Wednesday, December 7 2016

VietNamNews

Current growth model unviable

Update: July, 18/2015 - 09:30

Do Duc Dinh, chairman of the Socio-economic Research Centre's Scientific Council, speaks to Hai Quan (Customs) newspaper about the pitfalls of growth based on extracting natural resources.

What do you think about the Planning and Investment Ministry's proposal to increase crude oil production in 2015 to 16 million tonnes, 400,000 tonnes higher than 2014?

Globally, people are discussing whether or not OPEC should increase crude oil production in the context of dropping world market prices. High production and low prices yield low benefit. However, faced with low budget revenues and high public debt, Viet Nam has no choice but to increase production to increase revenues as it tries to balance State Budget collection and spending.

Of course, this is tantamount to selling our natural resources at low prices to have money to spend instead of increased economic benefit.

We have talked quite a lot about changing our economic growth model for the 2013-20 period. Will increasing crude production prevent us from implementing the new model this year?

For many years, our growth has been based on the comparative advantages of natural resources and low labour costs. We decided that from 2013, we would change our growth model towards improving quality, efficiency and competitiveness. However, our growth continues to lean on extraction of natural resources, including crude oil. So our 2015 growth will depend more on raw materials than the knowledge economy, high quality human resources or hi-tech services.

It has been reported that our natural resources are being exhausted by many years of over-exploitation, particularly coal. What is your opinion?

Generally, products with comparative advantages like natural resources and cheap labour have their limitations. It is projected that in a few years time, Viet Nam will have to import coal because of overexploitation at home. This is also true of crude oil. Some people say we have about 10 years before our current deposits run out. Meanwhile the operation of new oil rigs are facing many difficulties. So, in the long run, a growth model based on natural resources extraction is not sustainable.

Is there any evidence that our growth model is indeed moving towards improved quality, efficiency and competitiveness that is based on advanced technology?

Advanced technology has already been applied in many fields and certain successes have been achieved. Looking back at 30 years of our renewal process, we can proudly say that some of our industries, like hydro-electricity, energy, mechanical engineering, the pulp industry and telecommunication have already applied advanced technology in their industries.

So the change to a new economic growth model is taking place, but at snail's pace. It is high time that we review and analyse what branches or industries have more comparative advantages than others and focus on them.

South Korea and Japan are the best countries for us to learn from. Though Viet Nam has become a middle income country, we have to try hard to avoid the "middle income trap".

Viet Nam has many comparative advantages that are good conditions for the nation to develop. However, I feel that we have been leaning too heavily on these advantages.

Just look at our neighbouring countries like Japan, South Korea and Singapore. Though they don't have rich natural resources like us, they know how to utilise their human resources. And they have been very successful. This is a good lesson for us to learn. — VNS



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