Vietnam’s economy: qualitative changes needed
For a small-scale economy, high growth rates will not be enough to create big value, according to economist Tran Dinh Thien
The news that Vietnam in 2018 obtained a high GDP growth rate of 7 percent, a 10-year high, has been highlighted in all local newspapers.
Vietnam’s economy last year gained both goals – macroeconomic stability and high growth rate. This was an encouraging result in the context of uncertainties in the world and a growth slowdown.
PM Nguyen Xuan Phuc repeatedly affirmed, however, that Vietnam is striving for high economic growth rate but not at any cost.
“The monetary policy was managed in a flexible and reasonable way. The administrative procedure reform obtained considerable improvements. Business confidence was restored and consolidated,” Thien said in an interview with local press.
However, he emphasized that the high GDP growth rate alone would not be enough for Vietnam to be satisfied with its performance.
“For a small-scale economy, the high percentage growth rate doesn’t have much significance,” Thien said.
“You may understand that 1,000 footsteps by an ant won’t go as far as two gallops of a warhorse,” he explained, adding that even if Vietnam can gain 10 percent GDP growth, its GDP value will still be less than 2 percent of Singapore’s GDP.
At many economic forums, Thien has said Vietnam’s economy must not continue to be a ‘small fish in the pond.”
Being a small fish, it has to swim more rapidly and make bigger efforts. At the same time, it needs to strengthen itself to become a bigger fish and turn into a dragon.
He said that qualitative, not quantitative, change is the most important.
Vietnam’s economy is still weak as it is still under reform. It needs enterprises with large scale and high proficiency. An economy where 31.3 percent of GDP is from household production is not a strong economy, he said.
Thien mentioned the high proportion of businesses dissolved in the last few years, emphasizing that this is a worrying problem.
“I do not agree with the opinion that business establishment and dissolution are a ‘normal phenomenon’ of the economy,” he said.
The major topic for discussion in coming years is a reasonable strategy for creating and developing businesses. It is necessary to create a fair playing field for all economic sectors.
Some economists have recently called on the government to reconsider the strategy on attracting FDI. They believe that too much favor is given to foreign-invested enterprises, while Vietnamese enterprises, which are a pillar of the economy, do not receive similar incentives.