Vietnam should heed at least four megatrends that present risks and opportunities to its sustainable and competitive development, and should figure out how to leverage them to work in its advantage, Ousmane Dione, country director for the World Bank in Vietnam, has said.
The four specific megatrends are (i) shifting trade patterns, (ii) rise of the knowledge economy, (iii) climate change, and (iv) an aging population, Dione said in his opening remarks at the a national conference sustainable development goals.
Ousmane Dione, country director for the World Bank in Vietnam. Photo: VGP
Regarding shifting trade patterns, Dione noted that trade is slowing, which generates greater competition for countries like Vietnam. Vietnam has benefited from a robust FDI sector that has directly employed about 2.4 million workers. Yet neighboring countries, such as Cambodia and Myanmar, are emerging as competitors for low-skilled production jobs. In some cases, rapid technological change is even resulting in restoring of jobs back to home countries of FDI.
Vietnam can harness the shifting trade patterns to its advantage, he said. For example, there will be an increasing demand for manufactured goods from an expanding consumer class in Asia. The share of households with income for extra consumption in developing Asia countries is projected to rise from 20% in 2002 to 80% in 2030.
The rise of the knowledge economy
and automation is the second megatrend. 21st century workers require a more complex set of skills than in the past. This is being driven by automation, where machines are taking over for manual and routine jobs, as well as an increase in demand for products and services driven by the expanding consumer class.
A critical challenge in Vietnam is that only 8% of the labor force has a university education, which is insufficient to make the leap into the knowledge economy. Ethnic minorities, older workers, and pockets of youth in Vietnam are particularly vulnerable. While an economy that is more technology intensive has the potential to open up opportunities for better quality jobs, workers need to be equipped with the right skills mix to ride this wave.
The third megatrend poses a significant risk to Vietnam, and that is climate change
. Temperature increases per decade in Vietnam since the 1960s is double that of the global average. Rising sea-levels expose a third of Vietnam’s population to the risk of flooding, growing to more than 80% in the Mekong and Red River Deltas. Changing salinity threatens 2/3 of Vietnam’s fish from aquaculture. And land subsidence paired with increased salinity in the Mekong Delta, puts at risk the livelihood of 13.6 million rice farmers.
“Transformations in how we produce and conduct business are needed, and they are needed now,” he added. For example, primary producers could shift to drought, or flood, resistant crops or livestock. Tourism operators could diversify into regions that are less threatened by rising sea levels or high temperatures. The breakout session on the circular economy adds an important layer to today’s conference, in which we commit to extracting the maximum value from each resource in the production cycle.
The fourth megatrend is Vietnam’s aging population
. Vietnam is about to experience the fastest pace of population aging in history. The share of the population that is of working age peaked this year and will now start to decline. The share of the population aged 65 or over was 6.5% in 2017, and that is expected to reach 21% by 2050. That means one in every five people will be elderly.
This has many negative implications for Vietnam’s labor supply, long-term productivity growth, the pension and social assistance system. On the other hand, the care industry will likely expand to cater for the elderly population, as is currently occurring in developed Asia, Europe, and the U.S.
“Megatrends represent both sides of the coin – there are both risks and opportunities. The World Bank stands ready to support the government and private sector of Vietnam to strategically engage with megatrends,” he noted.