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Deputy Prime Minister Pham Binh Minh recently commented Vietnam is currently trying to direct foreign investor interest to innovative, environmentally projects. The focus is now shifting away from labour intensive industries that use a lot of natural resources to more high tech sectors and looking to foreign firms working more closely with local firms to build higher value chains,
Vietnam is also hosting the APEC Summit in November 2017, and according to DPM Minh Vietnam has advanced four key priorities: generating inclusive, innovative and sustainable growth; improving economic connectivity, enhancing the competitiveness of SME’s and ensuring food security and adaption to climate change, which are of course all particularly relevant to Vietnam. Of interest, it was only in the 1990’s that Vietnam emerged from being a net food importer and suffering food shortages to being a new food exporter but last year drought conditions caused a significant reduction in Vietnam’s food exports.
The Minister of Planning and Investment Mr Nguyen Chi Dung, recently commented “For example Vietnam is lagging behind more advanced nations because its economic scale remains small…. The economy is also facing a challenge of falling into a middle income trap, coupled with challenges of climate change and environmental pollution.”
He also stressed in the interview the need to improve the contribution of human resources through increased productivity and to improve the contribution of high technology to the growth. It is interesting that Vietnam’s growth in labour productivity is reported to have been the lowest in SE Asia, in last couple of years.
Whilst it is really promising to see the Government is aware and focused on some of the critical issues in addressing the middle income trap actions in the short term to medium term will determine whether Vietnam can be successful in avoiding the trap.