Economic restructuring ‘vital’

The Government has targeted a growth rate of 6.5 per cent in 2010. Nguyen Mai, a senior economist, spoke to Viet Nam News reporter Vu Hoa about prospects for the economy this year.

Do you think we can achieve this year’s growth rate target?

The target is only a predication, as last year we had to adjust the rate twice due to the impact of the global crisis. Last year, the country reached growth of 5.32 per cent, higher than the 5 per cent of the second adjusted target.

I think that the Government should submit some forecasts for the economy to the National Assembly. In the context of global changes, the National Assembly should give the Government rein to control the economy and report to the National Assembly by the year end.

What’s the nation’s strategy for luring foreign investment this year?

I think it depends on the country’s development strategy. Many experts say that Viet Nam has passed over the low-income threshold into being a middle-class country. If so, the economic model should change to adapt to the new position. We should change our concept from an emphasis on low-cost labour to hi-tech human resources. Foreign investment inflows would serve that strategy.

Over the next 10 years, we should shift from quantity to quality of development. We definitely have certain advantages and can benefit from them. Many countries have paid attention to Viet Nam. It can be seen that the US, which has high-tech advantages and business management experience, was the leading source of FDI in Viet Nam last year, investing US$9.8 billion, or 45.6 per cent of registered capital.

We should focus on hi-tech and lure foreign investors to invest in this sector with an aim of turning Viet Nam into a hi-tech country by 2020.

We should also expand our investment into developing sectors. This could help us to carry out socialisation and appeal for investment.

How can we cut the trade deficit?

There’s no country in the world without a trade deficit. Last year, Viet Nam’s imports of around $12 billion were acceptable. The issue is not how much we import but what we import. In import structure, automobiles were the greatest concern. We imported 78,000 autos and produced 120,000, a $2 billion market, while Viet Nam’s road system is poor and Vietnamese incomes are still low. We should have suitable policies to readjust demand rather than calculating how much we import. In addition, we have been opening our market to the foreign investors. The important thing is that businesses increase their competitiveness and customer trust in their products.

What policies are unsuited to the country’s development?

In general, there is no problem with our policies. I am paying a lot of attention to financial and interest rate policies, exchange rates and credit policies. We should also review some policies, like taxes, charges and fees.

Interest, exchange rate and credit policies are extremely important to an economy. I hope that the State Bank of Viet Nam will have long-term monetary policies to help businesses map out their development strategies.

How should we be restructuring our economy as the world emerges from recession?

In the last 10 years, we achieved high growth rate but low effectiveness in our economic model. We should review our labour models to restructure the economy.

Current models have encouraged overuse of natural resources, capital and labour. This should be changed to a model which attaches importance to high quality human resources.

In terms of science and technology, which is the most important motivator for economic development, we have had no significant achievements. In the future, we should invest more in the field. While we have a good educational system with the lowest illiteracy rate in the world, quality and structure still have problems.

We continue to lack skilled workers who can access modern technologies, so reforming the education sector is vital to the process of economic restructuring.

How can the restructuring be carried out?

There are four kinds of economic restructuring. The first one is carried out in specific sectors, such as agriculture, industry and services. The second is regional. The third is categorised by economic sectors which includes State-owned, private and foreign-invested firms. We are unable to deny the role of the State sector, but these other two pillars of the economy are vital. The last one is that we should form an integrated economy in which all economic sectors are well developed. — VNS