Nation must ‘ensure balanced development'

by Mi Bong

Tam Binh Street in HCM City's Thu Duc District is flooded after heavy rains. Experts say Viet Nam should take more steps to minimise the impacts of climate change when formulating its socio-economic plans. — VNA/VNS Photo Trang Duong

HCM CITY — Viet Nam should ensure that its economic and social needs are balanced, and that its development vision is long-term, experts said at a conference in HCM City on Tuesday.

While agreeing that the priority should be accorded in coming years to maintaining macroeconomic stability and sustaining the growth momentum, both national and international experts said this cannot be achieved at the expense of the natural environment.

The impacts of climate change on socio-economic development were also discussed at the two-day seminar organised by the United Nations Development Programme, Viet Nam's Academy of Social Science and the Committee for Economic Affairs of the National Assembly.

Do Hoai Nam, chairman of the Viet Nam Academy of Social Science, said the nation should develop long-term strategies that take into consideration the world economic situation in the future and its likely impacts on the Vietnamese economy.

Referring to the overall socio-economic development goals for the 2011-15 period with a vision to 2020, Nam said key tasks included inflation control, effective implementation of monetary and fiscal policies, land law amendments, and policies for developing high-quality human resources.

"A social security system that covers the entire country, especially its remote areas, is also vitally important," he said.

He called on the State Bank of Viet Nam to follow a cautious monetary policy to control credit growth and money supply. The central bank should also continue improving its capacity to supervise the financial-monetary system effectively, he added.

Climate change

Measures to protect the environment and cope with climate change were vital for sustainable economic development, he said.

Nam also stressed the important role of State management in the economic restructuring process.

John Hendra, United Nations Resident Coordinator in Viet Nam said in the current domestic and international context, achieving the two objectives of stability and growth required monitoring of all relevant indicators, including inflation, exchange rate, the level and structure of public debt, and the amount of foreign reserves.

"While we all recognise the importance of macroeconomic stability and growth, it is also important to recall that sound development is one that balances economic and social needs," he said.

He also spoke of the need to strengthen links between the National Assembly and research institutions, academic circles and individual experts.

In the first nine months of this year, Viet Nam has seen some recovery from the economic downturn. The GDP grew by 6.4 per cent in the second quarter, up from 5.83 per cent in the first, with sustained high monthly industrial output growth rates of over 14 per cent compared to the same period of last year, the seminar noted.

Inflation has cooled down in the second and third quarter. The accumulative inflation rate was 4.99 per cent till the end of August, possibly enabling the containment of annual inflation rate within the target range of 8-8.5 per cent.

Deficit concerns

However, the lending rate of over 13 per cent has created difficulties for businesses in a market that is not expanding rapidly, speakers noted.

Macroeconomic stability could be threatened if inflation is extended alongside increased pressure of trade deficit, foreign exchange and possible widening of the budget deficit, according to the speakers.

Over the last 10 years, public investments, including State budget investments and investments by State-owned enterprises have increased significantly, absorbing a lot of credit and making it very difficult to curb budget deficit, experts noted.

Vo Dai Luoc of the Viet Nam Asia-Pacific Economic Centre suggested that Viet Nam prioritises development of the private sector as a key motivating force for national economic development; and also ensure greater transparency in its financial system.

Nguyen Minh Phong of the Ha Noi-based Academy of Economic and Social Development Research said the adjustment of exchange rates effected in the recent past was necessary and correct as a measure to curb inflation.

He said that in the coming time, there was a need to adjust the exchange rate flexibly according to market situations. Businesses need to watch out for exchange rate fluctuations and accommodate them in their dealings to avoid losses, he said. — VNS

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Sustainable tourism development discussed

Photo: Tuoi Tre

Delegates from Indonesia, Malaysia, South Korea, the Philippines, Mongolia and Vietnam discussed sustainable tourism development at a workshop in Ha Long City of the northern coastal Quang Ninh Province on Tuesday.

At the workshop held within the framework East Asia Inter-Regional Tourism Forum (EATOF), Asso. Prof. Tran Thi Minh Hoa from the University of Social Sciences and Humanities Tourism Faculty spoke of advantages for the development of sea, sports, cultural and ecological tourism models in Quang Ninh province.

Quang Ninh is one of the country’s four tourism centers and the home of world-famous Ha Long Bay, twice recognized by the UNESCO for its landscapes and geological values, said Hoa.

The delegates suggested Quang Ninh could zone off deluxe tourism areas, invest in clean energy, develop tourism products and engage in human resources training.

