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Increasing competitiveness
Prime Minister Nguyen Tan Dung listed the benefits of Viet Nam's first Competitiveness Report when he met the academic responsible for its completion, Havard Business School Professor Michael Porter, in Ha Noi on Nov. 30.
The report provided comprehensive statistics and assessments of Viet Nam's competitiveness, said the prime minister.
Detailed recommendations for the national 2010-20 Socio-economic Development Strategy which was for average yearly economic growth of 7-7.5 a year were also provided.
So too were targets for social equality, social welfare and environment protection.
The report, published when Viet Nam was assessing its development and devising plans for fast, sustainable growth for the next ten years was much appreciated, said the Prime Minister.
Viet Nam's competitiveness has been the subject of several studies including the World Economic Forum's yearly Global Competitiveness Report; Reports dealing with the competitiveness of ASEAN member countries and the Viet Nam Chamber of Commerce and Industry's provincial competitiveness index.
But none had provided a deep and comprehensive national assessment of competitiveness, said Government Office Chairman Nguyen Xuan Phuc.
GDP per capita had grown at a yearly rate of almost 6 per cent and millions of Vietnamese had been lifted out of poverty. The average income increased to US$1,160 this year from $100 in 1990, putting Viet Nam on the verge of becoming a middle-income country, he said. The poverty rate had been reduced to 10 per cent this year, from 70 per cent in 1980.
International donors viewed Viet Nam as a success; a place where foreign aid was generally well utilised and had a visible impact, while the private sector saw Viet Nam as an increasingly attractive destination.
Members of the Singapore-based Asia Competitiveness Institute and Viet Nam's Central Institute for Economic Management wrote the report.
Professor Porter, who guided their research, said: "Viet Nam is now ready for the next chapter in its economic development and the Viet Nam Competitiveness Report (VRC) provides comparative data, analysis and concrete proposals to help decision makers as they chart their country's future path."
Improving national competitiveness is a key objective of the Viet Nam Government and business community in their socio-economic development goals for the next decade.
Professor Porter said he was impressed by the high growth and the significant reduction in poverty over the last two decades.
But Viet Nam's stagnant position in many international rankings of competitiveness was a worry.
The VCR was intended to contribute to the three key dimensions to the debate about the choices for Viet Nam.
They included a broad set of data about different aspects of Viet Nam's economic performance, activity and competitiveness; a conceptual framework for interpreting this data and the underlying relationships between its different dimensions; and concrete proposals for policy priorities and specific action initiatives.
The report's analysis is grounded in a competitiveness framework developed by Professor Porter who said the VCR provided an in-depth analysis of the forces that drive Viet Nam's growth and the key issues the country now needed to address to continue and accelerate its development.
Viet Nam needed to start a discussion about how it wanted to position itself in the global economy, said Professor Porter who listed Viet Nam's specific activities, clusters and business environment strengths identified in the report.
The academic also suggested the establishment of a National Competitiveness Council similar to that of other countries. Viet Nam government officials and foreign donors supported the idea.
Compete
Viet Nam is still behind more than 100 other countries and the prosperity divide within the country's regions are growing, although it is almost middle-income country, says the report.
An improvement in labour productivity is the key driver of its success, but Viet Nam lagged behind many other countries for productivity.
The analysis of economic activity indicators shows that foreign direct investment has been a central driver of structural change.
But value added within the exporting is low and productivity in other parts of the economy also lags, says the report.
Viet Nam's social infrastructure and political institutions are generally solid with basic education and health care providing an important basic prerequisite for economic growth.
The political system is perceived as stable but lacks the ability to take effective action. Corruption shows few signs of falling.
The report also identifies weak macro economic policy; insufficient input conditions, modest skills; cumbersome administrative procedures and immature financial markets.
The report says collaboration among companies forming clusters is also limited.
The report says three principles are particularly important to guiding the country to a new stage of development.
Viet Nam's future growth will have to go beyond providing access to and leveraging existing economic fundamentals; the Government needs to define a new role in accordance with the demands of an emerging and dynamic market economy and provide a more balanced mix of State-owned, private and foreign companies competing in the economy.
The report suggests Viet Nam needs a more coherent and effective macro economic policy to address the risks imbalances that have developed.
It also makes a number of police suggestions. These include transparency of the fiscal position of Government and State-owned enterprises; strengthening of budget discipline; consistent and predictable monetary policy; Financial market regulation; Co-ordination of overall macro economic policy and cluster-based action initiatives.
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