Vietnam’s GDP could grow 13.6% in 2025, says Harvard professor

Vietnam’s GDP could grow 13.6% in 2025, says Harvard professor

Vietnam will enjoy strong economic and trade expansion if the country signs the Trans-Pacific Partnership (TPP) agreement, with gross domestic product (GDP) growth forecast at 13.6% in 2025, said Professor Robert Z Lawrence from Harvard Kennedy School.

Speaking at an international workshop on economic reform in Hanoi City on Tuesday, Lawrence said Vietnam’s exports and gross national product (GNP) would grow faster than other TPP participating nations given tax barrier removals by large markets such as the U.S. and Japan.

The TPP is a free trade agreement currently being negotiated between 12 countries including the U.S., Canada, Mexico, Peru, Chile, New Zealand, Australia, Singapore, Malaysia, Brunei, Vietnam and Japan.

Vietnam’s GDP growth rate may reach 13.6% in 2025, much higher than 0.4% of the U.S., 2.2% of Japan, 1.4% of Peru and 6.15% of Malaysia. Meanwhile, Vietnam’s exports will surge by 37.3%, higher than 4.4% of the U.S., 14% of Japan and 12.4% of Malaysia, the professor said.

Vietnam’s economy expanded by 5.42% last year. The GDP in the first quarter grew 4.96%, slightly higher than the rate in the same period of 2012 and 2013 (4.75% and 4.76% respectively).

Vo Tri Thanh, deputy director of the Central Institute for Economic Management (CIEM), said that the professor’s estimations were sound though his foundations were unclear.

However, Thanh explained that this did not mean that Vietnam could benefit the most from TPP. “Vietnam has a low starting point, so the nation can spring up at the highest speed compared to other countries,” he said.

Lawrence said that implementation of TPP commitments will help speed up domestic economic restructuring. Vietnam is striving for internal reforms during TPP negotiations, including reforms of institutions, State-owned enterprises (SOEs) and the banking system.

At present, SOEs usually receive favorable policies to access low-interest capital sources. The enterprises also see little impact from normal rules and get tax incentives and priority in signing procurement contracts.

CIEM director Nguyen Dinh Cung said that SOEs’ contributions did not correspond to priorities they have got.

Around 1,000 SOEs account for 45% of the total investment and fixed asset and 27% of the total outstanding loan. However, they contribute less than 17% of industrial output and generate jobs for just 1% of people of working age.

Lawrence said the SOEs chapter for the TPP negotiations would discuss natural competition between SOEs and private enterprises, transparency and financial structure of SOEs.

Therefore, TPP could be a fulcrum for domestic reforms, the professor said.

In addition, there would be adjustments in the local market when the TPP agreement is signed and some farmers and producers will be replaced.

Enterprises must renovate operations and some would have to struggle against the process, he added.

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