His Excellency, Deputy Prime Minister, Vuong Dinh Hue,
His Excellency, Chairman of the Ho Chi Minh National Academy of Politics, Nguyen Xuan Thang,
His Excellency, Australian Ambassador to Vietnam, Craig Chittick,
Professor Nguyen Quang Thuan, President of Vietnam Academy of Social Sciences,
Ladies and gentlemen,
Good morning! Xin chào!
It is my great privilege and honor to join Professor Thuan in welcoming you to the workshop on Vietnam Economic Growth Model 2021-30, with a vision to 2045. I could not emphasize enough the strategic importance of our discussion today, because it will help shape Vietnam’s development path in the next few decades. I would like to thank all of you sincerely, thank Deputy Prime Minister Hue personally, for arranging your very busy schedule for this important event.
As Professor Thuan mentioned, today’s workshop aims to disseminate the findings of a joint study between four agencies: Prime Minister Economic Advisory Group, Vietnam Academy of Social Sciences, Ho Chi Minh National Academy of Politics, and the World Bank. I would like to thank Dr. Vu Viet Ngoan, Head of the Prime Minister Economic Advisory Group, for his strong leadership, and thank the teams for their strong collaboration throughout the process of our joint study. We’re grateful for the generous financial support of the Australian Government under the ABP2, which is critical for all leading up to today’s event.
Deputy Prime Minister Hue, Ladies and Gentlemen,
Strong economic growth is perhaps one of the most important pre-conditions for development success. Since Doi Moi took place in the late 1980s, Vietnam economic growth has been remarkable, the economy has expanded at an average of nearly seven percent annually. As a result, per capita income has increased almost fivefold. Vietnam today has emerged as a thriving lower middle-income economy and export powerhouse. Growth has also been inclusive, with poverty falling of just below seven percent, compared to more than sixty percent in the late 1980s.
But Vietnam’s journey to become a high-income economy has only just begun. In this new journey, what has been working in the past 30 years may not necessarily work in the future. The impacts of initial institutional and structural reforms seem to have reached their limit. Adjustments and changes to the growth model are urgently needed if Vietnam aspires to become a successful upper middle-income country by 2030 and a high-income country by 2045. Achieving this aspiration would require a strong and sustained performance over the course of more than 25 years, at least at the average rate of growth in the past 30 years. In addition, this target must be achieved in a challenging context. Domestically, Vietnam is facing rising structural headwinds, including a rapidly aging population, declining impact of factor accumulation, as well as an increasing environmental toll on development. Globally, Vietnam will have to navigate a changing terrain where shifting global trade and investment patterns seem to be less favorable for export-led growth and the Industrial Revolution 4.0 is reshaping opportunities and creating new risks.
So, what are the adjustments, and possibly, changes needed? Is export-led growth with a strong FDI sector still relevant? How will Vietnam continue to invest in infrastructure and human capital – which are vital ingredients for sustained growth? How to promote domestic private sector development so that they can drive innovation in the IR 4.0 era and growth more forcefully? How market institutions can be further reformed to support stronger and sustained growth?
Providing plausible answers to these questions would help us identify drivers for growth and reform agendas in the next few decades that will reinvigorate Vietnam’s potential and expand its development frontier.
Deputy Prime Minister Hue, Ladies and Gentlemen,
While leaving those critical questions for our discussion today, I would like to highlight two factors that are key for Vietnam’s future successes, regardless of the growth model that it will adopt.
First, QUALITY. Preliminary simulations indicate that Vietnam needs to move to a productivity-led growth, with substantial increase in the average growth rate of productivity, an achievement that has been attained by only a few countries to date. But raising productivity would require substantial improvement in all QUALITY aspects of growth. These include efficient resource allocation, improved quality of human capital, improved quality investment in infrastructure and service delivery, as well as innovation, making them all conducive for improved productivity. With respect to the last aspect, international experiences show that effective innovation requires an open-minded and well-sequenced reform agenda, and countries at different stage of development have different priorities in innovation. I believe that Vietnam can still enjoy significant gains from technology transfers and adoption, and firms should be placed at center in the innovation agenda. Having a business environment conducive to firm innovation would work better for Vietnam now than common supply-driven measures such as increased spending for R&D or focus on invention activities.
Second, IMPLEMENTATION. Vietnam’s development challenges today are far more complex than the past 30 years. A part of the complexity results from the fact that development issues are increasingly becoming multisectoral. Poverty reduction does not only require improved economic livelihood but also improved basic services and human capital development. Likewise, human capital development should not only be about education, but also be about health care throughout peoples’ lives as well as old-age care and social protection. Territorial/regional and private sector development are also multi-sectoral by nature. Addressing these complex issues requires a strong leadership and determination. It also requires effective and sophisticated governance system that ensures smooth coordination both horizontally across government ministries and vertically between different levels of the government. Continued strong institutional reforms that tackle the fundamental weaknesses relating to how the government provides services to businesses and citizens would be key to successful implementation of the strategies that we discuss today.
Deputy Prime Minister Hue, Ladies and Gentlemen,
The achievements that Vietnam has today are the tangible results of initial “Doi Moi” in 1986 as well as a series of bold market reforms that followed. Vietnam needs another “Doi Moi” today to achieve its aspiration for becoming a modern, high-income country by 2045. Living in the era of disruptive technologies that presents both challenges as well as opportunities, I would like to call it “Doi Moi 4.0”.
The World Bank Group has been privileged to accompany Vietnam throughout the country’s remarkable development over the past 30 years. But development will not stop at any arbitrary income level – every country is a developing country. We are excited to continue the strong and trusted partnership with Vietnam in the years to come, through comprehensive support, knowledge and financing, to address increasingly difficult development challenges. Vietnam’s successes are our successes, and together we can do it.
I believe we will have an interesting and highly relevant set of issues on our agenda this morning. To get the most out of the workshop, I hope that we will all be focused and succinct in our remarks and give others a chance to speak.
I look forward to a very productive dialogue.
Thank you! Xin cảm ơn!
