Starting almost from scratch, Vietnam has just entered the initial period of the industrialisation process and is striving to expand production. To successfully implement the industrialisation process by 2020, Vietnam faces a number of difficulties.

Professor Kenichi Ohno said at the recent Vietnam Development Forum that Vietnam policies and institutions are weak when compared to other Southeast Asian developed countries and even that of other developing countries.

According to the World Economic Forum’s (WEF) Global Competitiveness Report, during the two consecutive years of 2004 and 2005, Vietnam’s economy dropped 21 grades – the highest ever. In 2006, Vietnam continued to fall 5 grades to 86. These figures demonstrate the decline in the quality of development.

Doctor Tran Dinh Thien from the Vietnam Economics Institute gave evidence that gap of GDP per person between Vietnam and other countries, except China, is getting bigger although the Vietnamese GDP growth rate has constantly increased over a long time. With its current growth, Vietnam will lag further behind.

In addition, the domestic market systems are not synchronous and the process to change to a market economy is too slow. Mr Lien said that it developed spontaneously and depended on subsidies. It did not have general development plan. Two kinds of markets show their weakness, the land and real estate market and the financial market.

Another difficulty facing the country is that domestic businesses are weak due to their small scale and weak competitive capacity. Foreign investors warned that to improve competitiveness and attract foreign investment, Vietnam should pay more attention to developing its infrastructure. However, to do this work needs a huge amount of capital, which the domestic economy cannot supply, even with ODA support.

Mr Lien analysed that the judgement demonstrates that improving the infrastructure must be implemented according to a certain roadmap.

Further analysing the weaknesses of the infrastructure, a senior economic expert Le Dang Doanh said that Vietnam should be brave and renew its thinking. He gave an example that the country is building 102 ports but none of them are international enterpots. Meanwhile if Van Phong bay is developed into an international enterpots to transit goods from north Thailand, Myanmar and Laos to China, Japan and the Republic of Korea it will become a dynamic economic centre, and bring in a huge income.

Making progress in policy

Vietnam’s development strategies are not the same as other ASEAN countries. Based on valuable international lessons, Vietnam should find its own suitable direction. Vietnam should also accelerate the implementation of the international integration process. (This means that a strategy to attract huge amounts of FDI capital while gradually removing trade barriers in the past decades is not useful for Vietnam any longer.)

Dynamism in the industrial field is thanks to individual investment and consumption. Individual demands are increasing strongly due to external factors such as FDI, ODA and overseas remittances.

Professor Ohno said that Vietnam’s economy is booming and may even be too hot. Foreign investors are being attracted by the advantages of a favourable geographical position and a good quality labour force, instead of policy.

Nguyen Quang A said that the most important policy to develop industry is national allocation of human resources. It does not mean that the State will undertake this task but it must be coordinated when allocating national resources, including the workforce, capital and the country’s natural resources. The State should devise proper incentives.

Mr Quang A added that the State has different policies so it should have officials to check on the implementation of these policies.

Vietnam faces a big problem with the lack of participation from businesses (they can only join when a problem occurs) and close coordination among the ministries. These problems only occur in Vietnam, not in Malaysia, Japan or Thailand.

Mr Quang A said that it is high time for Vietnam to have experts gather for several months to decide which criteria should be chosen and which obstacles should be resolved first. Only the State could do this job.

The State must propose policies to encourage businesses to promote their capacity to boost their development.