Illustrative image (Source: VNA) Hanoi (VNA) – With its outstanding achievements over the pastthree decades, Vietnam is a development success story and continues to performwell even in the pandemic on a range of indicators, including trade, growth andhuman capital, Victoria Kwakwa, Vice President for East Asia and the Pacific atthe World Bank, has said.
Addressing the thirdVietnam Reform and Development Forum (VDRF 2020) themed “Vietnam: Actions toRecover Growth towards Inclusiveness and Sustainability”, Kwakwa stressed that thereis notable room for further improvements in global value chain (GVC)development to meet Vietnam’s ambitious long-term development goal of becominga high-income country by 2045 and narrow the development gaps with the advancedeconomies.
According to her, Vietnam’sparticipation in global and regional value chains remains limited, despitebeing “one of the most open economies in the world”.
Vietnam’s level ofparticipation in GVCs remains well below its ASEAN peers such as Singapore,Thailand, Indonesia, Malaysia, and the Philippines, she said, noting that in2018, the country earned only 20.4 billion USD through GVCs, ranked 55th out of174 countries. This is less than one quarter of the next ASEAN peer, thePhilippines, which earned 84.8 billion USD and ranked 34th.
The level of Vietnam’sparticipation in sophistication also remains low. The World Bank estimates thata 1 percent increase in GVC participation boosts per capita income levels bymore than 1 percent - about twice as much as conventional trade, sostrengthening GVC participation will be important for accelerating Vietnam’s productivityand growth.
To be well preparedfor strong recovery and make most of the new emerging opportunities, Kwakwasaid that in the short term, Vietnam needs to continue to contain thecoronavirus and consolidate activities that can accelerate a strong recovery.
She said she believedthat Vietnam should continue to ease entry and operational FDI restrictions.
In the medium term,being well-prepared for the “new normal” of GVCs is important. Supply chainscannot be established overnight, and companies still have to overcome theexpensive and time-consuming process of relocation.
In the longer term,Vietnam needs to narrow the productivity gap and move towards the productivityfrontier.
For Vietnam, emphasisneed be placed on skills development and R&D capacity building, as well aseffective implementation of Vietnam’s breakthrough on institutional reform.
Vietnam needs to beprepared for the future shift in GVCs and mitigate potential adverse impact ofaccelerated adoption of technology on labor markets.
“As we approach the traditionalMid-autumn festival, I would like to offer a special Moon cake recipe forVietnam’s success for the next decade. The recipe includes: a vibrant andinnovative Private Sector with strong linkage to FDI, effective Institutionsand quality Education. And we hope that every Vietnamese get a fair share ofthis cake” she said./.
VNA
