Vietnam should consider new model for growth and development: ex-official
Vietnam should consider new model for growth and development: ex-official
Nguyen Si Dung, former deputy head of the National Assembly Office, has urged the adoption of the “enabling State” model of nurturing development and better serving the people to help Vietnam prosper, as it has done for other Asian countries, rather than the interventionist model currently in use, which works better for the United Kingdom and the United States due to differences in culture.
Dung was speaking at the Vietnam Reform and Development Forum 2019, under the theme “Vietnam – Aspiration for Prosperity: Priorities and Actions,” held in Hanoi today, September 19.
With the abandonment of the centralized planning model, there are only two other models left for Vietnam: the enabling government and the interventionist government, according to the former official.
In the past, the enabling State models, such as those used by China, South Korea, Japan and Singapore, have been widely discussed in Vietnam. “However, we are acting according to the interventionist government models of the United Kingdom and the United States. Our State increasingly depicts an adjustment model,” he said.
He noted that if Vietnam follows the interventionist State model, the country will fall into the middle income trap as the cultural characteristics of Vietnam are different from those of the United Kingdom and the United States.
Vietnam has already switched from a centrally planned economy to a market-oriented one, so the enabling State model is more appropriate as it is a transitional model, he explained.
“In this model, the role of the State in policy planning is crucial. China has followed this model, and its development is like a storm,” he stated.
“Since Vietnam is a country with the cultural background of Northeast Asia, the enabling State model may be optimal for Vietnam,” he stressed.
The Party and the State have set out on the path of industrializing the country and have recognized the market system, but it still attaches importance to the State’s management role.
The choice of the enabling State, according to the ex-official, has brought about development and prosperity for many countries.
“This is undeniable. As local firms are facing difficulties in doing business, this may be a vital method and a more appropriate choice for our country,” he added.
The middle income trap
Escaping the middle income trap is already a major challenge for emerging economies, including Vietnam, not to mention materializing the desire for prosperity, stated Minister of Planning and Investment Nguyen Chi Dung.
He stressed that Vietnam could not achieve these targets without sustained efforts to change the old mindset, pursue innovation and reform systems and policies.
Along with global development trends, Vietnam has bolstered its economic development with innovation and has increasingly adopted technological advances from the Fourth Industrial Revolution in socioeconomic sectors and State governance.
As a low-middle income country, Vietnam is still facing a number of challenges, including low productivity and competitiveness, according to the minister.
He added that Vietnam’s economy is driven by a market system where the remaining flaws need to be addressed to boost resource efficiency and ensure sustainable development.
Meanwhile, Ousmane Dione, World Bank Country Director for Vietnam, discussed two critical areas of reforms for Vietnam.
“As we look ahead to the next decade, I see opportunities, but I also see risks. We live in a volatile time, when borders have reappeared and trade tension is rising. At the same time, technological changes are occurring at an unprecedented pace: robotics and automation, 3D printing,” remarked Dione.
He noted that these developments are particularly important for Vietnam, which has been relying heavily on global trade as an engine of growth.
Vietnam’s economic model is also facing several domestic challenges, including a fast aging population, low capital formation and investment return, the degradation of its natural capital, human capital that needs to be enhanced and the likely decline in productivity gains, he added.
“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,” he said.
With the rapidly evolving Fourth Industrial Revolution, there is significant room for Vietnam to improve its productivity by moving closer to the global technological frontier, he stressed.
Dione also urged the Government to find ways to modernize its market institutions and national governance. This will enable private sector firms, including domestic ones, to flourish and become the engine of growth.
