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Vietnam builds industrialisation strategy until 2020

Vietnam is making every effort to draw up a strategy for national industrialisation until 2020. In this process, it is coping with barriers, including inconsistent market institutions, sluggish development of the property market and the low accessibility to capital sources.

Local and foreign speakers at a workshop in Hanoi on March 19 shared the view that Vietnam has achieved a rather high economic growth in recent years, reaching around 7.5 percent per annum. Notably, the country has gradually shifted from a planned economy mainly based on agricultural production to a market economy, focusing on industries and services. It has been integrating into both the regional and global economy and is receiving high inflows of foreign direct and private investment. 

However, it is encountering difficulties in drafting and realising the national industrialisation strategy until 2020.

Prof. Kenichi Ohno from the Vietnam Development Forum said that Vietnam’s development strategy cannot be the same as that of ASEAN countries and that the country should seek the most suitable development model given its context. To this end, he said Vietnam’s international integration process should be accelerated at the initial stage of development.

According to him, the rapid development of the industrial sector is mostly driven by private investment and consumption. Foreign investors are drawn by Vietnam’s advantages including good geographical location and skilled workforce. However, its policies and institutions remain poor compared to those of regional countries and even the universal standard of developing countries. 

“These characteristics should be taken into account in the country’s policy making process in order to crack the ‘glass ceiling’, keep pace with high income countries, cope with challenges from China and achieve the set target for national industrialisation and modernisation before 2020,” said Prof. Ohno.

PhD Tran Dinh Thien from the Vietnam Economics Institute pointed out the lack of or weak development of the support industry in Vietnam, considering it a factor behind the development of the industrial sector. He said that State-owned enterprises, which are the mainstay of the national industrial sector, have mostly operated on a closed basis and barely need support industries. Meanwhile, the private business sector remains in its infancy and has been incapable and not encouraged to develop support industries. 

To establish a firm position in the region, Mr Thien said that Vietnam should strive to reach the average GDP level of Malaysia, Thailand, the Philippines and Indonesia which have the highest GDP in Southeast Asia (around US$200 billion). In addition, its GDP per capita should be a two-digit figure. 

He quoted the latest statistics as saying if Vietnam continues to maintain its GDP growth rate as at present (which doubles every 10 years), it will lag far behind other countries in Southeast Asia by 2020 in terms of annual average GDP per capita.

At the workshop, specialists also spoke of barriers to Vietnam’s industrialisation strategy, including the monopoly of several State-owned enterprises, slow progress in administrative reform and poor State management capacity.

For Vietnam, deeper international integration reveals the weaknesses of the industrial sector, particularly its poor competitive capacity. Competitive pressure is increasing, as the country has to facilitate trade liberalisation and compete equally with developed countries. In this context, a national economic development strategy should be built to meet the ultimate goal of increasing the international competitive capacity. (VOV)

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