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WB country director suggests two critical reform areas for Vietnam
The proposed reform areas will deal with the current growth model and “market” institutions.
Vietnam should consider two critical areas of reforms to make contribution to the formulation of Vietnam’s development roadmap for the next decade, World Bank (WB) Country Director for Vietnam Ousmane Dione made statement at Vietnam Reform and Development Forum 2019 in Hanoi on September 19.
“As we look ahead to the next decade, I see opportunities, but I also see risks. We live in a volatile time, when borders reappeared, and trade tension is rising. At the same time, technological changes are occurring at an unprecedented pace - robotics and automation, 3D printing to name a few,” Ousmane Dione said.
He stressed that these developments are particularly important for Vietnam, which has been relying heavily on global trade as an engine of growth.
At the time, Vietnam’s economic model is also facing several domestic challenges, including but not only a fast aging population, low capital formation and investment return, the degradation of its natural capital, human capital to enhance and likely declining productivity gains, Ousmane Dione added.
Therefore, while Vietnam has every potential to sustain its development success, bold reforms are required so that the country will be able to seize future opportunities and manage risks, with two critical areas of reforms.
The first reform area seeks to address a fundamental weakness of the current growth model. That is the excessive reliance on factor accumulation with limited contribution of productivity improvement.
With the rapidly evolving Industrial Revolution 4.0, there is a significant room for Vietnam to improve its productivity by moving closer to the global technological frontier.
The second reform area relates to “market” institutions. Despite impressive achievements in economic transformation, Vietnam has not been successful in creating an effective and efficient system of full-fledged market institutions.
This has hampered the healthy development of a dynamic competitive domestic private sector.
A well-designed Soci-economic Development Strategy is critical for Vietnam, but successful implementation will probably be more important. For this reason, priorities and actions need not only to be clearly identified but also practical to implement bearing in mind the local context and players.
“So, let us all think together and innovate. Let us be open, bold and ambitious but also practical and concrete,” Ousmane Dione concluded.
World Bank Country Director for Vietnam Ousmane Dione
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He stressed that these developments are particularly important for Vietnam, which has been relying heavily on global trade as an engine of growth.
At the time, Vietnam’s economic model is also facing several domestic challenges, including but not only a fast aging population, low capital formation and investment return, the degradation of its natural capital, human capital to enhance and likely declining productivity gains, Ousmane Dione added.
Therefore, while Vietnam has every potential to sustain its development success, bold reforms are required so that the country will be able to seize future opportunities and manage risks, with two critical areas of reforms.
The first reform area seeks to address a fundamental weakness of the current growth model. That is the excessive reliance on factor accumulation with limited contribution of productivity improvement.
With the rapidly evolving Industrial Revolution 4.0, there is a significant room for Vietnam to improve its productivity by moving closer to the global technological frontier.
The second reform area relates to “market” institutions. Despite impressive achievements in economic transformation, Vietnam has not been successful in creating an effective and efficient system of full-fledged market institutions.
This has hampered the healthy development of a dynamic competitive domestic private sector.
A well-designed Soci-economic Development Strategy is critical for Vietnam, but successful implementation will probably be more important. For this reason, priorities and actions need not only to be clearly identified but also practical to implement bearing in mind the local context and players.
“So, let us all think together and innovate. Let us be open, bold and ambitious but also practical and concrete,” Ousmane Dione concluded.