Meanwhile, Dr Milagros C. Espina from the San Jose University of the Philippines introduced a waste management and natural resources program called Winning over Waste (WOW).

The success of WOW will encourage similar activities in EATOF and reduce the threat of climate change, he said, emphasizing the necessity for the exchange of information among cultures on WOW and other initiatives.

EATOF must have a comprehensive policy on environmental protection from climate change and develop a program for its members to assist one another, he said.

The workshop also heard speeches on rural tourism development in Indonesia’s Yogyakarta province, tourism education in Mongolia, tourism under the ocean and a new change in adventurous tourism development in Sarawak in Malaysia.

An EATOF travel fair opened in Ha Long city on teh same day as one of the forum’s first activities.

The two-day fair saw the participation of travel agencies from eight provinces, namely Cebu (the Philippines), Gangwon (South Korea), Luang Prabang (Laos), Sarawak (Malaysia), Siem Reap (Cambodia), Tottori (Japan), Tuv (Mongolia) and Yogyakarta (Indonesia).

Vietnamese travel agencies from Hanoi, Quang Ninh and the northern port city of Hai Phong also introduced their tourism products at the event.

The second sea tourism and flight route committee was reestablished at a conference held by the EATOF organizing board on the same day.

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High disbursement shows positive economic signs

Photo: Tuoi Tre

A positive trend in economic development is reflected in the high disbursement of investment and development project funds.

Statistics show that an estimated VND92.1 trillion (US$4.7 billion) was disbursed from the State budget for development projects in the first eight months of the year, making up almost 74 percent of the annual plan.

Disbursement of Official Development Assistance (ODA) commitments reached over $1.8 billion, or 74.5 percent of the annual target and 13.5 percent increase year on year.

Foreign Direct Investment (FDI) saw up to $7.25 billion disbursed, representing an increase of 3.6 percent over the same period last year.

The Ministry of Planning and Investment (MPI) forecast that development investment this year is expected to reach VND800 trillion, accounting for 41.37 percent of gross domestic product and representing a growth of 12.9 percent year on year.

Once the disbursement is reached, it would be the second consecutive year Vietnam has surpassed the annual target for development investment, said MPI.

The trend was of primary importance for Vietnam since the country is largely dependent on investment for economic growth, the ministry explained.

The figures have shown the great efforts made by the Government, ministries, industries and local administrations to mobilise different financial sources for development amid post-crisis economic difficulties worldwide.

The figures were evidence of investors’ and partners’ confidence in Vietnam’s potential for growth, MPI said.

Problems, however, remain with cumbersome administrative procedures and limited management competence.

Experts have called on responsible agencies to move promptly in reviewing and adjusting relevant policies and streamlining administrative procedures in an effort to increase the country’s capacity to absorb investment.

The Director of the National Centre for Socio-Economic Information and Forecast, Le Dinh An, said measures to lure FDI should be associated with economic restructuring and geared to concrete industries and products.

Such an orientation should be also applied to ODA fundraising, he added.

National Assembly Vice Chairman Nguyen Duc Kien proposed an early orientation for mobilising and using ODA at a workshop in July.

He also called for relevant agencies to make objective evaluations of national debts in support of mobilising financial sources for economic development.

 

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High disbursement shows positive economic signs

Photo: Tuoi Tre

A positive trend in economic development is reflected in the high disbursement of investment and development project funds.

Statistics show that an estimated VND92.1 trillion (US$4.7 billion) was disbursed from the State budget for development projects in the first eight months of the year, making up almost 74 percent of the annual plan.

Disbursement of Official Development Assistance (ODA) commitments reached over $1.8 billion, or 74.5 percent of the annual target and 13.5 percent increase year on year.

Foreign Direct Investment (FDI) saw up to $7.25 billion disbursed, representing an increase of 3.6 percent over the same period last year.

The Ministry of Planning and Investment (MPI) forecast that development investment this year is expected to reach VND800 trillion, accounting for 41.37 percent of gross domestic product and representing a growth of 12.9 percent year on year.

Once the disbursement is reached, it would be the second consecutive year Vietnam has surpassed the annual target for development investment, said MPI.

The trend was of primary importance for Vietnam since the country is largely dependent on investment for economic growth, the ministry explained.

The figures have shown the great efforts made by the Government, ministries, industries and local administrations to mobilise different financial sources for development amid post-crisis economic difficulties worldwide.

