(MPI) - On September 19th, 2019, in Hanoi, the Ministry of Planning and Investment in collaboration with the World Bank (WB), the Australian Agency for International Development (AusAid) and Vietnam’s development partners organized the Annual Forum on Reform and Development (VRDF) under the theme "Vietnam: Aspiration for Prosperity - Priority and Action" under the co-chairman of Minister Nguyen Chi Dung and WB Country Director in Vietnam Ousmane Dione. The forum had the honor of the attendance of Prime Minister Nguyen Xuan Phuc.

Minister Nguyen Chi Dung ​speaking at the opening of the Forum. Photo: MPI

The most critical objective of VRDF 2019 is to provide an essential input for the formulation of some documents of 13th National Congress of the Party: Country development strategy for 10 years period 2021 - 2030, main directions and tasks of the 5-year Socio-Economic Development Plan period 2021-2025 based on positive, scientific research, appropriate domestic and foreign experiences.

Speaking at the opening of the Forum, Minister Nguyen Chi Dung said that, throughout the historical journey of the country since we are completely independent and united, all Vietnamese people want to devote their best to building and developing a prosperous, flourishing and happy Vietnam. Since joining the group of middle-income countries, Vietnam has always been in the group of economies with high economic growth in the world, the average growth rate of gross domestic product (GDP) in period of 2011 - 2018 reached over 6.2%.

By the end of 2018, the GDP reached over 250 billion USD, belonging to the group of 45 economies with the largest GDP in the world, the GDP per capita reached approximately 2,600 USD (Calculated by purchasing power parity - PPP, the GDP reached over 720 billion USD, the GDP per capita reached over 7,600 USD).

The socialist-oriented market economy institution has been gradually improved towards modernization, synchronization and more profound and more extensive international integration. Vietnam is an attractive destination for many international enterprises and investors with newly registered foreign direct investment capital continuously increasing over the years, reaching over USD 200 billion in the period 2011 - 2018. The openness of the economy continues to increase, by 2018 equal to 200% of GDP.

Along with the development trend of the world economy, Vietnam has rapidly promoted economic development toward innovation, capturing, absorbing and applying achievements of the Industrial Revolution 4.0 in the socio-economic fields, sectors and state management. The Government, ministries, branches, and localities have made great efforts and determination to innovate, especially in perfecting institutions, amending and supplementing, promulgating many mechanisms and policies to build and promote the ecosystem of innovation, start-up, digital transformation, etc. and have achieved some encouraging results. In particular, the Global Innovation Index (GII) of Vietnam in 2019 increased 3 places compared to 2018, ranked 42/129 countries, ranked first in the group of 26 low-middle income countries and 3rd in ASEAN (after Singapore and Malaysia).

Photo: MPI

Besides the achieved favorable factors and positive results, Vietnam has to face many difficulties and challenges. Vietnam is currently a country with a low average income, labor productivity of the economy is not high, the international competitiveness of the economy in general and many industries, fields and principal products is not strong. The economy operating in a market mechanism still has its flaws that need to be improved to further enhancing the usage of resource efficiency and sustainability of development.

The world we live in is changing very quickly with many complicated developments, the level of global economic and trade competition is climbing. The Industrial Revolution 4.0 with the appearance of many technologies that have never seen before is drastically changing the way to do business, the way to run the economy and enterprises. Models of sharing economy, circular economy are being increasingly popular. These present both opportunities and challenges for developing countries such as Vietnam, requiring nations to be very agile to seize opportunities and overcome challenges, otherwise, they will fall behind the curve in the development course.

In this context, not to mention the realization of the aspiration for prosperity, just overcoming the "middle-income trap" alone has been a big challenge for many developing economies including Vietnam. We will not be successful without continuous exploration, creation, thinking innovation, proactive building of ways to develop the economy, institutional, mechanism and policy innovation.

Minister Nguyen Chi Dung said that realizing the aspiration for prosperity is a continuous process with various opportunities and challenges. Vietnam's Socio-Economic Development Draft Strategy period 2021 - 2030 identifies an important institutional orientation: Completing the transition to a modern, integrated market economy according to international practice; formulating, perfecting and testing the legal framework for new types of businesses, digital economy, providing public services, managing and protecting the environment by market principles.

