By Tao Jun, Tran Van Doanh
HANOI, Oct. 31 (Xinhua) -- Vietnam should solve its productivity challenge to make its socioeconomic development a success, an expert on the matter has told Xinhua.
To promote Vietnam's long-term economic growth, changes and reforms must happen, said Adam Sitkoff, Executive Director of the American Chamber of Commerce (AmCham) in Hanoi on Sunday.
"In the final months of 2016, companies and investors in Vietnam enjoy a level of stability that many countries in the region envy. The leadership transition was smooth, economic growth has been steady, inflation is manageable, and the currency remains in a tight range," Sitkoff stated.
However, the Vietnamese government should place a greater emphasis on "solving the continued challenges of corruption, human resource constraints, and an over-complicated, restricted, and unclear licensing and regulatory environment," he said.
"Vietnam has a great opportunity to build a modern, efficient economy. Success will require solving the country's productivity challenge, along with faster development of a skilled workforce," Sitkoff added.
Study after study has reported that current curricula are outdated, teachers are overmatched and underpaid, and graduates are lack the job-ready skills sought by the private sector. Upgrading the skills of the workforce is very important and the government should take further action to modernize and upgrade its national curriculum, particularly at the vocational and university levels, the expert told Xinhua.
Besides, he added, it is time for Vietnam to move forward with the difficult task of restructuring state-owned enterprises (SOEs) to ensure that they are managed with transparency, responsibility, and accountability, and that SOEs operate on a level playing field with both foreign and domestic private sector enterprises.
It is also time to tackle corruption by implementing systems well known to reduce the opportunities for illegal payments, he highlighted.
"Corruption has become corrosive in Vietnam and is dangerous to the economy and society as a whole. A significant step forward would be actions that greatly limit the use of cash payments," explained Sitkoff.
In October, the Communist Party of Vietnam Central Committee's General Secretary, Nguyen Phu Trong, said the party should determine a new growth model for the development of Vietnam in the coming years.
A roadmap for the next 5-10 years should be drafted, along with a vision to 2030, the party's top leader said, particularly pointing to policies and measures to promote science and technology, improve workforce quality, effectively mobilize social resources, especially from the private economic sector, the concentration of land, as well as solve bad debt and weak commercial banks.
Trong also said more focus should be given to the control of public and bad debts, the restructuring of the state budget, public investment, SOEs, and commercial banks, as well as the improvement of the business and investment environment.
According to Sitkoff, many of the issues raised by the Party Secretary are not unique to Vietnam. Vietnam is not the first country to have banking and bad debt problems, nor is it the first country to face corruption and mismanagement issues impacting the foundation of the economy. Vietnam is also not alone in facing difficult decisions on dismantling inefficient SOEs.
While there are many difficult challenges to overcome, Vietnam is equipped with the tools to do so. Initiatives that provide further encouragement of private enterprise, and that enable and facilitate, rather than restrict business opportunities, will help Vietnam achieve its goals.
"Simply put, we need to see actions to fix areas where inconsistencies, inefficiencies, and unfair practices persist," Sitkoff said. Vietnam needs to create an environment that enables the Vietnamese people to express their natural ambition and entrepreneurial spirit, he added.
Sitkoff's view echoes that of the Asian Development Bank (ABD). According to the bank, Vietnam needs to develop a more dynamic market economy that can compete globally and deliver sustainable and equitable growth over the long term.
"A greater role must be given to the private sector to increase Vietnam's competitiveness and reduce the distorting influence that SOEs and a fragile financial sector have on innovation and job creation," the ADB stated in October in its country partnership strategy for Vietnam in the 2016-2020 period.
"As its low-cost labor advantage begins to dissipate, Vietnam will need to increase productivity, product innovation, and value addition," said the ADB.
Developing a healthy, better educated workforce and upgrading the quality of infrastructure will be critical. Since 1990, Vietnam has grown mainly by expanding its labor force and both foreign direct investment and domestic capital. "But demographic shifts and eventual limits of capital mobilization will close these options. Vietnam needs to rely more on productivity gains driven by innovation in order to boost its economy," stated the ADB.
Future growth will have to come from a "smarter" working labor force and from a higher quality of capital resources. Higher labor productivity, in turn, will have to come from resuming total factor productivity growth -- from growth in new and better ways of combining labor and capital, according to the bank.
"In many ways, China has a longer development experience than Vietnam and hence Vietnam can learn from China's development experiences and economic model," Eric Sidgwick, ADB Vietnam Country Director, told Xinhua recently. Enditem