Policy recommendations for new growth model
Vietnam needs to create a new growth model to raise internal strength for a rapid and sustainable development, thus overcoming the middle-income trap.
The proposal was made by Professor Tran Tho Dat, Vice Rector of the National Economics University, at a seminar in Hanoi on March 26.
The Vice Rector of the National Economics University argued that Vietnam’s recent history of growth is the result of extensive factors such as low-cost labour, capital flow and natural resources.
However, after the economic recession in 2009, growth slowed down significantly and has yet to pick up much speed, he said.
“Success may only be reached by shifting to a new growth model that is based on the efficiency of mobilising resources to improve industrial competitiveness, technological standards and productivity,” the Professor said.
He also claimed that increasing links between domestic enterprises and multi-national groups is a sound way to reach this goal.
At the seminar, economic experts also put forth a number of policy recommendations to further improve the role of foreign direct investment (FDI) and create a new sustainable growth momentum for Vietnam by enhancing links between FDI and domestic businesses.
Vietnam must have a feasible industrial development strategy and join the global value chain to raise its internal value, said Duong Dinh Giam, Director of the Industrial Policy and Strategy Institute.
Although Vietnam has become an attractive destination for many multi-national groups, its FDI quality remains low in comparison with other regional countries, in part due to the poor connection between foreign investors and domestic businesses, he added.
According to Professor Kenichi Ohno from Japan’s National Graduate Institute for Policy Studies (GRIPS), despite a remarkable structure shift from agriculture to industry in the past two decades, Vietnam’s added production value only reached 19.7% in 2010, much lower than those of Thailand, the Republic of Korea (RoK), Malaysia and Indonesia.
The country’s industrialisation remains modest compared to other Asian nations such as China and the RoK, he said.
However, the Japanese expert also acknowledged the Vietnamese Government’s efforts in cooperating with the private sector to create higher internal value.
Vietnam needs to have a FDI marketing strategy, build the capacity for domestic enterprises and increase collaboration between foreign and local firms while improving logistics services and industrial human resources, he stressed.