Innovation – key for unlocking door to growth: insiders

A report reviewing Vietnam's macro-economic performance in 2024 announced at a recent seminar hosted by the Central Institute for Economic Management (CIEM) showed that Vietnam witnessed a remarkable economic recovery in 2024.

Challenges in 2025 will serve as a positive “pressure” for Vietnam to intensify fundamental economic reforms, focusing on innovation and integration, it said.

Positive “pressure” for decisive reforms

Science and technology are developing rapidly, creating alternatives to human labour, CIEM Director Tran Thi Hong Minh said, adding that the international labour distribution is becoming increasingly apparent.

In this context, she emphasised that maintaining macroeconomic and social stability is a necessary requirement, but "not easy" and "not enough."

This uncertain backdrop is not solely negative as it also presents numerous development opportunities for middle-income countries, she said, noting that Southeast Asia, in particular, holds significant potential for rapid growth.

The key lies in fully tapping these opportunities through timely economic institutional reforms and improving the capacity of agencies, businesses, and labourers, she added.

In 2024, Vietnam recorded impressive economic results, with a clear recovery in economic growth, expanding by 7.09% year-on-year. In addition, inflation was kept in check at 3.63%, significantly lower than the target set by the National Assembly. More importantly, business confidence went up, reflected in figures such as the disbursement of foreign direct investment (FDI) reaching US$25.35 billion, and remittances estimated at US$16 billion.

Minh stressed that the Party and State have proactively worked to refine the policy framework for innovation, especially Resolution No.57-NQ/TW dated on December 22, 2024 by the Politburo on breakthroughs in science and technology development, innovation, and national digital transformation.

This has created an inspiring atmosphere for the scientific community in recent times, she said.

With timely policies to develop new technologies, Vietnam has become a 'new home' for many great investors, Minh said, adding that there is still a lot of policy room for innovation, which needs to be connected with the development of new economic models (digital economy, circular economy, creative economy).

Minh also pointed out numerous challenges, such as the risk of falling into the middle-income trap, factors to create new drivers for growth model innovation and enhancing competitiveness.

With this mindset, she expressed her belief that these difficulties can become positive “pressure” for Vietnam to intensify fundamental economic reforms. These reforms will focus on innovation and integration, stressing that this serves as the foundation for the country to realise its growth goal for 2025 and the following decades.

Deep integration and value chain

Nguyen Anh Duong, director of CIEM’s Department for General Economic Issues and Integration Studies stressed that alongside its economic achievements, Vietnam continues to establish itself as a destination with deep connectivity to global markets. Therefore, effectively implementing signed free trade agreements (FTAs), as well as advancing FTAs with new partners (and supporting other countries' participation in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), showcase Vietnam's proactive approach to international economic integration.

However, the report also highlights challenges in fully capitalising on integration advantages, particularly concerning the global value chain, Duong said.

With the ongoing economic integration, Vietnamese businesses are increasingly recognising the importance of more active participation in regional and global supply chains. In this regard, the report highlights the commendable efforts of many domestic firms to innovate and enhance their capabilities, regardless of their position—whether low or high—in the value chain.

Many Vietnamese businesses have strived to innovate and enhance their capabilities, both in production organisation and the application of science and technology, to be able to integrate into supply chains, Duong said.

Additionally, the report notes a new challenge in the global shift towards sustainable development—specifically green regulations and the trend towards green exports.

Green regulations will become mandatory rules of “the game” in the international market starting in 2025, and could potentially act as non-tariff barriers for Vietnamese exports, he said.