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Updated: 3/21/2016 3:01:56 PM GMT + 7

On February 23, 2016, the Office of the Government, Ministry of Planning and Investment and the World Bank Group jointly launched the report titled "Vietnam 2035: Towards Prosperity, Innovation, Equity, and Democracy” in Hanoi. Deputy Prime Minister Vu Duc Dam, World Bank Group President Jim Yong Kim, and senior leaders of the Government of Vietnam, foreign embassies, international organizations were among the participants.

Under the leadership of Deputy Prime Minister Vu Duc Dam, chairman of the Vietnam 2035 Report Steering Committee, the report has been finalized as a result of hard work and close collaboration of Ministry of Planning and Investment, the World Bank Group, and many national and international experts and researchers.

Consisting of 7 chapters focusing on 3 pillars of development surrounding 6 key transformations; the report lays out development strategies that are relevant to a lower middle-income country in the volatile world context and aims to tranform Vietnam to a high-income country or upper middle-income country by 2035.

The three main pillars discussed in the report are: economic prosperity with environmental sustainability; equity and social inclusion; and a capable and accountable state.

Economic prosperity with environmental sustainability

The 1992 and 2013 Constitutions set out Vietnam's grand and ambitious goal of achieving "prosperous people, strong country” status. This is clearly reflected in various documents of the Communist Party and the Government, which set the the goal of achieving an annual per capita GDP growth rate of 7% (equal to a 7% - 8% GDP growth rate as set forth in the socio-economic development strategy for the period 2011-2020). This growth rate will help Vietnam to become an upper middle-income country by 2035, the current level of Malaysia or where South Korea stood during the first decade of the 21st century. However, this goal is very ambitious because it is by far higher than Vietnam's growth rate in the past and only few countries in the world managed to achieve this.

The environmental issues are also putting huge pressure on Vietnam's long term and sustainable development. The growth success during the last 25 years was gained at a huge expense on the environmental side. The fast deteriorating natural resources are posing grave concerns. Industrial waste and urban pollution have caused serious health problems, especially in children in locations near Hanoi and Ho Chi Minh City. In the future, Vietnam is also one of the countries that will be most vulnerable to climate change. The Mekong Delta region, where there is a high density of population and economic activities, will be most affected. The risks are further compounded by an increased energy consumption that is primarily based on coal-fired power generation. Vietnam's greenhouse gas emission has been in the top group of the world in recent years.

The proposed reform to achieve sustainable economic growth consists of 4 areas: (1) Creation of a favorable environment for domestic enterprise development; (2) Strengthening learning and innovation; (3) Restructuring urban investment and reforming urban development policies; and (4) Ensuring environmental sustainability.

Promotion equity and social inclusion

Vietnam has always put a lot of efforts in ensuring social equity and inclusion and is one of the few countries that achieve high growth while maintaining social equity. The achievement started with a more equitable land allocation in the late 1980s and continued on to the provision of improved access to basic services such as education and health, as well as a more equitable state budget allocation among provinces at different levels of development. But a continued growth path with social equity is not automatic, especially considering the new impacts of urbanization, globalization and the requirements for better work skills. Vietnam has to pursue a two-fold agenda: social equity and inclusion.

Current programs have yet to continue to provide equitable opportunities. Although major progresses have been achieved to improve the living standard since Đổi mới but large group of disadvantaged citizens still remain excluded; and there is still a huge gap between children from wealthier and poor households. The mortality rate under ethnic infants under 1 year of age is 4 times as high as among Kinh infants. More than half of children with disabilities have never attended school. Exclusions also persists as a contrast to higher income groups. During the last decade, the number of Vietnamese millionaires has tripled, but malnutrition among ethnic children remains unchanged.

The solutions to such inequalities and inequities require continued efforts. In particular, it requires an agenda to be implemented until 2035 that addresses the following 4 elements: (1) Reducing barriers and improving opportunities for ethnic groups; (2) Helping people with disabilities to fully take part in the social life; (3) Removing the residential registration system (hộ khẩu) as a barrier to accessing public services; and (4) Reducing the gender gap.

Strengthening of state capacity and accountability

The institutional and political reform must be implemented as Vietnam develops. The experience in many countries shows that state effectiveness or government capacity in developing and implementing objectives are closely related to development results. The state effectiveness rests on 3 support pillars: a well-organized government with a capable administration; compliance with market principles in developing economic policies; and a mechanism to ensure checks and balances among branches of government as well as a wide public participation. These 3 pillars are needed to ensure state effectiveness. Neither a restructuring the state without paying attention to market principles nor giving a greater role to the market without participatory policy-making will lead to desired outcomes.

Vietnam is also an example of the relationship between state power and development outcome. Many of the initial achievements were due to the state effectiveness that was higher than the comparable level of a low-income country. However, a less effective state may cause stagnating productivity and a less favorable environment for private sector development. As a legacy of the past, public institutions have been commercialized, localized, fragmented and were not subject to sufficient supervision by the citizens.

The current legal framework in Vietnam allows citizen participation in the state governance to a certain extent. A state "of the people, by the people, and for the people”, and "people know, people discuss, people do, and people monitor” are clearly stated in the Constitution. But there still exists a gap between these commitments and reality. Access to information still remains a problem that should otherwise be key to promote people's voice and state accountability.

Institutional modernization requires a robust reform of the state and its relation to the market and society. Efforts to improve state capacity and effectiveness should address 3 issues at the same time: (1) creating a well-organized state with a capable administration; (2) applying market principles in economic planning; and (3) improving the state accountability.

The full report can be downloaded at:

Vietnamese version: VN2035TV

English version: VN2035English

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