VN should prioritize macroeconomic stabilization and fighting inflation, UN official
Published: 05/02/2011 05:00
The United Nations Residential Coordinator John Hendra talks with VietNamNet about the challenges and perspective for 2011 in the context of Vietnam becoming a lower middle-income country (MIC) and beginning the implementation of the new five-year plan (2011-2015).
VietNamNet: 2011 marks an important milestone as the National Party Congress and Elections of the National Assembly and People’s Council will take place this May leading to personnel changes in the leadership. In your view, how will such personnel changes create opportunities for Vietnam to further its economic reforms?
UN Resident Coordinator John Hendra: As Vietnam is in transition and still needs fundamental economic, social and governance reforms, it will be important that both the Congress and later elections result in a clear vision for the country’s future and a strong, competent and ethical leadership ready to tackle the key development challenges Vietnam now faces as a lower middle-income country (MIC).
In short, Vietnam’s leaders for the next five years will need to bring new ideas, energy and strong political will to bear on the key issues facing the country. It will be critical that documents adopted at the Party Congress, in particular the Socio-Economic Development Strategy (SEDS 2011-2020), become a framework to ensure a more balanced development that better combines economic growth with human development, social protection and environmental sustainability.
Importantly, the SEDS sets out a more sustainable growth model based on increasing domestically generated value and technological content and enhanced productivity.
It will be particularly important that the “breakthroughs” identified – more effective institutions; a more skilled labor force and reformed higher education system; better physical infrastructure; and more efficient state enterprises – are backed by strong political attention to drive effective implementation and cross-government coordination.
It will also be critical that the new leadership seizes opportunities very early on to address those issues of most concern to Vietnamese families today: rapidly escalating cooking prices, continued corruption, access to quality healthcare and education, and a deteriorating natural environment.
VietNamNet: This will be the first year for the 2011-2015 SEDP and the 2011-2020 SEDS to be adopted by the 11th Party Congress. This stage is important for Vietnam as a MIC. What would be the emerging challenges that the UN would draw Vietnam’s attention to in implementing its development strategy? UN Resident Coordinator John Hendra: In the immediate future, it will be critical to prioritize macroeconomic stabilization and fighting inflation, as Prime Minister Nguyen Tan Dung indicated in his New Year’s address. Maintaining macroeconomic stability is not only important for the sake of Vietnam’s reputation and creditworthiness in global markets, but it is a key driver of international competitiveness.
The challenges of inefficiency, low competitiveness, and management and oversight of SOEs, as well as the competitiveness of the economy more broadly, should also be given top priority. It is the poor who stand to lose most from continued high prices and general economic uncertainty.
Vietnam should also pay attention to the risks of rising inequality associated with high economic growth. The SEDP acknowledges that, “it is critical not to allow the development gap⦠to become an urgent problem.” Ensuring that social protection is available to those who are most at risk, including those who are vulnerable to falling back into poverty, will be key.
Greater attention will also be required to address the dynamic social and demographic trends influencing Vietnam’s development. Increasing mobility, internal migration and urbanisation are key features of the way Vietnam is developing. Removing barriers to social services for migrant workers so that they are able to access social safety nets in times of crisis would recognise the contribution migration is making to the economy and would help prevent some of the negative impacts associated with labour mobility.
Another challenge is gender inequality. Persistent son preference and lower fertility rates are driving the rapidly rising sex ratio at birth, while recently released research by GSO shows that 58 percent of Vietnamese women have experienced some form of domestic violence in their lifetime, including 34 percent who report physical or sexual violence from their husbands. Openly discussing and acting on these findings should lead to greater action across society to address these challenges. Greater investment in social and human development will be critical to achieve the vision set out in the SEDP and SEDS. Prioritizing public investment and enhancing its efficiency will make more resources available for public expenditure in social sectors. Investing in education and skills and in preventive health will be critical to maximizing human capabilities. By raising productivity levels in the economy and ensuring good employment opportunities, these investments will help Vietnam avoid the double trap of rising inequality and low competitiveness. Vietnam’s goal of building a prosperous, democratic, market-oriented society requires a public administration that can deliver on the promise of greater prosperity for all citizens. A challenge remains to mainstream the principles of a meritocratic and efficient public administration system among public officials so that they are motivated and capable of managing the economic, social and environmental challenges facing Vietnam. Continued corruption in the provision of healthcare and education needs to be addressed as it particularly hurts the poor and further exacerbates inequalities.
Environmental degradation is increasingly apparent in Vietnam and could threaten the country’s future development. It is crucial for Vietnam not to repeat the mistakes of many other countries by sacrificing natural resources to a single-minded focus on growth at any cost. Climate change is a central challenge and natural disasters are clearly becoming more severe as a result. Vietnam also needs to prepare now for a low-carbon industrial economy, including through energy-efficient and clean manufacturing and power generation technologies. Finally, some groups are at risk of being left behind in Vietnam’s rapid transition. These include those who experience significant socio-economic disadvantages, such as ethnic minority populations and those who face significant barriers to accessing new opportunities, such as people living with HIV, people with other chronic illnesses and people with a disability. VietNamNet: Compared to its neighbor, China, Vietnam has many similar issues in economic reform and poverty reduction. Are there any lessons that Vietnam should learn from China? UN Resident Coordinator John Hendra: While both China and Vietnam have extraordinary records in poverty reduction and strong economic connections to each other, it is important to note that most observers see Vietnam’s impressive reform progress about a decade behind China’s and that there are obvious differences in size and scale. That being said, I think there are some key lessons.
First, in terms of economic policy, while SOEs remain an important component of its national economy, China has made considerable progress in reforming them to strengthen their management and their competitiveness. What’s more, China’s physical infrastructure is considerably more than a decade ahead of Vietnam’s and has higher public investment efficiency. Given the magnitude of the infrastructure challenge that Vietnam faces during the new SEDS, it is critical that systems are developed to ensure that public investment goes to projects that have a sound rationale in economic, social and environmental terms.
Secondly, China has deeply reformed its education sector, in particular higher education. In doing so it has unleashed its strong potential for research and attracted many talented researchers from within the country and from abroad. This has not yet happened in Vietnam.
Thirdly, in the legal sector, while both China and Vietnam have engaged in reform and made considerable progress, there are areas where China has progressed faster. This is the case for access to justice and legal aid, in particular for vulnerable populations such as the poor and migrants.
Fourthly, as Vietnam implements the new SEDS it will be critical that it avoids some of the pitfalls that China has encountered, including a widening gap between the rich and the poor, increased inequality in areas of social policy such as health outcomes and environmental degradation.
Finally, I think Vietnam should learn not only from China but also from countries that have successfully moved through lower to upper MIC status. In particular, Vietnam should aspire to join the group of countries that have opted for a green growth model and are creating a clean, low-carbon economy.
VietNamNet: Thank you very much!
Interviewer: Xuan Linh
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Provide by Vietnam Travel
VN should prioritize macroeconomic stabilization and fighting inflation, UN official - International - News | vietnam travel company
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