“Vietnam has made great progress in building the economy, society and democratic institutions during the period of reform. But I do not have to tell you that the hard part is yet to come,” said Jomo Kwame Sundaram, assistant secretary general for the Economics Development at the UN Department of Economic and Social Affairs.

“There will be many challenges to face, some of which you will be ready for, and others that will take you by surprise,” he said.

Mr Sundaram also estimated that one of the challenges facing Vietnam in the future would be inequality, despite the country's generally 'classless' record during the past 20 years of reform.

“Vietnam is still in the early stage of industrialisation and it is likely that the factors that have caused inequality in China will also affect Vietnam as the process unfolds,” he said.

Similar to China, Vietnam has a shrinking workforce covered only by enterprise-based social security mechanisms while universal mechanisms have yet to be put in place, the UN official added.

Vietnam also retains the residence registration system, which imposes costs on migrants and limits their access to better urban jobs.

Mr Sundaram explained that once in urban employment, unregistered migrants are subject to manipulation, exploitation and abuse because they have no legal rights. Temporary urban residents must also pay more for education and healthcare.

"We can therefore expect intra-rural and intra-urban inequality to increase in Vietnam unless policies are put in place to ensure equal rights for vvage-earners, and to moderate the impact of health and education costs on the welfare of the poor,” he vvarned, saying that the inequalities, if not rectified, would damage the country's economic performance.

“Unequal access to productive assets, such as land and credit, not only diminished the impact poverty reduction but also slows down growth itself if the poor are prevented from seizing economic opportunities and raising productivity levels,” he concluded.

Professor David Dapice of Harvard University's John F. Kennedy School of Government also pointed out that Vietnam has many paradoxes in development, the most serious of which is in education. Despite the country's outstanding record in enrolment, the poor quality of schooling has always been a public concern due to the slow pace of institutional change, he said.

In his presentation, Mr Dapice also highlighted figures showing that Vietnam's primary school enrolment is nearly universal and secondary enrolments have risen to over 65 per cent. Enrolments at the tertiary level have also risen, from 137,000 in 1992 to 1,320,000 in 2004, a 10-fold increase.

But he presented less impressive figures for university education, saying, “In the colleges, it is widely accepted I that levels of research and the quality of the curriculum, with I some exceptions, is lagging badly. Not one Vietnamese university is listed in the top Asian university lists created by various magazines, or listed based on published research.”

The professor said he regarded the lack of effective reform in education as a “huge long term stumbling block” for the country, noting that it curtailed the development of local centres of excellence, R&D capacity and the ability to move to higher value-added activities.

“It creates political tensions as normal families feel trapped and angry that people are able to exit and send their children abroad,” he said. Mr Dapice recommended that state oversight and supervision should be improved and different approaches tried to provide truly equal opportunity in education.

“If the state manages to switch from trying to control all education to fostering the growth of diverse but quality educational institutions, it will reap political benefits,” said the professor.

“A better educated populace will earn more, attract more investment, start more productive firms, and generally be supportive themselves of further reform while also supporting the government.”

Vietnam Investment Review