The figures were evidence of investors’ and partners’ confidence in Vietnam’s potential for growth, MPI said.

Problems, however, remain with cumbersome administrative procedures and limited management competence.

Experts have called on responsible agencies to move promptly in reviewing and adjusting relevant policies and streamlining administrative procedures in an effort to increase the country’s capacity to absorb investment.

The Director of the National Centre for Socio-Economic Information and Forecast, Le Dinh An, said measures to lure FDI should be associated with economic restructuring and geared to concrete industries and products.

Such an orientation should be also applied to ODA fundraising, he added.

National Assembly Vice Chairman Nguyen Duc Kien proposed an early orientation for mobilising and using ODA at a workshop in July.

He also called for relevant agencies to make objective evaluations of national debts in support of mobilising financial sources for economic development.

 

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Economist discusses Vietnam’s economic growth

As policymakers are about to release Vietnam’s socioeconomic development strategies for 2011-2020, Tran Dinh Thien, chief of the Vietnam Institute of Economics, talks to Tuoi Tre about the challenges which lay ahead and provides recommendations for Vietnamese policymakers.

What are the main challenges for Vietnam in the next 10 years?

Though the 25-year economic reforms have really boosted Vietnam’s socioeconomic development, the country is now facing four obstacles that should be addresses.

The per-annum growth exceeding 7 percent that Vietnam has kept for 25 years is yet to qualify as sustainable in line with economic determinations of sustainable development for any nation enjoying an annual growth rate of 5 percent over 10-15 years.

Secondly, despite the high GDP growth rates of the past years, our per capita GDP still lags behind that of other nations in the region.

Thirdly, the country has yet to fully benefit from WTO’s integration as its economic engine seems to be running out of steam.

Fourthly, giving the recent global economic downturn, we had to issue a lot of money to contain the domestic market’s financial crunch, said to spur inflation. But the consumer price index, the gauge of inflation, is weakening, while macroeconomic stability has yet been achieved.

What are chronic downsides of Vietnam’s economy?

Though the national economy seems to have matured, our chronic economic diseases including budget deficit, trade deficit and unequal income distribution, have yet been treated.

Rising issues like corruption, the disproportionate allocation of national resources to large state-run national conglomerates at the cost of the needy private sector and complicated administrative procedures are additional symptoms that may drag the country to the so-called middle-income trap.

What is the middle-income trap?

Many countries have, in the past, reached the US$3,000-8,000 GDP per capita target by relying on cheap labor and abundant natural resources. But they found themselves stuck in the middle-income trap no longer able to achieve sustainable growth.

Since their low-cost labor force and resources advantages have run out, they now have to contain environmental pollution, income discrimination and social conflict all brought upon by their past growth-at-all-cost policies.

It is easy to get caught in such traps as many countries like Mexico, Brazil and Argentina with a per capita GDP of $5,000-$7,000 and Thailand, Indonesia and the Philippines with GDP per capita of $3,000-$4,000 can attest.

But there are also success stories such as our neighbors Korea, Taiwan and Singapore.

Has Vietnam’s past development posed such risk?

Since Vietnam is barely testing the water with a new level of per capita GDP at around $1,200, we should carefully follow good examples to avoid being trapped in the near future when income reaches $3,000-$5,000.

Vietnam is sailing in risky waters since it doesn’t have any large enough corporation able to compete with international counterparts in teams of capitals, management capacity, international standards implementation and high-tech production.

So what will be the way for Vietnam to go?

Vietnam’s socioeconomic development plan for the next decade must factor in the recent global economic slump requiring all nations to rethink their development strategies.

Vietnam’s economy must be redirected to apply hi-tech and environmental-friendly technologies and away from outdated strategies relying on cheap-labor and natural resources’ exploitation.

Most of our resources were set aside for giant state-owned groups, so will they be the drive engines helping Vietnam get out of dangerous waters?

Large groups like Japan’s Toyota and Korea’s Samsung are the backbones of many economies and are the driving forces in technological invention and innovation.

But in the Vietnamese context, state-run conglomerates cannot perform as effectively as those in developed nations, so we should also provide the private sector with a chance to become the driving force.

If the private sector is not taken into account as a main driving force in our development strategies, we might miss a chance for the country’s development.

Do you think that is realistic given state-run groups can access large-scale loans worth some thousands of trillions of dongs while the private sector never stands such a chance?

We have talked a lot about how to stop economic wastage and unequal distribution of resources. Money should not be channeled to those who cannot use it in the most effective way; needless to say they are state-run or private businesses.

