation, are growing. The ongoing COVID-19 crisis could be an accelerator of these trends, according to the report.
It argued that to thrive in such changing environment, Vietnam needs to strengthen its productive assets, with priority given to four areas.
To have dynamic firms, encouraging competition and easing firms’ entry and exit ensures the flow of resources to the most innovative and productive firms. This can only happen in a supportive business environment that ensures access to finance, transparent regulations and legal protections.
Meanwhile, Vietnam has built up a large stock of infrastructure. It now needs to improve the efficiency and sustainability of infrastructure services, including financing, and operations and maintenance.
Regarding skilled workers and opportunities for all, the report noted the country scores well on basic education, but it will need to promote university and vocational-technical skills. Those facing barriers entering the labour market, including ethnic minorities, should be provided with greater opportunities to boost both social equity and economic growth as the population ages and the labour force shrinks.
In terms of green economy, the report said sustainable development requires more effective management of non-renewable natural resources such as land, forest and water; stricter pollution controls, including in major urban centers; and mitigation of and adaptation to the inevitable growing impacts of climate change.
WB Country Director for Vietnam Ousmane Dione said, “Vietnam is one of the greatest development success stories of our time. The country, however, is now at a turning point where some of its traditional drivers of growth are gradually weakening. To achieve its ambition to become a high-income economy by 2045, Vietnam must put productivity growth front and centre of its economic model. In other words, it needs to grow not only faster but also better.”
According to Australian Ambassador to Vietnam Robyn Mudie, Vietnam’s commitment to bold economic reform has been a major contributor to its remarkable economic success.
“Australia is proud to have supported this report, which provides clear recommendations on how Vietnam can harness productivity enhancing reforms to improve both the quality and equity of its future economic development,” she added.