Creativity key to growth promotion

Minister of Planning and Investment Nguyen Chi Dung and World Bank (WB) Country in Vietnam Ousmane Dione co-chaired the forum on the theme “Increasing Productivity - Leverage for Sustainable Development” in the presence of Prime Minister Nguyen Xuan Phuc.

Those in attendance included development partners, investors, and representatives from research institutes, ministries, embassies, foreign and domestic organisations, and the business community along with provincial and municipal leaders.

VDF 2017 focused on specific solutions to spur productivity, creating long-term solutions for Vietnam to overcome the middle-income trap and catch up to developing economies, the trend of global productivity growth and challenges for Vietnam.

The forum’s topic this year is considered very practical for Vietnam’s current affairs when its economic growth has experienced a continued reduction. According to a report released at the forum, Vietnam’s average economic growth in the period 1990-2000 stood at 7.3% and the figure fell to 6.7% for 2001-2010 and below 6% for 2011-2016.

Experts said that over the past years, Vietnam’s growth was primarily contingent on capital and natural resources and labour intensive industries. Therefore, slower labor productivity is the cause of slow economic growth. Meanwhile, the world is entering the era of the 4.0 industrial revolution and Vietnam is making every effort to maintain substantial growth.

In 2017, labor productivity has contributed up to 89% to GDP growth, much higher than the 66.3% level recorded in the 1990-2000 period. Thus, productivity growth is the key to ensuring Vietnam’s steady growth in future.

In his remarks, Prime Minister Nguyen Xuan Phuc called for greater efforts to increase workers’ productivity, the efficiency of capital use, and total factor productivity.

“Increasing total factor productivity is an important task of the government, which strengthens investment in science, advanced technologies, development and research, infrastructure, smart connection, legal reform, governance, business environment, and reducing transaction costs for the economy.

We should uphold the people and businesses’ spirit of innovation and creativity and seize opportunities created by the 4th industrial revolution to develop the digital economy and smart industry and cities towards higher productivity and efficiency. On the basis of total factor productivity, Vietnam will have opportunities to overcome the middle-income trap.”

He also described increasing productivity as a foundation for improving national competitiveness.

In order to avoid productivity decline, UNDP Senior Advisor in Vietnam Rajah Rasiah suggested that Vietnam should learn experience from other regional countries. Experience from the Republic of Korea (RoK) Taiwan (China), and Singapore show that "creativity" is a key factor for growth promotion and these economies focus their investments on infrastructure, capital accumulation, and human resource development, export orientations.

Therefore, what Vietnam can learn is to focus on human development by strengthening science and technology education, and vocational training, and attracting talents and experience from overseas Vietnamese overseas and from abroad. In addition, it is essential to increase funding for innovation, including preferential interest rates for innovative activities, and sponsor or work out incentive financial policies for research and development, he said.

Like the Vietnam Business Forum 2017 on December 12, speakers once again underlined effective linkages between domestic and FDI enterprises by becoming involved in production and business activities towards moving up in global value chains and ultimately improving its productivity.

World Bank Country Director in Vietnam Ousmane Dione said improved productivity is significant to turning Vietnam into a middle-income country till 2035.

He hailed Vietnam’s growth over the past five years, saying there remains room for the country to improve economic productivity, upgrade transport and logistics and closer collaboration between domestic and foreign firms is vital to elevating Vietnam’s status in the global value chain.

Vietnam has witnessed another year of robust growth and macroeconomic

stability, marked low single digit inflation, a relatively stable exchange rate, and a strengthening

external position, he said

He also congratulated the government for achieving an improvement of 14 ranks in the WBG Doing Business 2018 ranking. Reform implementation must keep this positive momentum, as it is critical for continued macroeconomic stability and higher productivity growth, he noted.

The Vietnamese government needs to continue improving its business climate, simplify administrative procedures and properly allocate land and capital resources, he said while stressing the importance of skill training, innovation and effective use of preferential loans.

In addition, ministries, sectors, localities and especially enterprises themselves need to raise their awareness about higher investment in research and application of science and technology so as to increase product value and productivity.