So the government’s development strategies should entail allocating privileged resources to needy economic sectors without discriminating private firms.

The responsibilities and cooperation between state management agencies must also be regulated as clearly as possible so as to leave room for creative ideas and better management.

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Economist discusses Vietnam’s economic growth

As policymakers are about to release Vietnam’s socioeconomic development strategies for 2011-2020, Tran Dinh Thien, chief of the Vietnam Institute of Economics, talks to Tuoi Tre about the challenges which lay ahead and provides recommendations for Vietnamese policymakers.

What are the main challenges for Vietnam in the next 10 years?

Though the 25-year economic reforms have really boosted Vietnam’s socioeconomic development, the country is now facing four obstacles that should be addresses.

The per-annum growth exceeding 7 percent that Vietnam has kept for 25 years is yet to qualify as sustainable in line with economic determinations of sustainable development for any nation enjoying an annual growth rate of 5 percent over 10-15 years.

Secondly, despite the high GDP growth rates of the past years, our per capita GDP still lags behind that of other nations in the region.

Thirdly, the country has yet to fully benefit from WTO’s integration as its economic engine seems to be running out of steam.

Fourthly, giving the recent global economic downturn, we had to issue a lot of money to contain the domestic market’s financial crunch, said to spur inflation. But the consumer price index, the gauge of inflation, is weakening, while macroeconomic stability has yet been achieved.

What are chronic downsides of Vietnam’s economy?

Though the national economy seems to have matured, our chronic economic diseases including budget deficit, trade deficit and unequal income distribution, have yet been treated.

Rising issues like corruption, the disproportionate allocation of national resources to large state-run national conglomerates at the cost of the needy private sector and complicated administrative procedures are additional symptoms that may drag the country to the so-called middle-income trap.

What is the middle-income trap?

Many countries have, in the past, reached the US$3,000-8,000 GDP per capita target by relying on cheap labor and abundant natural resources. But they found themselves stuck in the middle-income trap no longer able to achieve sustainable growth.

Since their low-cost labor force and resources advantages have run out, they now have to contain environmental pollution, income discrimination and social conflict all brought upon by their past growth-at-all-cost policies.

It is easy to get caught in such traps as many countries like Mexico, Brazil and Argentina with a per capita GDP of $5,000-$7,000 and Thailand, Indonesia and the Philippines with GDP per capita of $3,000-$4,000 can attest.

But there are also success stories such as our neighbors Korea, Taiwan and Singapore.

Has Vietnam’s past development posed such risk?

Since Vietnam is barely testing the water with a new level of per capita GDP at around $1,200, we should carefully follow good examples to avoid being trapped in the near future when income reaches $3,000-$5,000.

Vietnam is sailing in risky waters since it doesn’t have any large enough corporation able to compete with international counterparts in teams of capitals, management capacity, international standards implementation and high-tech production.

So what will be the way for Vietnam to go?

Vietnam’s socioeconomic development plan for the next decade must factor in the recent global economic slump requiring all nations to rethink their development strategies.

Vietnam’s economy must be redirected to apply hi-tech and environmental-friendly technologies and away from outdated strategies relying on cheap-labor and natural resources’ exploitation.

Most of our resources were set aside for giant state-owned groups, so will they be the drive engines helping Vietnam get out of dangerous waters?

Large groups like Japan’s Toyota and Korea’s Samsung are the backbones of many economies and are the driving forces in technological invention and innovation.

But in the Vietnamese context, state-run conglomerates cannot perform as effectively as those in developed nations, so we should also provide the private sector with a chance to become the driving force.

If the private sector is not taken into account as a main driving force in our development strategies, we might miss a chance for the country’s development.

Do you think that is realistic given state-run groups can access large-scale loans worth some thousands of trillions of dongs while the private sector never stands such a chance?

We have talked a lot about how to stop economic wastage and unequal distribution of resources. Money should not be channeled to those who cannot use it in the most effective way; needless to say they are state-run or private businesses.

So the government’s development strategies should entail allocating privileged resources to needy economic sectors without discriminating private firms.

The responsibilities and cooperation between state management agencies must also be regulated as clearly as possible so as to leave room for creative ideas and better management.

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High disbursement shows positive economic signs

A positive trend in economic development is reflected in the high disbursement of investment and development project funds.

