Vietnam has the fastest aging population in the world.

Vietnam's population is aging at an accelerated rate. Photo: Nhu Y

4 risksof Vietnam

According to Ousmane Dione, four major trends are impacting Vietnam: new forms of trade, the knowledge economy, climate change, and an aging population. “These major trends bring both risks and opportunities, and it’s crucial to find ways to leverage them to Vietnam’s advantage,” said Ousmane Dione.

Mr. Ousmane Dione stated that the growth of trade is slowing down. Vietnam has benefited from a strong FDI attraction and employs 2.4 million workers. However, neighboring countries like Cambodia and Myanmar are emerging as competitors to Vietnam in attracting jobs and low-skilled labor. Furthermore, with technological changes, FDI enterprises may even reinvest in their home countries.

The World Bank director in Vietnam also expressed concern about the rise of the knowledge economy, which demands a more complex skill set than manual labor, while only 8% of Vietnam's workforce has a university degree.

“This workforce is insufficient to bring about a meaningful shift from ‘daytime work’ to ‘knowledge-intensive work’ in the knowledge economy. This leaves ethnic minority workers, older workers, and a segment of Vietnamese youth vulnerable,” the World Bank director said.

In particular, the World Bank Director in Vietnam stated that Vietnam is experiencing the fastest rate of population aging in human history. The proportion of Vietnam's working-age population peaked this year and is now declining.

“The proportion of the population aged 65 and over was 6.5% in 2017, and is expected to reach 21% by 2050. This means that one in five people is elderly. This has many negative impacts on Vietnam's labor supply and long-term productivity growth,” added Mr. Ousmane Dione.

Joy and worry

Deputy Prime Minister Vu Duc Dam stated that rapid development is already difficult, but now it must be sustainable. "Often, the whole country, due to pressure for economic development, has to sacrifice the environment. With the environment, it may take decades to fix the damage, but with society, it takes generations—a very long time—to improve," Mr. Dam said.

The Deputy Prime Minister also stated that he was "happy" that Vietnam's competitiveness, business environment, and innovation have improved, but he was still concerned because its ranking remains high compared to other countries in the world.

"A series of obstacles faced by businesses have not yet been resolved by ministries and agencies. However, many businesses and associations, when making recommendations, only focus on their immediate needs, without considering long-term goals for the business community, including sustainability," the Deputy Prime Minister said.

Speaking at the conference, Prime Minister Nguyen Xuan Phuc requested that efforts be made to improve the business environment and enhance competitiveness, as many component indicators have shown unsustainable and low improvements; the efforts of some ministries, sectors, and localities have been uneven and lacking in decisiveness, which must be rectified in the coming time.

The Prime Minister also requested that the role of the business community and social organizations, especially the Vietnam Chamber of Commerce and Industry (VCCI), be further promoted in identifying institutional and legal barriers, investment and business conditions, and administrative procedures; emphasizing accountability, discipline, and order; strengthening inspection and supervision; and strictly handling violations, negative practices, and harassment against businesses.

Speaking about innovation, entrepreneurship, and the approach to the Fourth Industrial Revolution, the Prime Minister requested the completion of the startup ecosystem to realize entrepreneurial and innovative ideas, especially for the younger generation.

Mr. Ousmane Dione noted that Vietnam needs to operate three elements, likened to three gears – modern industries, traditional industries, and the workforce – smoothly in order to create better jobs. Because, without policies to lubricate the machine and leverage Vietnam's advantages, it's like "stirring up the wheel," causing the machine to jam and halting job creation.