|
Global crisis puts focus on real economy
Viet Nam would be better to concentrate on developing its internal potential instead of being too dependent on foreign direct investment (FDI).
The comment was made here yesterday, August 16, by international economic experts at a high-level round-table meeting on economic development and growth.
Deputy Minister of Foreign Affairs Doan Xuan Hung said the Vietnamese Government always appreciated knowledge and experience and welcomed recommendations from prestigious international experts and scholars.
He said this significantly contributed to national economic recovery and development.
"The global economic recession shows the shortcomings of the Vietnamese economy, but it also creates a number of challenges for it," Hung said.
"What should Viet Nam do to overcome the weaknesses and grasp the opportunities? It’s a huge question."
The meeting was held by the Ministry of Foreign Affairs in co-operation with the Party Central Committee’s Theory Council.
Among those attending were the Deputy Prime Minister and Foreign Minister, Pham Gia Khiem; the assistant to UN Secretary General for Economic Development, Professor Jomo Kwane Sundaram; and the Professor of International Economics, James Riedel at Johns Hopkins University in the United States.
According to the UN Development Programme, the visit of the two professors is to expose Viet Nam to the best international expertise to help it formulate its own socio-economic strategy.
The programme includes policy research and discussions involving leading international experts on different topics identified by Viet Nam’s policy makers.
Professor Sundaram said Viet Nam was an innocent victim of the global economic crisis because of it s financial deregulation, liberalisation, globalisation and securitisation.
He suggested that Viet Nam seize the rare opportunity offered by the global slowdown to support and develop the real economy.
He warned that Viet Nam in particular, like other developing countries in general, were paying too much attention to attracting FDI capital rather than using domestic sources.
However, he said FDI played a significant role in national development. More than 80 per cent of FDI in the 1990s was for mergers and acquisitions, which did not create any new abilities or potential "so countries should not be too dependent on it".
"FDI contributes to technology transfer, skill and knowledge spill-overs, linkages and market access," said the professor, but Viet Nam should use FDI to achieve developmental goals, not the other way round.
The FDI effective use ensures no balance-of-payment problems in the medium and long-term, he said, adding all FDI must enhance foreign exchange earnings besides technology and market access.
Regarding the stimulus package implemented by many countries across the world, including Viet Nam, Professor Sundaram said it was necessary to offset weakened foreign demand for exports.
He suggested the stimulus package did not need external but domestic financing, and countries should take the occasion to build and improve their infrastructure as well as strengthen social services and protection.
Besides further promoting the stimulus package, Viet Nam should pay attention to education, healthcare and infrastructure, which were missing out, Professor Sundaram said.
The professor recommended that the best way to develop enterprises was not privatisation but reform, stressing that State-owned enterprises reform.
Professor Sundaram said that Taiwan’s development model was more appropriate to Viet Nam than South Korea’s or Japan’s as Taiwan focused on small- and medium-sized enterprises, while Japan and South Korea were dependent on huge economic corporations.
He also advised that national development strategies that created incentives for the whole population were better than poverty-reduction strategies.
Protection policies for investors, especially overseas Vietnamese, also known as Viet Kieu, were also important, he said.
The professor said export orientation was the key to the development of Japan, South Korea and Taiwan, but the current international environment was less conducive to this.
He said that while countries in north-east Asia protected domestic enterprises that operated efficiently and achieve high exports, countries in South-east Asia let foreign enterprises take advantage of cheap labour that did not contribute to increased competitiveness.
He advised domestic enterprises to avoid "beggar thy neighbour" policies resulting in a race to the bottom that benefited no one, except corporations and FDI.
Other ideas
Professor Riedel agreed with Sundaram that developing countries concentrated too much on attracting FDI.
Professor Riedel said this type of short-term capital source was one of the main reasons for the recent internal crisis in Viet Nam.
He said Viet Nam’s investment efficiency was undermined by poor socio-economic infrastructure and an underdeveloped private corporate sector.
The private sector made a great contribution to generating jobs and attracting capital, he said. However, in Viet Nam, it provided only 24 per cent of the country’s total industrial output.
He also suggested Viet Nam balance short and long-term benefits.
Professor Riedel said Vietnamese households always took good care of the future, while businesses seemed to focus on projects that only created short-term benefits.
President Ho Chi Minh’s statement that: "We will rebuild our land 10 times more beautiful" should be used as a golden rule for Viet Nam, he said.
VietNamNet, VietNamNews
|