Statistics show that an estimated 92.1 trillion VND (roughly 4.7
billion USD) was disbursed from the State budget for development
projects in the first eight months of the year, making up almost 74
percent of the annual plan. Disbursement of Official Development
Assistance (ODA) commitments reached over 1.8 billion USD, or 74.5
percent of the annual target and 13.5 percent increase year on year.
Foreign Direct Investment (FDI) saw up to 7.25 billion USD disbursed,
representing an increase of 3.6 percent over the same period last year.

The Ministry of Planning and Investment (MPI)
forecast that development investment this year is expected to reach 800
trillion VND, accounting for 41.37 percent of gross domestic product and
representing a growth of 12.9 percent year on year.

Once the disbursement is reached, it would be the second consecutive
year Vietnam has surpassed the annual target for development
investment, said MPI.

The trend was of primary
importance for Vietnam since the country is largely dependent on
investment for economic growth, the ministry explained.

The figures have shown the great efforts made by the Government,
ministries, industries and local administrations to mobilise different
financial sources for development amid post-crisis economic difficulties
worldwide.

The figures were evidence of investors’ and partners’ confidence in Vietnam’s potential for growth, MPI said.

Problems, however, remain with cumbersome administrative procedures and limited management competence.

Experts have called on responsible agencies to move promptly in
reviewing and adjusting relevant policies and streamlining
administrative procedures in an effort to increase the country’s
capacity to absorb investment.

The Director of the
National Centre for Socio-Economic Information and Forecast, Le Dinh
An, said measures to lure FDI should be associated with economic
restructuring and geared to concrete industries and products.

Such an orientation should be also applied to ODA fundraising, he added.

National Assembly Vice Chairman Nguyen Duc Kien proposed an early
orientation for mobilising and using ODA at a workshop in July.

He also called for relevant agencies to make objective evaluations of
national debts in support of mobilising financial sources for economic
development./.

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Land reserve will help douse property fevers: experts

HANOI – Experts and officials at a seminar on urban development in Hanoi on Saturday called for a new approach to urbanization management in the capital city by increasing land reserves to choke off property fevers there.

Pham Sy Liem, director of the Urban Research and Infrastructure Development Institute, remarked that land fevers often took place soon after any urban planning schemes were announced. Recent fevers in new urban areas of Duong Noi, An Khanh, and even in the farming area of Ba Vi indicated that current urban land management has failed, he said.

“Therefore, to fight land manipulators and to make the most from land for development, urban administrators need to build up land reserves right at the time they make any urban planning scheme,” Liem told the seminar.

He asserted that land reserves would provide a strong vehicle for the urban administrator to manage the property market in urban areas, adding “it is high time the country formulate a complete institutional mechanism on land reserves.”

The new mechanism, according to Liem, will help prevent the situation of land prices being chased up year after year while people affected by development projects are still unhappy with the rising compensations.

Duong Duc Tuan, deputy director of Hanoi City’s Department of Planning and Architecture, agreed to Liem’s viewpoint, saying land reserves were the basic resource for urban development in the capital city.

Those areas with ample land reserves would have better conditions for infrastructure development, especially for projects under the forms of Build-Transfer and Build-Operate-Transfer forms, he said.

Dang Hung Vo, former Deputy Minister of Natural Resources and Environment, stressed the need to improve land management to avoid corruption in the sector.

“We must look for strong methods to manage land under planning schemes, otherwise some people will gain hefty profits from land manipulation while others will suffer when their land is revoked for development projects,” Vo said.

He added that urban land must be seen as capital resources, so a right approach to urban planning would be the decisive factor to determine urban development.

Liem of the Urban Research and Infrastructure Development Institute said that the development of land reserves would also help collect most benefits from land for the State budget.

Under the master plan on urban development between now and 2025 with a vision to 2050 that was approved by the Prime Minister last year, there should have some 910 urban towns and cities in the country by 2020. The population in cities should reach 44 million, or 45% of the country’s population by then.

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Government keen to grow electricity industry

The Government will speed up programmes to generate electricity from
renewable energies and soon adopt a clear and favourable mechanism for
the electricity industry to grow as it is crucial for national
development.

The question of how to spur the development of the electricity industry
caught the special interest of cabinet members at their regular monthly
meeting in Hanoi on August 30-31 under the chair of Prime Minister
Nguyen Tan Dung.

The government’s plan for the issue is to
encourage all economic sectors to join hands with the State in investing
and boosting the growth of this important industry.

The PM asked the Ministry of Industry and Trade to focus investments on raising power output to prevent shortages in the future.

