National Congress will add Impetus to Vietnam’s Economic Development

A seminal event is currently underway in Vietnam and the country is hosting the13th Communist Party National Congress since 25 January. The Motto of the Congress is “Unity, Democracy, Discipline, Creativeness, and Development” and is being attended by 1,587 delegates representing more than 5.1 million Party members from across the country. These delegates would be appraised of the Party building work and informed about the “implementation of the previous Congress’s Resolution, review 35 years of the renewal process, 30 years of the 1991 Platform, 10 years of the 2011 Platform (amended) and the 2011-2020 socio-economic development strategy, and set out the socio-economic development orientations and tasks for 2021-2025, the goals and orientations for 2030, and the national development vision to 2045”. The Congress would also selectnew leaders for the position of the Party chief; the State President; the Prime Minister, and the National Assembly Chair.

The incumbent Party Chief Nguyen PhuTrong has held the position for the last two terms and Vietnam watchers expect him to continue for a third term. Under his leadership, Vietnam’s domestic policies have been quite sound, and the Communist Party of Vietnam has played a pivotal role in ensuring political stability in the country. Besides, Vietnam successfully delivered on its responsibilities as the ASEAN Chair for 2020, and the country successfully managed the COVID-19 pandemic with only 1,500 infections and 35 deaths.

The mandate of the Congress also includes reflecting on Vietnam’s foreign and economic policy over the next five years and beyond.Vietnam’s foreign policy has been quite balanced and it has managed its relations with great powers with alacrity i.e. China (linked by mountains and rivers and are remarkably similar in ideology, development path, social system, and value) and the US (its biggest export market and trade surplus of US$56 billion in 2019). In particular, the country was able to position issues concerning South China Sea high on the regional agenda and did not overtly criticize US military presence in the region to counter China’s growing might.

Similarly, Vietnam’s economic policies have attracted international attention. It maintained a sustained growth which lend it to be bracketed into middle-income status. Consequently Ha Noi emerged as the preferred destination for investments. Although the pandemic took toll on foreign direct investment (dampened investor sentiment and pledges dropped by 25 percentto US$28.5 billion in 2020), “foreign companies still poured $6.4 billion into existing FDI projects, up 10.6 percent year-on-year, showing that they were still confident in their investment in Vietnam and expect further growth”. These trends were also reinforced by the EU-Vietnam Free Trade Agreement, Vietnam - U.K. Free Trade Agreement and the Regional Comprehensive Economic Partnership, the world’s largest trade deal, which covers nearly a third of global GDP.

It is estimated that Vietnamese economy could continue to grow in the coming years at an average annual gross domestic product (GDP) growth of 7 per cent over the next five years. This would peg Vietnam’s GDP growth rate higher than that of China which is expected to grow at 8.4% in 2021, before slowing to 5.5% in 2022.A report by Standard Chartered forecasts that Vietnamwill surpass the $10,000 per capita GDP mark in 2030.This is anincredible growth story.  

The priorities before the Vietnamese leadership is to keep up the pace of economic growth. Prime Minister Nguyen XuanPhuc is confident that his country would be able to become a “modern industrialized country and leave the ranks of lower-middle-income countries by 2025” Furthermore, in 2030, when Vietnam marks the 100thfounding anniversary of the Communist Party of Vietnam, the country would emerge as an “ upper-middle-income country” and by 2045, turn into a “developed, high-income country”. The Vietnamese government’s current priority is to respond to Covid-19 epidemic as also to “boosting production and creating jobs,”

At the heart of Vietnam’s economic miracle are a number of catalysts such as political stability, liberal policies and infrastructure for manufacturing. These were supported by trade liberalisation, investor-friendly policies and low-cost human capitalwho are young and well-educatedandattractinternational companies. Perhaps what also merits attention is that Vietnam has placed enormous emphasis on IT sector. In 2019, the sector earned US$ 98.9 billion in revenue of which US$ 94 billion was from export activities. The government is also committed to harness the Industry 4.0 technologies, preparing a community of 100,000 technology enterprises. It is their belief that these technologies can help Vietnam escape the middle-income trap,and would potentially catapult Vietnam into a high-income status by 2045.

Dr Vijay Sakhuja is Consultant Kalinga International Foundation, New Delhi.

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