(CPV)- Vietnam’s ten years Socio-Economic Development Strategy (SEDS) for 2011 – 2020 will be a key document in setting the strategic directions Vietnam must take respond to major global and regional trends impacting the country’s development.
The new SEDS will ideally build on the achievements of the 2001 – 2010 Socio – Economic Development Strategy in accelerating industrialization and modernization following the socialist orientation, and laying the foundations for Vietnam to become a middle income country by 2020. It will also dovetail with the specific components of Vietnam’s Millennium Development Goals (MDGs), at least in part, which have a deadline of 2015.
At the same time, the 2011 – 2020 SEDS will reflect the changing realities of Vietnam’s engagement with the goal economy and the country’s new phase of development. It is instructive to review the goals set for SEDS 2011 – 2010, so as to ascertain the different context for SEDS 2011 – 2020, which were:
To bring our country out of underdevelopment; improvement noticeably the people’s material, cultural and spiritual life; and lay the foundations for making ours basically a modern – oriented industrialized country by 2020. To ensure that the human resources, scientific and technological capacities, infrastructures, and economic, defense and security potentials be enhanced; the institution of a socialist-oriented market economy be basically established; and the status of our country on the international arena be heightened.
The driving impulse embodied by these goals are modernization, industrialization, and integration into the global system. Coming from a relatively low base of economic development and previously isolated from international affairs, the earlier decades of reform entailed a fundamental ideological reorientation by the Vietnamese leadership that would allow and encourage private sector activities, while simultaneously making a concert effort to become a member of various regional and international forums.
Modernization and industrialization were – and still are – clearly necessary for Vietnam to shift from an agriculture – based economy to a manufacturing one, with a GDP growth trajectory that would help the country address serious hunger and poverty, and graduate out of the ranks of the least developed countries.
This was the backdrop to the SEDS 2001 – 2010; a decade in which Vietnam’s economic reform and business liberalization effort bore significant fruits. It entailed a marked drop in poverty rate (falling from 58.1% in 1993 to 16% in 2006); an average GDP growth rate of 7.43% (1990 – 2008); a dramatic increase in per capita income (from 220 USD in 1994 to 1,024 USD in 2008); and a growing private sector, and a steady increase in FDI in recent years. By the end of 2006, the year that Vietnam marked two decades of Doi Moi policy, the country had completed negotiations with the World Trade Organization to become the 150th member of the global trade body, attained Permanent Normal Trade Relations (PNTR) with the US.
In addition, the basic economic structure of the economy had completed a radical change; while the service and trade sector continued to account for around 40% of GDP, the agricultural sector (including forestry and fisheries) had gone from representing roughly 40% to 20% of GDP, and conversely the industrial sector (including construction) had gone from representing roughly 20% to 40% of GDP.
The headlong push for modernization and industrialization is also not without negative impacts, however, particularly with regard to the environment, social stability, and continued welfare improvement for the most vulnerable populations, such as the poor, disadvantaged women, and ethnic minorities.
Quoting Prime Minister Nguyen Tan Dung, “Vietnam’s development strategy is towards sustainability, including three mainstays: economic development accompanied with ensuring social equity and environmental protection. This commitment to the goal of sustainable development is reflected in the Ministry of Planning and Investment’s use of “three pillar’s of development to evaluate the results of implementing the Five-Year Socio – Economic Development Plan for 2006 – 2010 (MPI, 2009). The three pillars being:
Ensure high and sustained growth through improved efficiency so that the country graduates from under-developed status; ensure progress in the social sectors to improve the material and spiritual lives of the people; protect natural resources and the environment for sustainable development.
As such, the term ‘sustainable development’ is increasingly being used in Vietnam by the public and government alike, reflecting the increasing recognition that economic growth at any and all costs is no longer viable.
Environmental degradation is visible, with waterways heavily polluted by industrial waste, and related public health issues are a growing concern. As one of the twelve countries that will be most impacted by climate change in the world, Vietnam also has to mainstream climate change into its planning processes.
Relatively cheap labour has been Vietnam’s primary comparative advantage in export-oriented manufacturing, but the rising number of strikes in recent years point to inadequacies in industrial relations.
The push for industrialization has also resulted in an increasing amount of agricultural land being acquired for industrial purposes, leaving a growing number of farmers without land and without the skills necessary to enter the labor force.
Modernization has primarily focused on urban areas, leaving the countryside with insufficient infrastructure and opportunities, which further pushes young people to migrate to the cities to find employment. The rural-urban gap is widening, as is that between the rich and the poor.
These are common challenges many developing countries face, but this next phase of development is critical, as Vietnam has moved beyond the poverty alleviation agenda and is increasingly focused on how to compete successfully in the global market; reach the rank of middle income countries; and establish itself as an active participant in regional and international affairs.
The oft-cited phrase of “prosperous people, a strong country, an equitable, democratic, and civilized society” can stand as a long term development goal for Vietnam. In a sense, the very success of the next phase of development requires new approaches, institutions and practices in order for Vietnam to keep pace with an increasingly complex economy and modernizing society, under conditions of greater global volatility.
We note also that these challenges related to labor, agricultural development, environment and climate change, among others, are recognized by the Vietnam leadership, and are among the topics being addressed in the series of 18 reports being commissioned to help inform the 2012 – 2020 SEDS drafting process, of which this report is just one part.
Those specific papers will provide more detailed analysis of these challenges and the relevant experiences of other countries in addressing, and which should be useful for Vietnamese policymakers to consider. For our part, in interviews and discussions with senior government officials, researchers, and representatives of international organizations, conducted as part of the consultation process for this report, the concerns and challenges they see for Vietnam in the next development phase – and which should inform the 2011 – 2020 SEDS – were markedly similar and highly inter-related. As such, we feel that it is worthwhile to note the convergence of their views and have grouped them into five development ‘characteristics’ outlined below:
Quality of growth over rate of growth: growth that takes into account environmental issues, labor concerns, and the rural-urban divide is much more likely to be sustainable in the long run, by more efficient use of assets and resources, and by giving different groups within society a stake within the system.
Integrated rural-urban development: in a still predominantly agricultural country, current industrialization and urbanization policies do not support the rural economy to modernize and to link to urban development. Rural infrastructure and other public services lag behind those provided for the cities, leading to a bifurcation of rural and urban development, rather than mutually reinforcing one another.
Capacity bottlenecks in human resources, institutions, infrastructure, and the domestic private sector were referenced by all whom we interviewed. The capacity gap is particularly critical, as Vietnam seeks to move: from a low wage economy to one that is knowledge-based; from a small scale business model to one that can compete in regional an international markets; and from reactive responses to external shocks, to those which can more nimbly forecast volatility and mitigate its impacts.
Government coordination is critical, as complex issues require the involvement of many agencies, but Vietnam largely remains locked in a vertical, top down organization structure.
State-society relations will need to evolve as the role of the State shifts from that of control to one of facilitation, and the broader engagement and expertise of society is needed to generate knowledge and innovations, appropriate for the challenges and opportunities of the Twenty-first Century.