Discussing
the socio-economic development plan for 2011, which is the first year
in the next five-year development plan, and the 2011-2020 development
strategy, PM Dung said the general goal of 2011 is to strengthen
macro-economic stability to achieve a growth rate higher than that of
2010 and step up the economic restructuring.

The other goals are
to ensure social security and social welfare to further improve people’s
living conditions while assuring political security, social order and
safety, he said.

The PM proposed the Government target a GDP
growth rate of 7.5 percent, CPI year-on-year rise of 7 percent, and
trade deficit below 18 percent for 2011.

He underscored the need
to pay special attention to vocational training and considered it an
important index to serve the country’s economic shift in 2011.

PM
Dung also requested formulation of mechanisms and policies to support
national target programmes, and listed the rural development programme
as Government target for the 2011-2015 period.

At the meeting,
cabinet members heard about good performance of the national economy in
the last eight months with industrial production growing 15.2 percent
year-on-year.

CPI rose slightly - 0.23 percent in August against July - the Ministry of Planning and Investment reported.

Also
at this meeting, cabinet members heard reports on inspections, the
settlement of petitions and denunciations, the fight against corruption,
and administrative reform.

They debated a draft decree guiding
the implementation of several articles of the Enterprise Law, the draft
ordnance on management, and use of weapons, explosive materials and
supportive tools, and a bill amending the Cooperatives Law./.

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Economist discusses Vietnam’s development strategies

As policymakers are about to release Vietnam’s socioeconomic development strategies for 2011-2020, Tran Dinh Thien, chief of the Vietnam Institute of Economics, talks to Tuoi Tre about the challenges which lay ahead and provides recommendations for Vietnamese policymakers.

What are the main challenges for Vietnam in the next 10 years?

Though the 25-year economic reforms have really boosted Vietnam’s socioeconomic development, the country is now facing four obstacles that should be addresses.

The per-annum growth exceeding 7 percent that Vietnam has kept for 25 years is yet to qualify as sustainable in line with economic determinations of sustainable development for any nation enjoying an annual growth rate of 5 percent over 10-15 years.

Secondly, despite the high GDP growth rates of the past years, our per capita GDP still lags behind that of other nations in the region.

Thirdly, the country has yet to fully benefit from WTO’s integration as its economic engine seems to be running out of steam.

Fourthly, giving the recent global economic downturn, we had to issue a lot of money to contain the domestic market’s financial crunch, said to spur inflation. But the consumer price index, the gauge of inflation, is weakening, while macroeconomic stability has yet been achieved.

What are chronic downsides of Vietnam’s economy?

Though the national economy seems to have matured, our chronic economic diseases including budget deficit, trade deficit and unequal income distribution, have yet been treated.

Rising issues like corruption, the disproportionate allocation of national resources to large state-run national conglomerates at the cost of the needy private sector and complicated administrative procedures are additional symptoms that may drag the country to the so-called middle-income trap.

What is the middle-income trap?

Many countries have, in the past, reached the US$3,000-8,000 GDP per capita target by relying on cheap labor and abundant natural resources. But they found themselves stuck in the middle-income trap no longer able to achieve sustainable growth.

Since their low-cost labor force and resources advantages have run out, they now have to contain environmental pollution, income discrimination and social conflict all brought upon by their past growth-at-all-cost policies.

It is easy to get caught in such traps as many countries like Mexico, Brazil and Argentina with a per capita GDP of $5,000-$7,000 and Thailand, Indonesia and the Philippines with GDP per capita of $3,000-$4,000 can attest.

But there are also success stories such as our neighbors Korea, Taiwan and Singapore.

Has Vietnam’s past development posed such risk?

Since Vietnam is barely testing the water with a new level of per capita GDP at around $1,200, we should carefully follow good examples to avoid being trapped in the near future when income reaches $3,000-$5,000.

Vietnam is sailing in risky waters since it doesn’t have any large enough corporation able to compete with international counterparts in teams of capitals, management capacity, international standards implementation and high-tech production.

So what will be the way for Vietnam to go?

Vietnam’s socioeconomic development plan for the next decade must factor in the recent global economic slump requiring all nations to rethink their development strategies.

Vietnam’s economy must be redirected to apply hi-tech and environmental-friendly technologies and away from outdated strategies relying on cheap-labor and natural resources’ exploitation.

Most of our resources were set aside for giant state-owned groups, so will they be the drive engines helping Vietnam get out of dangerous waters?

Large groups like Japan’s Toyota and Korea’s Samsung are the backbones of many economies and are the driving forces in technological invention and innovation.

