The strong growth has put Vietnam’s economy into a new position, which is decided by the following criteria: Vietnam is the fourth-largest economy in ASEAN and 45th in the world; Vietnam is one of the economies with the highest GDP growth rate in the world; Vietnam’s poverty rate reduction is among the fastest in the world, from 58.1% in 1993 to 4.3% in 2022; Vietnam’s urbanization rate reached 41.7% in 2022, higher than the regional average; Vietnam’s economic structure is shifting towards gradually reducing the proportion of agriculture and gradually increasing the proportion of industry and services.
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Workers at Panasonic System Networks Vietnam Co. |
In addition, Vietnam has been deeply integrated into the global economy, being a member of many important international economic organizations, such as the WTO, APEC, and ASEAN, among others. The country has also signed various free trade agreements (FTAs) with partners around the world, facilitating exports and attracting foreign investment. According to data from the Ministry of Industry and Trade, as of August 2023, Vietnam had signed 18 FTAs, of which 14 have taken effect. Among the 18 FTAs, there are ten bilateral FTAs, seven multilateral FTAs, and one regional FTA. Vietnam is an ASEAN country with the highest number of signed FTAs, surpassing Singapore, Thailand, and Indonesia.
With these important achievements, Vietnam has affirmed its position as one of the most dynamic and promising economies in the region and the world. There are many opportunities for Vietnam to develop the economy.
First of all, Vietnam holds an ideal geo-economic position. It is located in the center of Southeast Asia, which is favorable for international trade and cooperation. It also owns the 3,260-kilometer coastline, borders nine countries and territories, and is the gateway to the sea for Laos, Northeast Cambodia, Thailand, and Southwest China. Vietnam’s major seaports, situated in Hai Phong, Da Nang, Ba Ria - Vung Tau, Ho Chi Minh City, etc., can help promote international trade, develop transportation, and develop a sea-based economy.
Regarding geo-economic position, Vietnam neighbors the world’s second-largest economy, China. Therefore, China is Vietnam’s largest trading partner. According to data from the Ministry of Industry and Trade, import-export turnover between Vietnam and China in 2022 reached USD 196.5 billion, an increase of 14.5% compared to 2021, of which Vietnam’s exports to China reached USD 66.7 billion, an increase of 13.8%; while Vietnam’s imports from China reached USD 129.8 billion, an increase of 15.1%. Sharing the border with a strongly emerging economy, Vietnam is able to attract foreign direct investment (FDI) from China and improve the competitiveness of enterprises, especially small and medium ones, so as to further penetrate into the Chinese market.
Vietnam also has diverse natural resources, such as minerals, oil and gas, forest products, fisheries, etc., which are necessary for economic development. Notably, Vietnam has the world’s second-largest rare earth reserve, estimated at 22 million tons. This is a valuable resource that can be used in many important fields, such as the electronics industry, automobile manufacturing, and renewable energy. Besides, rare earth mining and processing can bring socio-economic development opportunities to Vietnam, such as bringing about a big income for the State budget, creating jobs, promoting economic structural transformation, and enhancing Vietnam’s position in the international arena.
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Ho Chi Minh City affirms its position as the economic hub of the country. |
Secondly, Vietnam’s large, young, and dynamic population is an important resource for economic development. According to the General Statistics Office under the Ministry of Planning and Investment, Vietnam’s population forecast in 2023 was 100.059 million people, an increase of 1.2% compared to 2022. Vietnam has a young population structure with the proportion of the population under 15 years old accounting for 25.2%, the proportion of the population in the working age accounting for 70.7% and the proportion of the population over 65 years old accounting for 4.1%. The young population structure brings many benefits to the economy, such as a large labor force, large consumption potential and large investment capital flow. Besides, the young workforce has good health and the ability to quickly absorb new knowledge and skills, which are favorable for economic development. Furthermore, the young population has high consumer demands, creating a large consumer market for products and services. This is the driving force for economic growth. Especially, foreign investors are often interested in countries with young population because this is a potential market for their products and services.
Last but not least, the State’s economic policy is a constructive state model. Although it does not completely follow the constructive state model of other Northeast Asian countries such as Japan, the Republic of Korea, and China, the socialist-oriented market economic development model of Vietnam shares many similarities with the above model. In Vietnam’s economic development model, the State plays an important role in orienting, regulating, and promoting economic development via policies in order to achieve set socio-economic goals.
Over the past years, the State has implemented many economic policies according to the constructive state model, including investing in infrastructure to create favorable conditions for production, business, and circulation of goods; supporting enterprises; promoting international economic integration to expand export markets and attract foreign investment, among others, in order to raise the competitiveness of the economy. These policies have made important contribution to Vietnam’s economic growth so far.
However, there remain challenges ahead. One of them is the unsustainable economic growth. Vietnam’s GDP growth rate depends on objective factors, such as global commodity prices and global economic situation. Besides, the economic structure is not really reasonable. Vietnam’s economic structure needs to continue to be shifted, the proportion of agriculture is still high, the proportion of industry and services has not yet reached the necessary level. Income inequality is still high and Vietnam’s per capita income is still low...
In order to overcome these challenges, the Vietnamese Party and State have issued a number of policies. It is to shift from natural resource-based model to intellectual- and creativity-led one; develop green economy and circular economy. Vietnam should also invest in education and training sector as well as healthcare service so as to create favorable conditions for people to study and raise competence, promote social welfare, especially for the poor, national contributors, and people with disabilities.
It can be seen that Vietnam’s economy is ready for gaining further achievements. It will overcome all obstacles and challenges to reach new heights.
Translated by Minh Anh