Progress recorded in economic restructuring but challenges lie ahead: experts

Vietnam’s economic growth is relatively high thanks to economic restructuring being kept on track but challenges are still ahead as the growth dynamics are showing signs of declining, experts have said.

Experts at the workshop discuss measures to promote economic restructuring in Vietnam by 2020. (Photo: NDO/Trung Hung)
Experts at the workshop discuss measures to promote economic restructuring in Vietnam by 2020. (Photo: NDO/Trung Hung)

Economists gathered at a mid-term workshop held in Hanoi, on September 5, to review the implementation of the master plan on economic restructuring for the 2016-2020 period and discuss measures to promote the process. The event was co-organised by the Central Institute for Economic Management (CIEM) and the Australian-funded Australia Supports Economic Reform in Vietnam (Aus4Reform) programme.

At the seminar, CIEM Director, Dr. Nguyen Dinh Cung, said that Vietnam’s economic restructuring during the first half of the 2016-2020 period has achieved positive results, reflected in the relatively high economic growth combined with an improvement in the quality of growth and macroeconomic stability, thanks to the effective support from Aus4Reform.

Labour productivity has improved, while the industry and construction sectors continue to be the mainstay of high economic growth, with the contribution of mining to economic growth witnessing a significant reduction compared to the previous statistics.

However, Dr. Cung also pointed to a number of limitations during the economic restructuring, with resource allocation having not changed much towards the direction of improving efficiency. Large resource flows, such as agriculture to service and industry, rural to urban areas, the State to private sector, and formal to informal areas, are moving slowly, while these shifts are important factors for growth.

In addition, for the first time there is a sign that the growth was lower than that of the previous quarter, raising the question of whether Vietnam's economic growth is on a downward trend or not, Cung added.

“If there is no difference in thinking, institutional reform, resource distribution and improving the efficiency of using State resources, the requirement for maintaining high and sustainable growth is a big challenge," stated the head of the economic think tank.

To create a high and sustainable growth engine, the CIEM director suggested continuing to implement the existing solutions but in a stronger and broader manner. It is necessary to develop and perfect production indicators, especially the financial market and land use rights, while allocating State resources in accordance with the market regulations and promoting the development of private enterprises.

Progress recorded in economic restructuring but challenges lie ahead: experts ảnh 1

Dr. Nguyen Dinh Cung, Director of the Central Institute of Economic Management, speaks at the event. (Photo: NDO/Trung Hung)

Instead of trying to restructure the projects and enterprises that have suffered losses, resources should be invested in comprehensive restructuring, focusing on supporting effective enterprises and those with potential for development and effective corporate governance.

Most importantly, Dr. Cung stressed that there should be measures for research in preparation for the 2021-2030 period, as Vietnam has to complete the transition to a modern market and digital economy by that period, while taking advantage of the fourth Industrial Revolution’s opportunities. According to him, only an improved market could create new momentum for growth and development.

Dr. Can Van Luc, an economic expert in banking and finance, recommended forming an independent body to evaluate the reality and effectiveness of the economic restructuring process.

In is important to clarify four factors to compare Vietnam’s economic growth with the world’s, that are the business environment, business capacity, innovation and logistics costs, so as to clarify the distance of the Vietnamese economy against that of the world.

At the workshop, experts also analysed in detail the challenges to public finance reform, such as challenges to State budget collection reform, policy reform for increased budget revenues in the short and medium-term, State budget expenditure, overspending and public debt, public investment issues and State budget transparency at the local level.