But in the Vietnamese context, state-run conglomerates cannot perform as effectively as those in developed nations, so we should also provide the private sector with a chance to become the driving force.

If the private sector is not taken into account as a main driving force in our development strategies, we might miss a chance for the country’s development.

Do you think that is realistic given state-run groups can access large-scale loans worth some thousands of trillions of dongs while the private sector never stands such a chance?

We have talked a lot about how to stop economic wastage and unequal distribution of resources. Money should not be channeled to those who cannot use it in the most effective way; needless to say they are state-run or private businesses.

So the government’s development strategies should entail allocating privileged resources to needy economic sectors without discriminating private firms.

The responsibilities and cooperation between state management agencies must also be regulated as clearly as possible so as to leave room for creative ideas and better management.

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Economist discusses Vietnam’s development strategies

As policymakers are about to release Vietnam’s socioeconomic development strategies for 2011-2020, Tran Dinh Thien, chief of the Vietnam Institute of Economics, talks to Tuoi Tre about the challenges which lay ahead and provides recommendations for Vietnamese policymakers.

What are the main challenges for Vietnam in the next 10 years?

Though the 25-year economic reforms have really boosted Vietnam’s socioeconomic development, the country is now facing four obstacles that should be addresses.

The per-annum growth exceeding 7 percent that Vietnam has kept for 25 years is yet to qualify as sustainable in line with economic determinations of sustainable development for any nation enjoying an annual growth rate of 5 percent over 10-15 years.

Secondly, despite the high GDP growth rates of the past years, our per capita GDP still lags behind that of other nations in the region.

Thirdly, the country has yet to fully benefit from WTO’s integration as its economic engine seems to be running out of steam.

Fourthly, giving the recent global economic downturn, we had to issue a lot of money to contain the domestic market’s financial crunch, said to spur inflation. But the consumer price index, the gauge of inflation, is weakening, while macroeconomic stability has yet been achieved.

What are chronic downsides of Vietnam’s economy?

Though the national economy seems to have matured, our chronic economic diseases including budget deficit, trade deficit and unequal income distribution, have yet been treated.

Rising issues like corruption, the disproportionate allocation of national resources to large state-run national conglomerates at the cost of the needy private sector and complicated administrative procedures are additional symptoms that may drag the country to the so-called middle-income trap.

What is the middle-income trap?

Many countries have, in the past, reached the US$3,000-8,000 GDP per capita target by relying on cheap labor and abundant natural resources. But they found themselves stuck in the middle-income trap no longer able to achieve sustainable growth.

Since their low-cost labor force and resources advantages have run out, they now have to contain environmental pollution, income discrimination and social conflict all brought upon by their past growth-at-all-cost policies.

It is easy to get caught in such traps as many countries like Mexico, Brazil and Argentina with a per capita GDP of $5,000-$7,000 and Thailand, Indonesia and the Philippines with GDP per capita of $3,000-$4,000 can attest.

But there are also success stories such as our neighbors Korea, Taiwan and Singapore.

Has Vietnam’s past development posed such risk?

Since Vietnam is barely testing the water with a new level of per capita GDP at around $1,200, we should carefully follow good examples to avoid being trapped in the near future when income reaches $3,000-$5,000.

Vietnam is sailing in risky waters since it doesn’t have any large enough corporation able to compete with international counterparts in teams of capitals, management capacity, international standards implementation and high-tech production.

So what will be the way for Vietnam to go?

Vietnam’s socioeconomic development plan for the next decade must factor in the recent global economic slump requiring all nations to rethink their development strategies.

Vietnam’s economy must be redirected to apply hi-tech and environmental-friendly technologies and away from outdated strategies relying on cheap-labor and natural resources’ exploitation.

Most of our resources were set aside for giant state-owned groups, so will they be the drive engines helping Vietnam get out of dangerous waters?

Large groups like Japan’s Toyota and Korea’s Samsung are the backbones of many economies and are the driving forces in technological invention and innovation.

But in the Vietnamese context, state-run conglomerates cannot perform as effectively as those in developed nations, so we should also provide the private sector with a chance to become the driving force.

If the private sector is not taken into account as a main driving force in our development strategies, we might miss a chance for the country’s development.

Do you think that is realistic given state-run groups can access large-scale loans worth some thousands of trillions of dongs while the private sector never stands such a chance?

