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Vietnam should become less labour intensive
Viet Nam should shift from labour-intensive to more capital – and skill-intensive manufacturing, economists told a seminar in HCM City yesterday .
Prof James Riedel, who teaches international economics at the US's Johns Hopkins University, said Viet Nam may be one of the developing world's fastest growing countries as hailed by multilateral agencies, but since 2006 its growth rate has been lower and much more unstable.
Viet Nam should compete with other countries on the basis of its growing human capital and technology.
Pham Minh Tri, chairman of the HCM City Economic Science and Management Association, said: "If a country's exports are based on labour, it will not improve competitiveness or quality of growth.
"The exports must be based on technology, knowledge, and good business management."
Besides, allocation of resources is not yet effective resulting in inefficient public spending which accounts for half of all gross capital formation in Viet Nam, he said.
Speaking about the country's economy, Riedel said inflation in the last six years had been volatile, with huge capital inflows and high credit growth putting pressure.
While Viet Nam tried to maintain nominal exchange rates at stable levels, inflation caused the real effective exchange rate to rise, forcing the government to repeatedly depreciate the currency.
"Macroeconomic stability cannot be achieved if the country has many targets such as stable exchange rate, low inflation, and high growth at the same time," he warned.
To improve quality of growth, efficiency, and competitiveness, economic restructuring should aim to create industries with higher value addition and productivity based on improved efficiency of resource use and allocation, he said.
Finance needs to be allocated in right places to prevent wastage of human resources and capital and maximise profits.
Viet Nam should look for experience from other countries and territories like Taiwan, Korea, and China for sustainable development of its economy.
The seminar was organised by the Leadership and Management Science Research Institute, HCM City Business Association, and University of Economics and Law.
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