Vietnam needs to develop a more competitive private sector and promote innovation to reach upper-middle-income status within two decades, according to a joint report by the World Bank and the country’s planning and investment ministry.
The “Vietnam 2035” report, released Tuesday, said to achieve the status the lower-middle-income country needs to grow at at least 7 percent a year to increase per capita income to more than US$7,000 from $2,052 in 2014.
The report recommends that the government should focus on three areas: improving productivity and private-sector competitiveness, promoting equity and social inclusion and improving public sector effectiveness.
Jim Yong Kim, president of the World Bank Group, said the report, with inputs from international and Vietnamese experts, reflects Vietnam’s aspirations of becoming “a modern, industrialized nation within a generation.”
“Improvements in productivity, environmental protection and economic innovation can help Vietnam maintain high levels of growth,” he said at a ceremony to release the report in Hanoi Tuesday.
“It will be critically important to remove barriers that exclude marginalized groups and deliver quality public services to an aging and urbanizing middle-class.
“The report recommends that Vietnam build modern and more transparent institutions – those steps will help the country meet its ambitious goals.”
Minister of Planning and Investment Bui Quang Vinh said Vietnam is “at a turning point of reform and development.”
He said without the reforms recommended by the report it would be hard for the country to “avoid falling into the middle-income trap and lagging behind.
“We see these reforms as a continuation of the historic doi moi reform process and we believe current and future generations of Vietnamese people have the will, determination, courage and capacity to successfully implement these changes.”
The report says Vietnam should take steps to strengthen the economy and financial sector, with a focus on more effective regulation, protection of property rights and enforcement of competition policies.
It suggests the country should consider new policies and investments supporting the growth of industries linked to global supply chains, along with smarter use of major international trade agreements like the Trans-Pacific Partnership.
It says Vietnam can continue fostering social inclusion and equality by providing greater access to opportunities for minorities, people with disabilities and women.
Though Vietnam has made impressive progress on the inclusion agenda, ethnic minorities comprise half of the country’s poor despite being only 15 percent of its population, according to the report.
It also recommends governance improvements to boost accountability and transparency, and ensure Vietnam has strong institutions to keep pace with the country’s rapid development.
It calls for adopting a more unified government structure that more clearly defines the economic functions of the state, reduces its role in direct production, clarifies boundaries between the private and public sphere and employs and promotes staff based on merit.
Without these reforms, Vietnam’s average income in 2035 will be only $4,500, according to the report.