VIETNAM 2035 REPORT

What do you want Vietnam to be in 2035 and how to get there?

From December 12, 2014 to January 20, 2015, Minister of Planning and Investment Bui Quang Vinh and World Bank Vietnam Country Director Victoria Kwakwa hosted an online discussion on policy actions for Vietnam’s development toward 2035.

The discussion has received many interesting questions and comments on various topics from both Vietnamese people and international audience. Due to limited time, Minister Vinh and Ms. Kwakwa could not respond to all of the questions and comments. We really appreciate your time and your engagement in the discussion.

The Government of Vietnam and the World Bank are conducting a joint study on how the country can achieve its objectives to become a modern nation that is wealthy and create room for all of its people to prosper.

Since the 1980s, Vietnam has sustained high growth without increasing inequality, a feat few countries at any level of development have managed. Since the early 1990s, tens of millions have been lifted out of poverty and the bottom 40% of the population’s share of national income has kept pace with Vietnam’s growth.

Today, Vietnam’s development path is at a critical juncture. The Vietnam 2035 report will analyze key strategic and policy actions that will be critical for achieving Vietnam's aspiration of becoming a modern industrialized economy building on its successful track record of inclusive growth.

Your input is requested to help inform the drafting process. Please share your ideas and suggest solutions to address key challenges that Vietnam is facing. We would like to hear from you – Vietnamese citizens and friends from the international community – to help make this study a substantial and practical guide for Vietnam’s development path.

We are now in the early stage of developing the report and have identified several initial issues.

One critical challenge for Vietnam is moving back to a higher growth path. The key here will be to move away from a growth model that is state and capital investment led toward one steered by the private sector and based on productivity growth driven by technology and innovation. Vietnam should pursue a greener growth model by making green choices in its energy, water and transportation sectors, and at the same time strengthen its resilience to climate change.

While income inequality in Vietnam is modest, inequality of opportunity has emerged as a growing concern. Vietnam needs to address persistent poverty, especially among ethnic minorities, and evolving vulnerabilities challenges such as the aging of its population. Social protection policies will need to operate as a more integrated system across social insurance, social assistance and active labor programs. The education and health sectors should be reformed in line with the needs of a modern, industrialized country, with equal access for all.

Institutional reforms need to keep pace with economic development and securing inclusive growth. State institutions need to be overhauled for the state to become a successful facilitator of the economy.

Do you agree that these are the critical issues that Vietnam needs to become an industrialized country in the shortest time?? What else do you think should be considered?

Minister of Planning and Investment Bui Quang Vinh and World Bank Vietnam Country Director Victoria Kwakwawill join an online discussion on our website to discuss solutions for Vietnam’s development toward 2035 that will be covered in the Vietnam 2035 Report. The discussion will be opened until the end of 20 January, 2015. Please share your views with us by submitting your comments in the form below. Mr. Bui Quang Vinh and Ms. Victoria Kwakwa will discuss and respond to your questions on this website.

What do you see as the vision for Vietnamese cities, 20 years from now?

From February 2 to 14, Vietnamese and World Bank’s experts will host a discussion on urbanization and spatial transformation for Vietnam’s development toward 2035.

Vietnam is well on its way on the journey into urbanization and economic development. Urban areas are home to 33% of Vietnam’s population and contribute 51% of national GDP, and urban population is growing at just over 3% per year implying a doubling of urban population in less than 25 years.

Vietnam’s institutions for provision of services are also evolving to support such rapid pace of urbanization.

Vietnam’s transformation into a modern industrialized nation cannot take place in the absence of well-planned urbanization.

Vibrant Vietnamese cities will be essential for the emergence of knowledge-intensive production of goods and services. While Vietnam has done reasonably well in reaping the benefits of urbanization in the past couple of decades, evidence suggests that there is need to reassess and bolster the underlying institutional structures that govern factor markets (land, labor, and capita), public finance, urban regulations, and service delivery so that they are compatible with the needs of a modern market economy.

