Overcoming hurdles: A worker assembling phone components in Vietnam. Infrastructure in the country still lags its peers in the region. — AFP
HANOI: Three years since the Covid-19 pandemic, Vietnam has made significant progress on economic recovery, building a strong foundation and momentum for future growth and development.
However, underlying issues remain to be addressed to fully unleash the country’s potential, said participants at the Vietnam Socio-Economic Forum 2023 earlier this week in Hanoi.
Dr Tran Dinh Thien, former head of the Vietnam Institute of Economics, said measures must be taken to end the prolonged declining trend of the economy.
Thien said, while Vietnamese enterprises have proven to be extremely resilient and enduring, they also “grow very slowly and have difficulties reaching maturity”. In addition, they tend to have short life spans with approximately 70%-75% of them (compared to the number of newly registered businesses) closing down every year.
This year has witnessed a surge in the number of businesses heading toward the exit. During the first eight months of the year, 124,700 businesses (against 149,000 newly registered businesses) closed their doors. That’s 84%, an increase of 11.3% compared to the same figure from the previous year.
There are a number of paradoxes with the economy such as the difficulties in absorbing capital despite a large demand for it, high gross domestic product growth and low inflation, but high interest rates at the same time, Thien said.
The underlying problem, according to Thien, is resource distribution has not been optimal, resulting in bottlenecks. He advised the government to prioritise the development of a strong market economy, where resources are distributed based on competence.
He proposed building an effective infrastructure system and sound policies to support and unlock the country’s development potential. There have been significant efforts in recent years in pushing for greater administrative reforms, in visualising the future of Vietnam’s economy and in identifying new growth drivers, he said.
According to Thien, Vietnam’s net-zero objective by 2050 adopted in 2021 is a good example of the country’s new approach to socio-economic development and should remain a top priority in the years to come.
Dau Anh Tuan, deputy director-general of the Vietnam Chamber of Commerce and Industry, said the country’s poor economic infrastructure remained a major obstacle for Vietnamese businesses.
Vietnam ranks 77th in infrastructure quality, 103rd in roads, 83rd in ports, 103rd in airports and 87th in power supply in world rankings, falling behind many of its regional competitors for investment, including China, India, Indonesia, Malaysia and Thailand.
In addition, high production costs remained a major weakness for Vietnamese businesses, hampering their ability to compete, invest and expand. This, in turn, resulted in slow growth and lower employment experienced by the economy.
He proposed stronger incentives be introduced, especially for businesses in industries with high added value.
Le Hong Thuy Tien from IPPG Group said effective policies are vital to spurring the growth pace of businesses. She proposed the government take action to remove barriers and unnecessary procedures to help businesses cut costs and save time. — Viet Nam News/ANN
