In the current context, amid the fluctuations of the world economy and the new strength and place of the Vietnamese economy, it is imperative for policy makers to change their old way of approach and thinking to keep pace with current demand for development.

Global trends
The world economy has changed dramatically in recent times as a number of economies are developing rapidly, such as China and India, while the US- the world’s most powerful economy is boding ill for recession. In addition, there has been a reallocation of investment capital inflows and global labour and monetary systems.

Notably, Eastern Asia’s currently holds a huge financial clout of more than US$4,000 billion and is becoming a powerful financial centre.

Ass. Prof and Dr. Tran Dinh Thien, Deputy Head of the Central Institute for Economic Management (CIEM) said, ”Defining the era’s issues that are to benefit Vietnam is not simple. The most important thing is to define how Vietnam should co-ordinate with the global economic network and how Vietnam will participate in the network. If we don’t understand the essence of the global economic network, the assessment of development subjects will be inaccurate. If Vietnam still keeps pursuing its old ways of developing, it will be lag behind current development trends” in the world.

In the context of deeply integrating into the world economy, apart from making the best use of available advantages such as natural resources and an abundant workforce, Vietnam should accelerate the process of national modernization and industrialization with a view to creating more value in the global value chain and effectively engaging in the region’s production network.

In order to reach that goal, it is essential to develop economic models such as industrial parks, export processing zones and logistic services.

However, many Vietnamese localities are in an overload situation when carrying out this process, which is allocated unreasonably.  According to Dr Vo Tri Thanh from the CIEM, the process of developing economic models is taking place mostly in Hanoi and HCM City. Previously, Southeast Asian nations poured overload investment in the major cities, exerting crippling effects on the environmental and social issues. At present, Hanoi and HCM City are still lagging far behind Bangkok, Jakarta and Manila.

Proper investment and zoning plan
Poor infrastructure is a major hindrance to the development of the national economy and cannot be resolved overnight. Reality shows that China has been successful in zoning, building waterways, railways, roads and creating air routes. As a result, the country has attracted a large amount of foreign investment.

Currently, Vietnam must spend around US$701 transporting a 20 foot-container to Europe while China’s transport costs are only US$335 (less than half of Vietnam’s figure). Therefore, Vietnam is finding itself in a difficult position when competing with China in exporting its products. Vietnam is now building and developing a large number of seaports. However, the question of how to locate and select central seaports to bring optimal efficiency needs to be scrutinised.

While the transport system is weak, the wishful thinking of planners who did not know real situation wastes capital for infrastructure development. 

Professor and doctor Nguyen Ke Tuan from the National Economics University said that Vietnam should have long-term strategic visions to resolve transport issues. Recently Can Tho International Airport has been upgraded and now Vietnam has an international airport network of Cat Bi, Noi Bai, Phu Bai, Da Nang, Chu Lai, Sai Gon and Cam Ranh and Can Tho. Is it sensible to have three international airports from Chu Lai to Da Nang once capital is limited and investment is scattered?

In recent years, the Government has given priority to developing electricity. Doctor Vu Thanh Tu Anh, director of research at the Fulbright Economics Teaching Program in Vietnam said that Vietnam’s electricity growth rate is high but this is not utilized and productivity is still low. This shows clearly when we compare to China.  To increase GDP by 1 percent, the electricity growth rate must rise by 2 percent while in China over the past 20 years if GDP increases by 1 percent electricity will go up 1 percent. In addition, Vietnam is always short of electricity while the Electricity of Vietnam still expand its operations into mobile phone, real estate and finance. Is this reasonable?

Mr Tu An added that the national managers and lawmakers must look carefully at the issues of establishing groups and diversifying their activities. A model to develop groups in Vietnam is similar to other East Asian countries like Japan and the Republic of Korea (RoK) in the past. However, in any current circumstances, the work must be carried out flexibly. Japan and the RoK developed groups in different ways and in different sectors. Vietnam joined the World Trade Organisation and must follow numerous commitments. Tasks that the two countries could fulfill in the 60s, 70s, and 80s, now Vietnam still cannot do. At that time Korean businesses received a lot of support from their government over several years. For example Korean group Samsung only got a subsidy from the Government for five years and then it had to boost exports if it wanted to survive. Meanwhile in Vietnam, businesses still receive support from the Government through loans with guarantees.

Need policy breakthrough

It is high time for the country to make a breakthrough in policymaking. Many issues, such as human resources development and the scatter of investment have been discussed several times but have not yet been resolved. Although it is not easy to resolve these issues, to meet the requirements of national economic development all these difficulties must be overcome. Managers and legislators should have long-term visions and propose moves based on real demands.

Professor Kenichi Ohno, director of the Vietnam Development Forum said that Vietnam should upgrade its models of strategic development. Currently Vietnam lacks close coordination between business and the relevant ministries in developing strategies. Therefore, the Government and businesses must work together towards developing appropriate policies.

Making a breakthrough in policymaking and strategic thinking is an important factor in helping the national economy grasp the new opportunities to develop and integrate into the global economy./.