Multi-dimensional Review of Viet Nam
Towards an Integrated, Transparent and Sustainable Economy
Since the launch of the Ðổi Mới economic reforms in 1986, Viet Nam has achieved tremendous economic and social progress. Today, it is well integrated on global markets, has enjoyed robust growth, and has seen remarkable poverty reduction. With its recent successful fiscal consolidation, its attractiveness as a trading destination and rapidly growing domestic middle class, Viet Nam faces a window of opportunity for its transition to an inclusive market economy. Three guiderails should form the basis of this strategy: integration, transparency and sustainability. Better integration between state-owned enterprises, foreign investors and domestic private companies in open markets will be key to future performance gains. Partnerships between universities and enterprises would also help upgrade skills and create innovation, thereby making the integration durable. Transparency and performance of government are prerequisites for trust and a key lever to enhance efficiency and productivity in most areas of the state and the economy. A more sustainable development path will need better management of water, air and energy to address climate change. Reforms of the social security system can also ensure that no one is left behind, especially in the face of a fast ageing population.
New opportunities in agriculture, manufacturing and services in Viet Nam
Viet Nam must achieve more efficient allocation of resources and reinvigorate productivity growth across all sectors in order to obtain its objective of attaining high-income status. Better integration of smallholders into agricultural supply chains may help Viet Nam gain competitiveness on global markets, while improving incomes in rural areas. The integration of services with manufacturing holds significant potential for Viet Nam’s economy. Achieving this requires a four-pillar framework. First, a more transparent and conducive market environment would provide equal opportunity to all firms (private, public and foreign). Second, partnerships between universities and entrepreneurs would create and accelerate innovation, thus bringing competitive gains. Third, policies to stimulate the business services sector would create the conditions for strong domestic private companies to emerge. Fourth, public support would help to attract the types of FDI that facilitate the creation of new capabilities and help Vietnamese firms prepare for linkage opportunities.
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