Vietnam economy under Nguyen Tan Dung’s 10-year prime ministerial term
Opening the market widely to foreign investors and developing infrastructure were the two important hallmarks of the Vietnam economy in the last 10 years under the management of the government headed by Nguyen Tan Dung, who has just resigned from the post of Prime Minister.
With the goal of diversification & multilateralisation and the wish of making friends with all countries, after obtaining WTO membership, Vietnam completed negotiations and signed more than 10 free trade agreements (FTAs), including recently signed agreements with the EU and TPP.
The TPP, with 12 member countries, is described as the ‘next generation’ FTA which set up an unprecedented cooperation framework and covers 40 percent of the global economy.
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“Vietnam is one of the countries leading in terms of bilateral and multilateral FTAs signed,” said the former Minister of Trade Truong Dinh Tuyen.
The second hallmark made during Dung’s term is strong infrastructure development. The super project on expanding and upgrading Highway No 1 and the Ho Chi Minh Road through the Central Highlands one year before schedule Was an outstanding achievement.
In addition, 600 kilometers of highway were put into operation, which has helped make remote areas closer to central economic centers like Hanoi and Ho Chi Minh City.
The expansion of international airports of Noi Bai and Danang and the operation of the Cai Mep international port, which allows Vietnam to receive large container vessels, all have helped upgrade Vietnam’s ranking as an investment site in international organizations’ eyes.
Though Vietnam still has a long path toward institutional reform, it has gained considerable achievements in this field. The resolution on administration reform issued in the last two years urged ministries and branches to gear up for reform. Taxation and customs agencies have announced the reduction of hundreds of hours that businesses have to spend on procedures.
However, as deputy chair of the National Assembly’s Economics Committee Nguyen Van Phuc commented, the reform process needs to be implemented in a more serious way by the new government.
“The successor of the Minister of Planning and Investment Bui Quang Vinh needs to recommend more drastic measures to carry out institutional reform,” Phuc said.
Though the national economy has experienced ups and downs in the last 10 years, Vietnam has gained great achievements in social welfare. The number of poor households, according to the General Statistics Office (GSO), dropped from 18.1% in 2006 to 4% in 2015.
Meanwhile, according to UNDP, the human development index during the period increased from 0.598 points to 0.666 points. Vietnam is listed among the countries with the steadiest growth in South East Asia.
However, economists pointed out that many problems still exist.
The “iron fists (State-owned corporations) that are melting" is the image deputy chair of the National Assembly’s Committee for Culture, Education, the Youth and Children Le Nhu Tien used to describe the decline of some state-owned economic groups.
The collapsed Vinashin, the big difficulties Vinalines is facing and the bauxite projects in the Central Highlands which have ‘gobbled up’ big resources all show the shortcomings of the state-owned conglomerate model.
In the last half decade, the government had to make major efforts to deal with the public debt which is on a strong rise. Minister of Finance Dinh Tien Dung admitted that ‘Vietnam walks tightrope’ as the state budget fell in the last two years.
In order to have money for investment, the government has to borrow money from different sources, which has made the ratio of public debt to GDP exceed the 60% threshold.
Nguyen Manh Cuong, a National Assembly’s Deputy, said: “The economic development is not sustainable, not commensurate with the potential. The state budget deficit and public debt are high, while productivity is low. The administrative reform and state apparatus are complicated, while corruption is serious."