We have talked a lot about how to stop economic wastage and unequal distribution of resources. Money should not be channeled to those who cannot use it in the most effective way; needless to say they are state-run or private businesses.

So the government’s development strategies should entail allocating privileged resources to needy economic sectors without discriminating private firms.

The responsibilities and cooperation between state management agencies must also be regulated as clearly as possible so as to leave room for creative ideas and better management.

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Scandinavia funds Mekong region energy efficiency

Finland and the Nordic Development Fund will provide 7.9 million euros ($10 million) to Vietnam, Cambodia, Laos, and Thailand to promote renewable energy, energy efficiency, and clean technologies under the aegis of the Energy and Environment Partnership Program for the Mekong region.

A memorandum of understanding was signed by the Vietnamese Ministry of Industry and Trade and the Finnish Ministry of Foreign Affairs in Hanoi Monday.

The EPP seeks to increase availability of and access to renewable energy (RE) services and renewable energy technology (RET) in rural areas, focusing on rural poor women and ethnic minorities.

It also aims at development of and investment in RE and RET, improving knowledge and tools to support RE projects, mapping out related policies and legislative framework, and promoting access to information and funds for RE and RET development.

It is expected to combat climate change while providing sustainable energy services to those who lack them.

EEP will fund projects by public entities, companies, research institutions, universities, and civil social organizations.

NDF is a development agency set up by the Nordic countries -- Denmark, Finland, Iceland, Norway and Sweden – that, in cooperation with other development agencies, grants financing for climate change interventions in developing countries.

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Plans on socio-economic development are crucial

HA NOI — Building the right development strategy for the future and mobilising resources for its implementation were critical steps for the future of the nation, Prime Minister Nguyen Tan Dung said here yesterday.

He was addressing a senior policy seminar on a draft of the National Socio-Economic Development Strategy (NSDS) for the next 10 years.

The seminar was attended by senior policymakers, representatives of research and business communities and development partners.

Dung said Viet Nam was preparing for rapid and sustainable growth to enable it to continue the growth resulting from 20 years of the doi moi (renewal) process.

He said the nation had recently crossed the per-capita income threshold to become a lower-middle-income country and now planned to become fully industrialised by 2020.

Dung said the development model that Viet Nam had relied on since doi moi was launched had led to rapid economic growth.

During this period, per-capita income had grown almost 10-fold – from less than US$100 a year in 1990 to about $1,200 in 2010. The poverty rate had also fallen from 58 per cent in 1993 to 14.5 per cent in 2008.

However, he said Viet Nam was facing challenges that had arisen from this rapid growth and improved status.

Dung's remarks were echoed by the president of the Viet Nam Academy of Social Sciences (VASS), Do Hoai Nam, who said the challenges Viet Nam faced in leaping over the ‘middle-income trap' were fierce.

He said the economic infrastructure was not well developed. Neither were urban and rural areas. The economy needed strengthening in specialised areas, there was only a small number of skilled workers, and the standards of science and technology were low compared to the region.

Nam said that to improve the situation, Viet Nam had to keep implementing its vision until 2050. "We need to specify catch-up strategies for every 10-year period," he added.

The national strategy is one of the most important documents guiding socio-economic development during the next two five-year plans. It is expected to be endorsed by the 11th Party Congress in January.

The Academy of Social Sciences will co-ordinate analytical inputs from research communities in and out of Viet Nam to provide inputs for the strategy. The World Bank will provide technical assistance to support substantive research-based evidence for senior policy makers and researchers.

Dung said that a draft of the strategy had been sent to all ministries, sectors and localities as well as big international organisations in Viet Nam to gather feedback.

He said the main objective of the strategy was for Viet Nam to become a modern industrialised country by 2020.

By 2020, GDP per capita was expected to reach about US$3,200 and real incomes about three-and-a-half times higher than at present.

The new strategy was based on five main viewpoints, said Dung. One of them was rapid development closely allied with sustainability. Democratic practices and optimal use of human resources were other key foundations.

He added that people were to be considered the main subject of the planned development - and the main resource.

Developing an increasingly independent and self-controlled economy in the context of broader international integration was also important.

Dung said the strategy aimed for three breakthroughs. These were the improvement of the socialist-oriented market economy, the quick development of human resources, and the building of a synchronised infrastructure.

The strategy highlighted the need to focus on improving the efficiency of State management.

Dung said the nation actively promoted the sharing of experiences on an international basis, strengthening resources and creating a suitable environment for national development.

The seminar led to a set of recommendations on the strategy to the Government. — VNS

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