EC3373 ASEAN ECONOMICS
Vietnam in ASEAN
Tutorial Group: W2 (Friday 1-2pm)
Han HeChou Aaron A0085883M
“The fastest growing emerging economy by 2050”, this is what the Senior Partner of PricewaterhouseCoopers LLP, John Hawksworth, claims of the potential for the Vietnam’s economy.Vietnam has transformed from a nation plagued with wars in the 1970s, to an economy that has posted annual per capita growth of 5.3% since 1986. Vietnam’s economic success started after the implementation of the ‘Doi Moi’ (Revolution) policy by the Communist Party of Vietnam (CPV). The goal was to create a country that was self-sufficient in food, and improve the standard of living of the Vietnam’s people. The reforms implemented include the transition of the economy that was heavily based in agriculture towards manufacturing and services. More importantly, under Doi Moi, the highly centralized planned economy of Vietnam started opening up itself to the outside world. Since becoming a member of ASEAN in 1995, Vietnam has established FTAs between ASEAN, Japan, China and Korea. Furthermore, Vietnam joined the World Trade Organisation in 2007. These are significant milestones for Vietnam as she continues to be integrated into the regional and global economy. This widens the market for Vietnam’s exports and resulted in greater inflows of Foreign Direct Investment (FDI). The CPV continued to liberalized trade with the promulgation of the Law of Investment in 2005 that created an equal playing field for all enterprises in the economy and an ‘equitation’ programme that saw the sale of State Owned Enterprises to strengthen the private sector. These reforms by the CPV contributed to the rapid expansion of foreign trade over the last two decades. Vietnam’s exports have increased more than 11 times between 1995 and 2008, with the annual growth rate averaging 20.7%. Since 2004, the CPV has adopted the Strategic Orientation for Sustainable Development (Vietnam Agenda 21). The idea of ‘sustainable development’ has become the basis of the policies implemented in the future. The Strategic Orientation for Sustainable Development is a framework strategy that sets the national objectives for the country and pinpoints the challenges the country is facing. This includes recently implemented the Socio-Economic Development Strategy for 2011 – 2020.
Major National Objectives for Vietnam
Sustain economic growth
The main economic development objective is to maintain the fast and sustainable economic growth the country is experiencing. Having growth of 5-8% in the past 5 years, (refer to Fig 1 in Appendix) Vietnam’s products have rapidly expanded into the international markets. The agro-based, forest and aquatic products in particular have done well. In addition, Vietnam’s Global Competitiveness Index (GCI) in 2010 has increased significantly, placing the country in the group of the world’s 59 most competitive economies compared to the other 137 economies of the world. The Socio-Economic Development Strategy for 2011-2020 stresses the importance for rapid development to be closely linked with sustainable development. Poverty reduction and improvement of education quality
Vietnam’s target for sustainable development also covers the social and environmental area. Another of Vietnam’s main national objective is to reduce the poverty rate in the country. There has been a reduction from 22% in 2005 to 9.45% in 2010 through programmes such as the Comprehensive Poverty Reduction and Growth Strategy (CPRGS) adopted in 2002. However, the poverty rates are not sustainable and uneven in the mountain and disaster-prone area. Vietnam is also targeting to improve the education quality and skill level of the labour force. Though the country has improved the education quality and training capacity, for example, accomplishing primary education universalization in 2000, the education quality still remains lower than required. In addition, the country’s economy is...
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