Accelerating Vietnam’s economic restructuring and growth model transformation

Wednesday, 2019-09-18 16:11:00
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Workers operate an automatic tile production line at the Prime - Dai Viet Joint Stock Company, Khai Quang Industrial Park, Vinh Yen city, Vinh Phuc province. (Photo: NDO/QUANG MINH)
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NDO – The Party and State’s policy on economic restructuring associated with transforming the growth model towards sustainability has been implemented drastically in recent years and achieved positive results, which need to be mainatined in the near future, a report has said.

In order to evaluate the results of economic restructuring and growth model transform during the 2016-2020 period, the Central Institute for Economic Management (CIEM), with the support from the “Australia Supports Economic Reform in Vietnam” (Aus4Reform) programme, has published its research report on "Evaluating of the results of restructuring Vietnam’s economy and renovating the growth model for the 2016-2020 period.”

The report examines a number of issues, including macroeconomic stability and strengthening the economy's resilience, growth and the manner and quality of growth and economic restructuring (for investment, credit institutions and State-owned enterprises). Accordingly, Vietnam’s economy has made positive changes since the transition of policy orientation in 2011 towards promoting economic restructuring reform and changing the growth model to achieve high and sustainable growth. During 2011-2015, macro policies were gradually tightened with flexible adjustment to stabilise the macro economy, while a series of programmes and projects were carried out to shift the growth model towards higher quality, greater efficiency and better competitiveness.

Economist Dr. Nguyen Dinh Cung, the CIEM’s former head cum Vietnam’s Aus4Reform country director, said that the 2016-2020 period saw more favourable conditions thanks to the policy adjustment in the previous term. During the term, macroeconomic stability has been maintained. Vietnam has kept the inflation rate at a reasonable level of under 4%. The State budget collection has been significantly improved. The budget deficit decreased sharply compared to the previous five years and has been maintained at a stable level at below 4% of GDP, reaching the set target. Public debt and external debt tend to decrease quickly, while public debt management and foreign debt are no longer as stressful as before.

According to Dr. Cung, those positive outcomes were attributed to the shift of focus in economic reform and administration of socio-economic development since 2011. During 2011-2015, the country focused its efforts and resources on stabilising the macro economy and restoring business production, thus creating a new momentum which was strong enough to mobilise more social resources, allocate and use them more effectively, and gradually form a more rational and dynamic economic structure with increasing potential for growth.

However, Cung also warned that the economy's resilience has improved in terms of macro-economy compared to the previous period but the vulnerability still remains, due to the increasing openness of the economy making it increasingly depend on external fluctuations in numerous ways.

In the context of a more complex international and regional environment, the requirements and pressures for the acceleration of economic development and reform will be more stressful and unpredictable, especially for Vietnam’s opened economy which continues to be exposed to vulnerabilities caused from external fluctuations. Therefore, in order to successfully restructure the economy and transform the growth model, it is necessary to have synchronous solutions for the whole economy and for each industry, each region and each locality.

Besides, Dr. Cung said that solutions are needed to make the domestic private sector develop faster and more uniformly compared to the FDI sector to be the main driving force for national economic development. Cung also affirmed that overcoming this imbalance does not mean limiting, restraining and blocking the FDI sector but must make the domestic economic sector, especially the private sector, grow faster and commensurate with the FDI one, while at the same time making the State sector more dynamic and more competitive.

In addition, it is necessary to expand the domestic economic sector to reach the global business environment. In particular, there should be a general solution for institutional reform and private economic development to make a breakthrough for the private sector to compete in the global arena, as well as making it a chief motive towards being the main driving force for the country's economic development.