Vietnam’s reform and integration efforts

Joining the World Trade Organisation (WTO) has offered Vietnam a wealth of opportunities to speed up economic development, boost its exports and attract more foreign direct investment (FDI).

However, according to economic experts, Vietnam still has weaknesses such as poor quality growth, outdated infrastructure, inadequate human resources and a low competitive capacity. Therefore, in order to take advantage of any opportunities, it is essential to improve the quality of growth and FDI, increase the efficiency of investments, stabilise the financial market and introduce policies to stabilise the macroeconomy in a flexible and reasonable manner.

Impact on economic growth

The Head of the Central Institute for Economic Management (CIEM), Le Xuan Ba said that international economic integration and admission to the WTO has a positive impact on Vietnam’s economic growth for the past three years.

Despite the price hikes in the world market putting more pressure on the input costs of domestic products, Vietnam still reached a GDP growth rate of 8.5 percent in 2007.

In 2008, the country’s economic growth suffered due to the soaring prices of materials, high inflation and its major partners facing an economic downturn.

However, sharp increases in the price of key exports, including crude oil and foodstuffs and an expanded export market have had a positive impact on the country’s economic growth. Because of several difficulties, Vietnam’s economic growth rate only reached 6.2 percent in 2008.

A CIEM report said that if international economic integration does not go further, Vietnam’s economic growth will slow down. In 2009, the negative effects of the global financial crisis and the positive effect of international economic integration resulted in Vietnam’s GDP falling to 5.3 percent. However, this growth rate is still higher than that of many other countries in the world.

Choosing suitable development model

In 2010 the world’s economy is forecast to recover despite a number of difficulties still lying ahead. Economists have noted that in the post-crisis period the world economy will be restructured more robustly and if Vietnam fails in this process it will find itself lagging behind other economies.

Vietnam is not only a member of the WTO but many other economic institutions, such as the ASEAN-China commitment, and the agreement between ASEAN-Japan, Australia and New Zealand in the next few years. Therefore, the country needs to be aware of the impact of these commitments to introduce suitable measures to cope with them.

Former Deputy Prime Minister Vu Khoan said that the State and the business community will face several conflicting relationships, such as speed and the quality of growth, growth and macro-stability, the balance between domestic and foreign markets and State interference in the market. Therefore, it is very important to choose a suitable model of development.

Professor Nguyen Mai said it is high time the Vietnamese people realised that the country has an important position in Southeast Asia and an increasingly growing position in Asia and the world.

As a WTO member, the State needs to set up a team of experts for each sector to take part in the Doha round of negotiations to bring more benefits to developing countries, including Vietnam, said Mr Mai. The country should do its utmost to persuade other countries and economic institutions to recorgnise Vietnam’s full market economy because this will help domestic businesses deal with anti-dumping lawsuits.

“Vietnam is determined to develop into an industrialised country, but which development model will be chosen and which industries will be the key sectors?,” said Mr Khoan. Choosing a proper model will help Vietnam to develop strongly and sustainably and it is also an important factor that will help the economy integrate more successfully in the future.- VOV

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Posted by VBN on Jun 30 2010. Filed under Economy News. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry

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