Lessons utilised in shaping the country’s socioeconomic strategy

Lessons utilised in shaping the country’s socioeconomic strategy- illustration photo/ shutterstock

The Institute for Development Strategy under the Ministry of Planning and Investment has received comments on the Socioeconomic Development Strategy 2021-2030, which has outlined a clear vision for Vietnam’s goals, aiming to transform the country into one with modern industries and a higher medium income level within 10 years.

As such, the strategy lays out an average GDP growth rate of 7 per cent per year, with an average GDP per capita at around $7,500, and an annual labour productivity growth rate of 6.5 per cent. Additionally, the draft strategy points out that public debt shall remain below 60 per cent of GDP, while development investment shall reach 33-35 per cent of GDP.

Economist Cao Viet Sinh, who has been overseeing the draft, said that strategic directions and perspectives at the macro level are built on lessons learnt from previous strategies and international and domestic changes.

The draft for the 2021-2030 period uses an analytical framework based on clearly-defined strategic objectives, outlining the targets to be achieved by 2030. At the same time, the document also states selected orientations and solutions to achieve these goals.

Clear improvements

As the draft sets out priorities to increase efficiency and ensure sustainability, Sebastian Paust, head of Development Cooperation at the German Embassy in Hanoi, commented that this draft is “much better” than its predecessors. “The draft sets out ambitious but achievable goals,” he said, adding that Vietnam could do even better if some issues, such as decentralisation, were improved.

Paust’s suggestion refers to an ongoing approach which could not yet be developed fully, as localities are lacking qualified staff and financial resources to make the most of the government’s decentralisation efforts.

The current draft defines specific goals related to market institutions, skilled human resources, modern technology, and modern infrastructure for the next 10 years. However, Stefanie Stallmeister, operations manager of the World Bank in Vietnam, said “some limitations” remain, such as there inadequate guidance to formulate actions to be taken.

It is suggested that the digital economy’s GDP targets may be difficult to measure, as digital services can be widely used and integrated with traditional sectors, which makes their specific contributions to the economy vague.

Besides these goals, the Socioeconomic Development Strategy’s draft provides a list of key reform areas, with briefly described targets. For instance, “Foreign direct investment attraction will shift its focus from quantity to quality, with higher added value, improving efficiency and technological innovation” to ensure “freedom and safety in business activities”.

However, the World Bank suggested adding two more strategic goals, referring to inclusive growth and effective natural resource management, with the belief that Vietnam will only be successful if future development guarantees opportunities for all people while protecting the country’s natural resources. Furthermore, the institution recommends focusing on improving the quality of market economy institutions to better deal with the relations between the state, the market, and society.

The draft outlines the importance of building a legal and institutional framework to develop a market-oriented economy clearly. Therefore, the bank explained, it is crucial to emphasise the need to review and evaluate all existing legal regulations and ensure there are no overlaps and unintended bottlenecks for businesses and citizens.

Tightening relations

It will also be important to recognise the increased accountability, not only for the government but also for the people. As Vietnam is focusing on creating a level playing field between state-owned enterprises and the private sector, it needs to strengthen governance and transparency to effectively supervise and enforce these policies.

One of the key factors paid attention to in the Socioeconomic Development Strategy’s draft is the role of institutional quality in strengthening the market economy and relations between all stakeholders.

Along with the quality of the government’s policies, the World Bank agrees with the draft’s emphasis on the quality and professionalism of state agencies as effective policy implementation relies on these actors.

“The government should also include goals in the strategy that reflect those of market institutions,” Stallmeister said. She added that the draft does not yet include any indicators for the main strategic goal, which is an effective market institution. “However, some governance indicators can be used in economic documents or approved by the government to evaluate the performance of provincial and city governments,” she said.

Success will depend on the state’s ability to reform and implement key projects to quickly achieve the stated tasks. However, according to the World Bank’s observations, the government’s performance has been uneven in recent years, even relatively slow in areas such as public investment, air pollution, and natural disasters resilience. Thus, lessons learnt from managing the pandemic in a non-traditional way need to be more emphasised in the draft.