Viet Nam expects to grow at 6.5-7 per cent for the next five years, according to a Government report tabled recently at the National Assembly on socio-economic development in 2015 and 2011-15 as well as the targets for the next five years. It forecasts GDP growth to be 6.7 per cent in 2016.
The Government's website, chinhphu.vn, asks Tran Dinh Thien, director of the Viet Nam Institute of Economics, about this.
|Tran Dinh Thien
What is your opinion about the Government's report on the economy for 2011-15 and the economic growth targets for the next five years?
The report was serious and candid and did not duck any urgent issues. It features economic reviews of the past and economic prospects, and mentions the strengths of and major challenges to the economy.
The Government's annual GDP growth target of 6.5-7 per cent for next five years is reasonable. I believe there are many factors that could spur the economy into achieving strong growth, including foreign direct investment.
If the Government strengthens institutions, Vietnamese companies would have a great chance to become better.
However, the chances could become challenges if the nation achieves high economic growth but does not reform its institutions.
The Government's general targets in 2016 and the next five years include ensuring economic stability and achieving economic growth of 6.5-7 per cent, including 6.7 per cent next year. What are the reasons for the Government's optimism?
The past few years were a period when the economy faced the greatest difficulty since the nation started economic reforms, and the growth rate was low.
In the last two years the economy has resumed growth and inflation has fallen to low levels. These were considered reason enough to think the economic recovery will be sustainable though there are some other economic factors to think it is a weak recovery.
However, in general, there are reasons to make more optimistic forecasts or set higher targets for 2016 and the next five years than the previous five. The most important factor is that Viet Nam has integrated further into the global economy. That will bring more opportunities for economic development.
The integration will bring opportunities and challenges and bigger opportunities come together bigger challenges. Moreover, big opportunities could change into big challenges if we do not take full advantage of them.
The Vietnamese economy is expected to achieve strong growth when the nation integrates further with the global economy. For instance, when it joins the Trans-Pacific Partnership, Viet Nam will have the opportunity to enjoy the maximum benefits and achieve high economic growth. Its GDP could increase by US$20-30 billion by 2020 depending on certain conditions. The TPP offers Viet Nam the chance to achieve higher economic growth.
Viet Nam will join the ASEAN Economic Community (AEC) and has also signed, or will sign, other free trade agreements. The country will face many challenges when it enters the global arena. The number of companies that are established or closed down shows the health of the economy. Will these challenges prevent the local economy from achieving its growth targets?
Viet Nam has only resources and labour and not technological strength or quality. Meanwhile, the global market has a trend of competing by capacity, efficiency and technology.
In Viet Nam, the number of companies investing in the agricultural sector is low. The agricultural sector needs investment from companies and Government support to improve its competitiveness.
Meanwhile, the private industrial and service sectors are weak. The number of companies that are really strong and competitive at the global level is low, and most of the strong companies are in a few sectors like finance and property.
Regarding the number of companies, over the past few years many closed. That means the competitiveness of local companies was weak. The number of newly established companies as shown by statistics is just the number that have registered and not the number that is operational.
I think local companies are weak in terms of finance, competitiveness and vision. Viet Nam must have a new national programme for domestic enterprises and establish basics of a national start-up programme. — VNS