In the VN 2035, one of the key areas of analysis that team on urbanization and spatial transformation is looking at how can the existing institutions plan better for urbanization, what should be some of the key aspects that policy makers should reflect in laws/regulations and should the existing policy of spatially balanced development be pursued? What do you see as the vision for Vietnamese cities,20 years from now?

Our experts will be responding to your comments and opinions. They include Mr. Huynh The Du, Director of Public Policy Program, Fulbright Economics Teaching Program, Mr. Nguyen Do Anh Tuan, Institute of Policy and Strategy for Agriculture and Rural Development, Mr. Somik Lall, Lead Economist for Urban Development in the World Bank’s Social, Urban, and Resilience Global Practice, Mr. Gabriel Demombynes, World Bank Senior Economist and Ms. Madhu Raghunath, World Bank Senior Urban Specialist based in Hanoi, Vietnam.

What is your vision for how innovation will contribute to the sustained growth in Vietnam over the next 20 years?

From March 11 to 25, Vietnamese and World Bank’s experts hosted a discussion on higher education and innovation – driving force for Vietnam’s development toward 2035.

International experiences show that innovation is critical to both growth and the concomitant creation of new and better jobs. More generally, both theory and history suggest that countries can have very different growth trajectories depending on their ability to identify and assimilate technological advances.

Over the past decades, Vietnam’s impressive growth has relied heavily on the accumulation of capital and labor. More people started working and companies invested in machinery and other capital. These gains cannot continue to grow as they have in the past. Future economic growth must rely increasingly on increasing productivity. The single most important driver of total factor productivity (TFP) as well as productivity in general is innovation, more specifically, technology-driven innovation. In agriculture, for example, R&D results applications have contributed up to 30% of growth in the the sector.

Boost innovation requires mobilizing financial sources and improving the performance of the national innovation system, or NIS. The NIS is made up of the firms, research institutes, universities, and public and private agencies that produce knowledge and research, advance technology or commercialize it. State budget remains the key source of investment in science, technology and innovation (STI), i.e. 65 – 70% of total social investment in STI, and yet STI expenditures account for 1.5% of total State budget. Industry does not invest in R&D in ways that optimize growth.

Human resources for STI – a key to the development of innovation – are scarce and often not of sufficient quality and relevance. The skills supplied through formal education and training are often out of date or too theoretical, and do not meet the demands of the labor market. In addition to financing constraints, the governance of higher education suffers from weaknesses in terms of information about skills needs and incentives for alignment. And there is a weak linkage between universities and institutes, between research institutes and the industry sector, poor quality of scientific research and social service providers, unsound policy and mechanisms, and weak structural system of human resource training.

Viet Nam’s business sector still accounts for a very small share of R&D expenditure. Few firms perform R&D, the overall level of innovation activity is low and links to public research are weak. Improving in-house innovation capabilities – which requires skills to engage in design, engineering, marketing, information technology and R&D – in a broad range of enterprises are an overarching priority.

In the Vietnam 2035 Report, key areas of analytical questions for the chapter on science, technology and innovation include:

What are the necessary reforms to the enterprise sector and its enabling environment (financial markets, business support services, intellectual property right protection) to improve technological absorptive capacity, the demand for innovation and the emergence of innovative firms?
What reforms are necessary to increase research productivity and effectiveness in universities and research institutes, and to increase the linkage between them and their linkages to the productive sector; and
How does the education system need to change to ensure it produces world-class human capital, especially for science, technology, management and entrepreneurship?

Thank you for sharing with us your opinions. What is your vision for how innovation will contribute to the sustained growth in Vietnam over the next 20 years and what are key factors to ensure the effective and dynamic NIS/ innovation systems for Vietnam?

The experts participating in the discussion include Mr. Le Dinh Tien, Former Vice Minister, Ministry of Science and Technology, Mr. Banh Tien Long , Former Vice Minister, Ministry of Education and Training, and Mr. Michael Crawford, Lead Education Specialist, and Mr. Suhas Parandekar , Senior Education Economist, in the World Bank’s Education Global Practice.

Please view questions and comments below.