Opportunities and challenges when Vietnam becomes a Middle Income Country

CA - Vietnam was successful in the accomplishment of the 10-year Socio-Economic Development Strategy (SEDS) period 2001-2010 and 5-year Socio-Economic Development Plan (SEDP) period 2006-2010 with remarkable development achievements. Vietnam has achieved two thirds of the MDGs with a sharp fall in the poverty ratio (three times higher than the MDG targets by 2015).

These development achievements have brought Vietnam to become a lower Middle Income Country (MIC) and to advance to a new development stage.

Vietnam is fully aware of both the opportunities and challenges that will come with this new MIC status. Apart from the favorable conditions brought by the current economic potential and the social progress, the enhanced role and position of Vietnam in the international and regional arena, and the strong support from the international community and DPs, Vietnam faces a lot of challenges, specifically:

The inadequacy of the existing socio-economic infrastructure compared with that needed to allow continued successful growth could hinder the current rapid development, and slow down the improvement of people’s lives.

The establishment of a market economy, that has contributed so much to Vietnam’s socioeconomic improvement, is not yet adequately developed; more progress must be made to ensure that growth is sustained.

The competitiveness of the economy is still low. More work needs to be done on establishing an enabling legal framework, on upgrading the low level of application and use of modern technology adapted to a modern market economy and, on upgrading management capacity and human resource development. The current lack of highly skilled labor in particular could become a heavy constraint on economic development.

Green growth development has become an increasing concern as a factor that can undermine the sustainability of development (Vietnam is one of five countries that are most heavily affected by climate change.)

These and other opportunities and challenges need to be addressed in the long term strategies and medium term plans now being developed in Vietnam. To deal with the challenges, the Government of Vietnam has launched a package of measures with three breakthroughs in institutional framework, high quality human resources and infrastructure development as well as restructuring the economy with the three dimensions including: public investment; banking and financial sectors; and state-owned enterprises along with stronger social safety net.