Vietnam to Reach Upper Middle Income Status in 20 Years

said World Bank Group President Jim Yong Kim at the Vietnam 2035 Report Launching Ceremony in Hanoi. The report is prepared by the World Bank Group and the Government of Vietnam.

Reform is the only choice

A new report recommending steps to help lift Vietnam to the upper middle-income status in two decades suggests that Vietnam build a more competitive private sector, support smart urbanisation, promote innovation, and take advantage of increasing trade opportunities to enact broad structural reforms.

Reaching the ambitious goal of upper middle-income status in two decades will require Vietnam to grow at least 7 per cent per year, raising the average income level to over US$7,000 - or US$18,000 in purchasing-power parity (PPP) terms - by 2035, compared with US$2,052 - or US$5,370 in PPP terms - in 2014.

"In the last 30 years, Vietnam has become one of the world's great development success stories, rising from the ranks of the poorest countries. On the strength of a nearly 7 per cent average growth rate and targeted government policies, tens of millions of people have lifted themselves out of extreme poverty," said Jim Yong Kim.

He added that the Vietnam 2035 report reflects Vietnam's aspirations of becoming a modern, industrialised nation within a generation.

Particularly, the report recommends that Vietnam build modern and more transparent institutions - those steps will help the country meet its ambitious goals.

The agreement to work on the joint report was made in Hanoi between Vietnamese Prime Minister Nguyen Tan Dung and WB President Jim Yong Kim in July 2014. The report was produced by a joint team from the Ministry of Planning and Investment, the World Bank Group, and external experts from Vietnam.

"Vietnam is at a turning point of reform and development. We face significant opportunities, but also big challenges. To reach the goal of a becoming a prosperous, creative, equal and democratic Vietnam, the only choice is to implement the reforms recommended by the Vietnam 2035 report. Without these reforms it will be hard to avoid falling into the middle income trap and lagging behind. We believe current and future generations of Vietnamese people have the will, determination, courage and capacity to successfully implement these changes," said Planning and Investment Minister Bui Quang Vinh.

Three main pillars

The report focuses on three areas: Improving productivity and private-sector competitiveness; promoting equity and social inclusion; and improving public sector effectiveness.

Accordingly, the report recommends Vietnam take steps to strengthen the economy and financial sector, with a focus on more effective regulation, protection of property rights and enforcement of competition policies. It suggests that Vietnam consider new policies and investments supporting the growth of industries linked to global supply chains, along with smarter use of major international trade agreements like the Trans-Pacific Partnership. Improvements to the agriculture sector - which employs nearly half the nation's workforce - as well as stronger environmental protections and better planning for clean energy generation are also recommended.

The report says that Vietnam can continue fostering social inclusion and equality by providing greater access to opportunities for minorities, people with disabilities and women, and providing services to an ageing, urbanizing and middle-class society. Though Vietnam has made impressive progress on the inclusion agenda, ethnic minorities comprise half of the country's poor despite being only 15 percent of its population.

Hence, the report recommends governance improvements to help boost accountability and transparency, and ensure Vietnam has strong institutions to keep pace with the country's rapid development. The report suggests adopting a more unified government structure that more clearly defines the economic functions of the state, reduces its role in direct production, clarifies boundaries between the private and public sphere, and employs and promotes staff based on merit. Another recommendation calls for Vietnam to strengthen state accountability by ensuring checks and balances between the three branches of government and creating opportunities for citizen feedback on public service delivery.

(Source: VCCI)