The development orientation of science - technology, and innovation emphasizes considering enterprises as center; allowing the implementation of new policy testing mechanisms, accepting risks for the deployment and application of new technologies, innovation, new business models; carrying out digital transformation in national governance, production - business, social organizations; applying and developing new technologies, in which prioritizing digital technology, 5G, and post-5G connection, artificial intelligence, blockchain, 3-D printing, Internet of Things (IoT), network security, clean energy, environmental technology for transformation, enhancement of productivity and efficiency of the economy.

The Draft Strategy also provides an orientation for appropriate attention and investment for basic scientific research, focusing on research and application of core and digital technologies, focusing on building a specific, outstanding, competitive institutions, mechanisms and policies, creating a foundation to enhance technology application, improving research and development capacity, building and developing a system of national innovation centers and innovative start-up ecosystems, taking enterprises as center for research - development, technology application and transfer.

Besides, it is necessary to focus on developing priority technologies with high applicability, especially digital technology, information technology, biological technology, artificial intelligence, mechatronics, automation, biomedical electronics, energy and environment, applying scientific and technological achievements, boosting the development of several principal economic industries and fields which has vast potentials, advantages, and spaces to motivate growth in the spirit of catching up, progressing together and overtaking in some areas compared to the region and the world; encouraging and facilitating conditions for all people to promote their ability and to be freely creative in economic and social life.

According to Minister Nguyen Chi Dung, Vietnam's aspirations and desires in developing the country are toward a more and more prosperous and modern nation, with bold and determined orientations. However, Vietnam wishes to explore and learn from experiences from the world and listen to the advice and recommendations that are attached to the specific conditions of Vietnam from experts and scholars.

WB Director Ousmane Dione speaking at the Forum. Photo: MPI

Speaking at the Forum, WB Director Ousmane Dione said that we are living in a volatile time when borders reappeared, and trade tension is rising. At the same time, technological changes are occurring at an unprecedented pace - robotics and automation, 3D printing to name a few. These developments are particularly important for Vietnam, which has been relying heavily on global trade as an engine of growth. At the time, Vietnam’s economic model is also facing several domestic challenges, including but not only a fast-aging population, low capital formation, and investment return, the degradation of its natural capital, inadequate human capital and likely declining productivity gains, etc.

“So, while Vietnam has every potential to sustain its development success, bold reforms are required so that the country will be able to seize future opportunities and manage risks.” Mr. Ousmane Dione emphasized

Mr. Ousmane Dione said that the Forum will discuss two critical areas of reforms for Vietnam and make a contribution to the formulation of Vietnam’s development roadmap for the next decade.

The first reform area seeks to address a fundamental weakness of the current growth model. That is the excessive reliance on factor accumulation with limited contribution of productivity improvement. With the rapidly evolving industrial revolution 4.0, there is a significant room for Vietnam to improve its productivity by moving closer to the global technological frontier. Identifying policy options to promote innovation-based growth, and taking full advantage of IR 4.0 is one of the motivations of today’s forum.

The second reform area relates to “market” institutions. Despite impressive achievements in economic transformation, Vietnam has not been successful in creating an effective and efficient system of full-fledged market institutions. This has hampered the healthy development of a dynamic competitive domestic private sector. How can Vietnam modernize its market institutions and the national governance to enable an environment where private sector firms, including domestic ones, can flourish and become the engine of growth? Seeking answers to this important question will be another focus of our discussion today.

A well-designed Socio-Economic Development Strategy is critical for Vietnam. For this reason, priorities and actions need not only to be clearly identified but also practical to implement bearing in mind the local context and players and this is exactly what the development partners would want to get out of our dialogue today. We want to focus our discussion on how Vietnam can prioritize its policies and formulate an actionable reform agenda for the next decade. So, let us think together and innovate, let us be open, bold and ambitious but also practical and concrete, Mr. Ousmane Dione emphasized.

Within the framework of the Forum, there were discussion sessions with the theme “Heading towards modern and integrated market economy institutions”; “Innovating to overcome the middle-income trap”; “Acting for a prosperous Vietnam”./.

MPI