Despite the global economic downturn, Vietnam’s economy still grow 6.78 percent in 2010 with a total import-export value of US$157 billion, five times higher than 2000. Since the Law on Foreign Investment in Vietnam was issued in 1987, 92 countries and territories have invested with more than 12,463 projects in Vietnam worth US$194.6 billion, including implemented capital of nearly US$80 billion.
US$300 billion for investment in 2011-2015
Vietnam needs around US$300 billion for development investment in the 2011-2015 period, said Deputy Prime Minister Hoang Trung Hai on May 3 at the Vietnam Business Summit (VBS) under the framework of the 44th ADB annual meeting in Hanoi. Vietnam gives top priority to improving the business environment, restructuring development models, developing diverse markets, such as securities, services, labour, science and technology in order to liberalise investment and trade and make full use of domestic and foreign resources.
Mr Hai said the international community praised Vietnam’s development potential in the medium and long term periods and international donors provided a record high of nearly US$8 billion in ODA capital in 2010. This is a significant lever to further development in Vietnam.
Vietnam is one of countries that has received the most aid from the Asian Development Fund (ADF) and loans from the ADB.
Despite achieving significant results, Vietnam is still facing a lot of challenges and economic obstacles, for example the quality of growth, productivity, efficiency and competitive edge are low, the macroeconomic balance is not stable, and the market institutions and quality of human resources and infrastructure hinder development. There are also other issues such as narrowing the development gap with countries in the region and overcoming the difficulties middle income countries face.
ADB President Haruhiko Kurado said international economic integration opens capital and technological opportunities for Vietnam and its partners but it also brings many challenges, from macro policies to business management. He said he believes in strong development for Vietnam in the medium and long term periods.
Should have specific incentives
Vietnam has an abundant labour force with its population of 88 million, however, the country should pay more attention to dealing with the shortage of skilled workers and inadequate infrastructure, said Kuroda. He emphasized the important role of the private economic sector which contributes 47 percent of the GDP and generates jobs for 1.5 million people. To make full use of this sector, Vietnam should make more administrative reform and strengthen the ability to access land and credit. ADB praised Vietnam’s Project 30 to simplify administrative procedures, Mr Kuroda said.
Professor Kenochi Ohno said Vietnam will have to devise policies to promote intellectuals and sustainable development in the future. The country has to invest a lot to gain 1 percent growth but labour productivity still remains the same. He gave examples of other countries’ lessons from which Vietnam can learn, and three issues the country should deal with: inconsistent policies, poor coordination among ministries and departments, and inefficient cooperation among participants.
Economic experts warned Vietnam to avoid the common “traps” of middle income countries.
Some participants said that Vietnam should invest in the country’s strong fields such as human resources. However, Mr Hai also said 50 percent of exported Vietnamese agricultural products are raw and farmers are not able to make a better living even though productivity has increased. Vietnam will have to continue to invest to raise added value and help farmers improve their lives, Hai said.
Regarding Vietnam’s attracting FDI in fields that require a lot of workers, Mr Hai affirmed that the country has to implement these projects in order to generate jobs for local people in the initial period, then it can to shift to other fields with higher added value.