A young worker is painting potteries with enamel in a factory in Bat Trang Village, Hanoi
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Sandeep Mahajan, WB Chief Economist in Vietnam, underlined the declining productivity growth as the biggest challenge to the local economy due to shortcomings in production and use of natural resources of State-run businesses. The productivity of the non-State sector is also decreasing, he said, adding that it will be difficult for Vietnam to achieve a gross domestic product (GDP) growth of 7% in the future.
Experts said the main culprit lies in policy limitations. Tran Thi Lan Huong, a WB expert, recommended the State quickly improve the business environment to enhance the private sector’s competitive capacity and productivity, overhaul State-owned enterprises, restructuring agriculture and make full use of free trade agreements. Additionally, Vietnam should pay more attention to environmental protection and climate change adaptation to secure sustainable development, she noted.
Vice Chairman of the municipal People’s Committee Le Thanh Liem said the workshop offers an opportunity for managers and businesses to seek development measures in the field. He noted that the private economic sector contributes nearly 60 percent to the city’s GDP.
Though the number of private businesses in the city is growing strongly, typically they are of a small-scale with low productivity, he said, adding that the city will create the best working environment for both domestic and foreign enterprises. The city plans to develop e-government, improve social welfares, and promote international cooperation, he said.
Economist Pham Chi Lan, in her speech, urged for a favourable environment to enhance the private sector’s competitiveness and productivity, comprehensive reform of State-owned enterprises, market-oriented agricultural reform, tapping external trade opportunities, and joining global value chains.
General Secretary of the Vietnam Chamber of Commerce and Industry (VCCI) Pham Thi Thu Hang pointed out low productivity and the weakness of the private sector as hindrances to Vietnam’s economic growth. She said the weakness partly has its root in limited institutions, which once improved will create more development space for businesses, particularly those in the private sector.
To achieve the goal, the Vietnamese government and the World Bank drafted the Vietnam Report 2035 last July, which recommended six key transformations that Vietnam should make to reach upper-middle income status, including enabling economic modernisation with a productive and globally competitive private sector.
