One of the topics discussed at the first Vietnam Reform and Development Forum (VRDF), a meeting between the government and donors held recently, was the lag of Vietnam’s economy behind other countries.
At the forum, Minister of Planning and Investment Nguyen Chi Dung affirmed that after 25 years of receiving ODA and over 30 years of doi moi (renovation), Vietnam’s economy has changed its look with improved living standards and poverty and the hunger rate decreasing significantly. Vietnam has become a low-average income country which has been integrating more deeply into the world’s economy.
By the end of 2017, Vietnam’s population had reached 94 million, the 14th highest in the world, while the national economy had estimated value of $224 billion, 45th in the world.
However, the underdevelopment of the economy and the risk of lagging behind remains a big problem.
By the end of 2017, Vietnam’s population had reached 94 million, the 14th highest in the world, while the national economy had estimated value of $224 billion, 45th in the world.
Dung emphasized the need for renovation and reshuffling to develop. “If we don’t carry out reform together with development, we will certainly lag behind the times,” Dung said.
PM Nguyen Xuan Phuc said: “We acknowledge that Vietnam is still facing many risks, including the big risks of lagging behind and falling into the middle-income trap. ”
He said Vietnam has been making every effort to settle three bottlenecks that hinder development, namely institutional mechanisms, infrastructure and quality of the labor force. However, the results “still cannot satisfy the requirements for development and are not commensurate with the growth rate Vietnam expects to have”.
The economic lag can be seen in the figures released by the Ministry of Planning and Investment (MPI). Vietnam’s income per capita has been increasing rapidly, reaching $2,300 last year, but it is still in the 134th position in the world, though its population is 13th.
Vietnam’s gross national income (GNI) is just equal to 12 percent of total income of Southeast Asia, while the GNI per capita is equal to 48.3 percent of the region’s average level in US dollars and 52.5 percent based on purchasing power parity (PPP). And its GNI per capita in the region is just higher than Cambodia’s, Myanmar’s and Timor-Leste’s.
In comparison with the world, the figures are 21 percent and 38 percent, respectively.
As such, the big difference between Vietnam and the rest of the world is noteworthy, if noting that Vietnam is among the economies with the highest growth rates over the last 30 years.
In the 2009 Vietnam Development Report, the World Bank pointed out that Vietnam lagged behind Indonesia by 51 years, Thailand by 95 years and Singapore by 158 years.
The calculation was made based on two criteria.
First, Vietnam’s income per capita in 2007 was $836, while Indonesia’s was $1,918, Thailand’s $3,850 and Singapore’s $35,163.
Second, the income growth rate per capita calculated on fixed prices in 2001-2007 of the four countries were 6.5 percent, 4.8 percent, 4.8 percent and 4.0 percent per annum.
With the growth rate, it will take Vietnam a long time to catch up with the countries.
The lagging of Vietnam’s economy has been a topic of discussion at conferences between Vietnam and the donors’ community over the last decade. It was also put into discussion at the first CG (Consultative Group) meeting in Paris in 1993, when ODA (official development assistance) for Vietnam resumed.
By Tu Giang - Lan Anh, VietnamNet