The economist group business and the world's leading provider of country analysis said that Vietnam would maintain a high GDP growth rate in 2006-2020 at 5.4 percent on the average.

"Growth will be driven, above all, by openness, the scope for productivity catch-up, a relatively high quality of labour, the development of information communication technology, and regulatory and institutionary reforms," it said, adding that demographic factors will also favour fast growth in Southeast Asian countries, including Vietnam.

EIU predicted that Vietnam's GDP growth rate would stand at 7 percent in the 2006-2010 period, while China tops the list with 7.8 percent. Vietnam will, however, rank before other ASEAN countries such as Indonesia (5.6 percent), Malaysia (5.3 percent), the Philippines (5.2 percent), and Thailand (4.5 percent) in the next five years.

Vietnam's GDP growth will then gradually slow down at around 4.6 percent in the 2011-2020 period, according to EIU analysis.

Dr Le Dang Doanh, former head of the Central Institute for Economic Management, now a senior advisor to the Ministry of Planning and Investment, said GDP growth rate at around 5 percent is not low for a strong economy.

"Vietnam will be able to build a strong economy by 2020 if it focuses on boosting the quality of its economy”, Mr Doanh said. “It must turn from exporting raw materials to processed products, which will help the country be able to compete with other nations."

"Vietnam is now still following a route in which available materials such as land, cheap labour, and money from the government and ODA are used the most. These sources will be gradually exhausted as time goes by. That is why the country must focus on other replaced sources with added values such as advanced technology and a skilled workforce," he added.

In order to build a stable and strong economy, Vietnam must concentrate on increasing the quality of education and training to enhance capability of the local workforce, said Dr Doanh, adding that improving investment effectiveness and successfully coping with misspending should also be put on top of the agenda.

The economist also explained that a growth rate at an average of 7-8 percent for a developing economy is reasonable because growth rates for strong economies such as Japan and the US stand at only 3-5 percent.

Vietnam will be able to maintain considerable progress in economic development even at a GDP growth rate of 4-5 percent if its economic machine operates effectively.

“Each percentage added in GDP growth of a strong economy with per capita income of US$2,000 is much more valuable than a higher percentage added in GDP growth of a weak economy with per capita income of only US$600," Dr Doanh said.

Vietnam Investment Review