For Vietnam to rise as a new 'tiger'

Mr. Ousmane Dione, Country Director of the World Bank (WB) in Vietnam - Photo: Tuoi Tre

"Hating" Vietnamese food because it is so delicious, impressed with the improvement of Vietnam's business environment in 2017, urging Vietnam to come up with solutions to avoid the middle-income trap and forecasting the future, are the issues shared by Mr. Ousmane Dione - Country Director of the World Bank (WB) in Vietnam, before the new year 2018.

Coming to Vietnam and holding the position of "head" of the World Bank (WB) in Vietnam for 2 years, how do you feel about Vietnam?

Vietnam is an economy that maintains good growth and can become a miracle in the future with many expectations. That is the advantage of abundant, hard-working human resources; the economy is on the right track and increasingly stable.

We hope Vietnam will rise to become the new "tiger" of the region.

To do this, Vietnam must address many challenges, including labor productivity, building a quality workforce with skills to participate in the global supply chain, and adapting to challenges from technology and trends of the 4.0 industrial revolution. I think Vietnam has an excellent workforce to do this.

So what impressed you most about Vietnam?

Vietnam's business environment in 2017, according to the WB's assessment, increased 14 places to 68th place. This is an impressive jump.

I am sure that you are aware of the efforts made by the Government to reform the economy and improve the investment environment over the past time. This is a factor that has helped Vietnam rise in the business environment rankings.

Vietnam’s manufacturing sector has made significant strides. Looking at the import-export trade figures, we see that Vietnam exported more than 45 billion USD worth of phones, a strong increase compared to the previous year. Seafood exports also reached more than 8.4 billion USD last year, contributing to Vietnam’s GDP growth. Cashew exports reached 3.5 billion USD.

Vietnam has participated more deeply in the global value chain, a positive signal for the economy. Vietnam needs to continue to promote this through policies to encourage businesses such as taxes, business startups and many other policies...

During this process, we pledge to strive to accompany the Government, people and businesses of Vietnam to move forward and leave no one behind.

The improving business environment is what impressed you. So is the 6.81% growth rate that Vietnam achieved in 2017 an impressive achievement, sir?

Vietnam has had a truly successful year economically. Economic activities have been promoted comprehensively, with the support of many positive factors both domestically and internationally.

Strong consumption was supported by low inflation and rising wages. Investment also performed well thanks to a combination of loose monetary policy and increased liquidity in the banking system, as well as record FDI inflows.

Better-than-expected global GDP growth, a recovery in trade and a favorable financial situation have helped boost Vietnam's economy - one of the most open in the world.

In particular, rapid growth is accompanied by macroeconomic stability maintained for 6 consecutive years, with inflation maintained below 4%, exchange rates maintained relatively stable and international position enhanced.

The current positive results are an opportunity to continue to grow and promote reforms to enhance macroeconomic stability and enhance Vietnam's future growth potential. Vietnam should continue to develop in this direction while the times are favorable, just as it can be said that when the body is healthy, we should be more active.

Because as you know, the domestic context still has many worrying factors, such as high public debt and significant bad debt ratio of the banking system, as well as a series of unpredictable factors in the world.

In addition to the worrying factors you just shared, recently many international experts have urged Vietnam to come up with solutions to avoid falling into the middle-income trap when this trap is imminent. What is your opinion on this issue?

Although Vietnam's economy has achieved positive results in 2017, there are still some major obstacles that Vietnam needs to overcome to maintain economic performance and avoid falling into the middle-income trap.

To do that:

The first, must continue to carry out institutional reforms, build market mechanisms, and the State must create conditions to allow the private economy to develop, such as strengthening reforms in land management, reforming state-owned enterprises, institutional reforms, and reforming the banking sector.

Improving and modernizing administrative procedures and improving the efficiency of state institutions will also contribute to reducing costs in the business environment.

Monday, Vietnam needs a high-quality infrastructure system. Rapid growth is putting pressure on infrastructure. Electricity demand is forecast to increase by 7-10%/year. Freight traffic increases by about 12%/year.

Therefore, Vietnam needs to find solutions to meet these needs within the framework of existing financial resources to avoid falling into the "bottleneck" of infrastructure - that is, focusing more on improving the efficiency of public investment, while increasing and exploiting private capital appropriately.

Some important national projects, such as power generation projects (especially renewable power generation), construction of the North-South expressway, national railway or Long Thanh Airport in Ho Chi Minh City area will also benefit if there is a suitable PPP investment mechanism.

Tuesday, Vietnam needs an integrated model to deal with climate issues in high-risk areas such as the Mekong Delta and the Central Coast, such as integrated planning, building infrastructure that can adapt to climate conditions, as well as restructuring to adapt to climate in both production and life.

Wednesday, it is a matter of improving qualifications and building human capital to keep up with the 21st century. This is an important factor for Vietnam to improve its position in the value chain and deal with new challenges that come with the emergence of new technologies and the "Industrial Revolution 4.0".

To do that, Vietnam needs to build a solid foundation and build a high-quality university and vocational education system to ensure a competitive workforce in a rapidly changing global economy.

There are both short-term and long-term challenges awaiting the Vietnamese economy. So what is your view on Vietnam's economic prospects in 2018 alone?

The economic outlook for 2018 is positive. Barring major changes, we expect high economic growth to be maintained at at least 6.5%, driven largely by rising domestic demand and export-oriented manufacturing.

The overall outlook, while favorable, is also fraught with risks. Globally, we see significant policy uncertainty and expect continued liquidity squeezes.

Therefore, it is necessary to focus on prudent macroeconomic policies to enhance Vietnam's resilience to fluctuations, as well as strengthen structural reforms to enhance medium-term growth potential.

There are things that make you think and are impressed after 2 years in Vietnam. Is there anything in these 2 years that makes you unsatisfied, sir?

Oh! That's Vietnamese food. I want to keep fit (laughs) but your food is so delicious and I'm getting fat (laughs). My son told me about this. Just kidding, but I think this is what attracts my friends.

My life here, from culture, health, food or even communication with Vietnamese people, is very comfortable.