Jun 10, 2019 / 14:27

Vietnam urged to act rapidly or risks falling in middle-income trap

The Hanoitimes - Vietnam’s growth potential is diminishing unless substantial reforms are made, stated a World Bank expert.

Vietnam’s economy is narrowing the development gap with other countries, but the risk of falling into the middle-income trap remains latent if the country does not take prompt action, according to Sebastien Eckhardt, lead economist of the World Bank mission in Vietnam. 
Overview of the conference.
Overview of the conference.
Vietnam’s golden population structure, of which the proportion of laborers doubles the dependent population, would last for the next 22 years, and Vietnam’s growth potential is diminishing unless substantial reforms are made, Eckhardt said at a workshop discussing Vietnam’s growth quality in the 2021 – 2030 period on June 7. 

At the meeting, the World Bank’s Director in Vietnam Ousmane Dione said the world is changing at a rapid rate and Vietnam must catch up at the earliest with this opportunity or it risks being left behind. 

Dione said Vietnam is facing with a fast-aging population, a slowdown in productivity and low growth rate in investment expenditure, which are exerting negative impacts on Vietnam’s mid-term growth potential. 

The country’s current growth driving forces are expected to play a more diminished role in the next decade, Dione added. 

So the question would be the government should to have a right mindset and appropriate policies, ensuring the country’s sustainable and environmentally-friendly growth in the future, he stated, adding his strong belief for Vietnam to achieve its goal towards prosperity. 

Minister of Planning and Investment Nguyen Chi Dung acknowledged Vietnam’s current pace of socio-economic development has not been matched with its growth potential and advantages, coupled with the lack of sustainability. 

The foundation expected to help Vietnam become a modernized industrial country has not been as expected, while the country’s productivity and competitiveness remain at modest level, Dung continued. 

Additionally, Dung pointed to the lack of breakthroughs in developing high quality workforce and infrastructures, not to mentioned the widening gap between the rich and the poor. 

Dung requested international supports for Vietnam to identify and project future trends that could have direct impact on Vietnam’s economic growth. 

Moreover, a comprehensive assessment is required to evaluate bottlenecks for Vietnam’s development over the last five years, including solutions to realize the country’s growth potential. 

Vietnam is seeking recommendations in policies in terms of human resources and infrastructures development, green growth and sustainable development. 

The World Bank’s Eckhardt said Vietnam’s government should enhance its monitoring capability and tighten control on the capital pouring into the real estate sector and for consumption. 

Eckhardt noted the Vietnam should not over-depend on the banking sector, but deepen the capital market to support enterprises accessing capital in long-term. 

More importantly, the government must enhance competitiveness of the state-owned enterprises through privatization and fair competition, Eckhardt asserted.