HÀ NỘI – With its outstanding achievements over the past three decades, Việt Nam is a development success story and continues to perform well even amid the pandemic on a range of indicators, including trade, growth and human capital, Victoria Kwakwa, Vice President for East Asia and the Pacific at the World Bank, has said.
Addressing the third Vietnam Reform and Development Forum (VDRF 2020) themed 'Vietnam: Actions to Recover Growth towards Inclusiveness and Sustainability', Kwakwa stressed there was room for improvements in global value chain (GVC) development to meet Việt Nam's ambitious long-term development goal of becoming a high-income country by 2045 and narrow the development gaps with advanced economies.
According to her, Việt Nam’s participation in global and regional value chains remains limited, despite being “one of the most open economies in the world”.
Việt Nam's level of participation in GVCs remains well below its ASEAN peers such as Singapore, Thailand, Indonesia, Malaysia, and the Philippines, she said, noting that in 2018, the country earned only US$20.4 billion through GVCs, ranking 55th out of 174 countries. This is less than a quarter of the next ASEAN peer, the Philippines, which earned $84.8 billion and ranked 34th.
The level of Việt Nam’s participation in sophistication also remains low. The World Bank estimates that a 1 per cent increase in GVC participation boosts per capita income levels by more than 1 per cent - about twice as much as conventional trade, so strengthening GVC participation will be important for accelerating Việt Nam's productivity and growth.
To be well prepared for a strong recovery and make the most of emerging opportunities, Kwakwa said in the short term, Việt Nam needed to continue to contain the coronavirus and consolidate activities that could accelerate a strong recovery.
She said she believed Việt Nam should continue to ease entry and operational FDI restrictions.
In the medium term, being well-prepared for the “new normal” of GVCs is important, according to the WB official. Supply chains cannot be established overnight, and companies still have to overcome the expensive and time-consuming process of relocation.
In the longer term, Việt Nam needs to narrow the productivity gap and move towards the productivity frontier.
For Việt Nam, emphasis need be placed on skills development and R&D capacity building, as well as effective implementation of the country's breakthrough on institutional reform.
Việt Nam needs to be prepared for the future shift in GVCs and mitigate the potential adverse impact of accelerated adoption of technology on labour markets.
“As we approach the traditional Mid-Autumn Festival, I would like to offer a special moon cake recipe for Việt Nam’s success for the next decade. The recipe includes a vibrant and innovative private sector with strong linkage to FDI, effective institutions and quality education. And we hope that every Vietnamese gets a fair share of this cake” she said. — VNS