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NEWS UPDATES 29 July 2010

Lack of knowhow, economic imbalances hurt Vietnam

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Former Deputy Prime Minister Vu Khoan and economist Bui Kien Thanh talk about Government policies to speed up economic development. Former deputy prime minister Vu Khoan: The more Viet Nam wants to move forward, the more it is left behind other countries economically. It happens because of our backward starting point and low economic efficiency.

Our economy has shifted from a centrally planned economy to a market-oriented economic model and from a closed, self-reliant economy to an open one which is also increasingly integrating into the world economy, as discussed in the Viet Nam News.

These were key turning points in the thinking of our leadership, contributing to aggregating the strength of the entire people and crucial to our success today. It is not entirely a cause of our thinking, but a reality that the more we move forward, the more likely that we will lag. This failure could be attributed to many shortcomings in our economy, especially after the country's integration into the world economy. Weaknesses include poor infrastructure, in particular electricity shortages. Such difficulties are not easily solved although we are clearly aware of them.

Compounding the problem are a series of imbalances in the economy such as that between growth and efficiency, development and sustainability, budget revenues and trade deficit, pace of development and reform of institutions and backward economic structures. However, despite these difficulties, Viet Nam is endeavouring to integrate more deeply and widely into the world. The country cannot mature if it neither makes contact with the outside nor competes with other countries.

To escape the situation where the more we swim forward the more we lag behind, it is a must to clearly define what we want to become.

If the country has set a target to become a basic modern industrialised country by 2020, we need to figure out what we define as modern. Can we drive the country towards modernisation and industrialisation with backward knowhow, manual labour, and the economy mainly reliant on the exploitation of natural resources?

There are presently some misunderstandings about industrialisation. For instance, some people think industrialisation means all provinces should focus on industry.

It will be a mistake if all of them do so without taking factors of efficiency into account. I have great expectations of the coming 11th Party Congress where such issues should be made clear. In my opinion, restructuring the economy must start from two foundations. Firstly, where are we now and where will we go? Secondly, how is the world changing?

Theory is a key to deciding successful economic restructuring. The 1986 sixth Party Congress approved broad economic reforms known as Doi Moi or renewal that introduced market reforms, opened up the country for foreign investment and dramatically improved Viet Nam's business climate. Our thought processes and approaches have been renewed but the process needs to be accelerated to bring success.

Economist Bui Kien Thanh: The results achieved in socioeconomic development strategy during 2001-10 didn't match with the country's potentiality and strength. Besides achievements like an average gross domestic product per capita at an estimated US$1,200 this year, and transcending the threshold of a developing country with low income, difficulties remain ahead.

The competitiveness of the economy remains low. Economic growth is mainly based on quantitive development, increases in the volume of resources, chiefly in strengthening investment capital, but not really on increases in labour productivity and efficiency. Other shortcomings are also high inflation, overspending, a high trade deficit and environmental pollution. I strongly support the restructuring of economy as put forth by Prime Minister Nguyen Tan Dung. All productive sectors must shift from quantitative development into qualitative development in combination with modern technology and a highly skilled work-force. To do so, it is essential to have an open and clear mechanism, create favourable conditions for all economic sectors - no longer differentiating between State and private businesses - to create strong brand names and raise competitiveness.

The Prime Minister has also said State enterprises should exist in a competitive market equal to other economic sectors. If it is possible to do so, the country will not only speed up the development of the private sector but also boost the State economic sector. The Prime Minister has put forth enough measures for rapid and sustainable development. But what concerns people the most are how mechanisms and policies will be implemented to realise the given goals as well as how determined the State is in turning these goals into reality. These measures include the use of collective strength and those to safeguard independence, sovereignty and national territorial integrity, ensuring the stability of the economy, food and energy security, the efficient application of financial management rules; the effective mobilisation and use of financial sources; promoting the involvement and leadership of the population in decision making; and closely combining economic growth with environmental protection and improvement.

In my opinion, mobilising our collective strength is the most important measure, while the rest are merely specific details. All the targets are viable if we utilise the collective strength of 87 million people, of every sector, within and outside the Party, as well as domestically and abroad.

We also need a strong, industrious, thrifty, honesty, righteous, public-spirited and selfless political organisation. This is also an important issue the 11th Party Congress will have to address.

Regarding environmental protection, it plays an important role in sustainable development. Many experts said Viet Nam would be able to advance its economy at a relatively high level for the next 50 years. But the country can't spend some ten thousand years or even several million years mending environmental damage.

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