Strong reform resolve
After being informed of Vietnam’s position in the World Bank’s Doing Business report in October 2019, Prime Minister Nguyen Xuan Phuc immediately asked the ministries and agencies concerned to analyse and assess the causes in details and put forward prompt measures to raise Vietnam’s position in the ease of doing business rankings.
In a document conveying the Prime Minister’s instructions on implementing measures to improve the business climate, a notable point is that other subindexes were also mentioned in addition to the overall business environment index.
The World Bank report suggests that the overall score and the scores for 5 of the 10 subcomponents witnessed considerable improvement. According to Nguyen Minh Thao at the Central Institute of Economic Management, two of these five components were recognised for reforms, namely access to credit and payment of taxes and social insurance. Nevertheless, the head of government’s instructions still demonstrate a strong resolve for continued reform.
In fact, Vietnam currently has many advantages over other economies in attracting foreign investment. In a recent ranking by the US News & World Report, Vietnam jumped from number 23 to number 8 on the list of the best countries to invest in. An annual survey by the Japan External Trade Organisation also shows that 70% of the Japanese companies operating in Vietnam plan to expand their business in Asia and ASEAN, particularly in Vietnam.
According to economist Vo Tri Thanh, foreign investors are seizing opportunities from the new changes in the world and in Vietnam, so there are reasons to be optimistic for the next ten years.
With the stability of the macroeconomic foundations and strong economic growth at above 6.5% over the past 5 years, Vietnam has become one of the fastest growing economies in the region, thereby attracting large investment inflow.
However, more challenges are expected to emerge in the coming years, requiring both the government and enterprises to take bold actions to take advantage of the opportunities, said Thanh.
New policy-making mindset
Under its tentative programme, the Vietnam Reform and Development Forum (VRDF) 2019 was scheduled to begin at 8:30 in the morning but Minister of Planning and Investment Nguyen Chi Dung had arrived an hour earlier. Discussions on Vietnam’s prosperity and the opportunities and challenges facing the country had already heated up before the official opening hour.
The VRDF is customarily held at the end of the year. But 2020 is a special year in which Vietnam will formulate the socio-economic development strategy for 2021-2030 and the socio-economic development plan for 2021-2025. It is also the year to complete the documents to be presented to the 13th National Party Congress.
Furthermore, a rapidly changing world, with the advent of never-seen-before technologies that are transforming the way of doing business, has made traditional successes inadequate in realising Vietnam’s aspiration for prosperity.
“Such context brings about both opportunities and challenges for developing countries like Vietnam, requiring it to quickly seize the opportunities and overcome the challenges, otherwise it will fail to catch up with the current development trends”, said Minister Nguyen Chi Dung in his address with domestic and foreign experts to explain why VRDF 2019 was held earlier than usual. What the organisers had intended was to create a forum to garner suggestions and recommendations for the new stage of Vietnam’s development.
Such challenges had already been mentioned a long time ago. In a traditional development model, land, capital and the labour force are the most important resources in attracting investment. In the case of Vietnam, the main factors have been cheap labour and natural resources. But with new business models, ideas, intelligence and connectedness will now be the main resources.
Economic prosperity in the future calls for a new mindset in the formulation of mechanisms and policies, said economist Tran Dinh Thien.
It is apparent that the drivers and development structure of the fourth industrial revolution require radical changes in policy formulation and institutional reforms so that the drivers can be determined correctly towards bolstering development.
Thien reiterated that although the fourth industrial revolution is a technological revolution, it should go hand in hand with institutional reform. It is also the reason why institutional reform is still brought up by economic experts as Vietnam’s key to the door of prosperity.