VINACHEM

As global economic volatility persists, experts believe now is a critical moment for Vietnam to accelerate reforms to its economic institutions, thereby laying the groundwork for the country to become an upper-middle-income economy by 2030 and a high-income economy by 2045.

The Vietnamese economy showed encouraging signs in early 2024, with GDP expanding by 7.09%, surpassing the government’s target and outperforming many peers in the region. Yet the foundations of growth remain vulnerable, due to low labour productivity, a weak domestic sector, and an overreliance on foreign direct investment (FDI) which contributes 72% of export turnover but adds relatively little value.

Prof. Dr. Pham Hong Chuong, President of the National Economics University, noted that innovation must become a new and sustainable growth driver, and that a conducive institutional framework for businesses is essential to unlocking this potential. Meanwhile, Dr. Vu Thanh Tu Anh of Fulbright University Vietnam underlined the role of public investment as a catalyst for private sector growth, adding that fiscal and monetary policies must remain flexible to safeguard macroeconomic stability.

Vietnam’s private sector continues to face numerous challenges, including relatively high corporate income tax rates and the absence of tailored legal frameworks for emerging models such as fintech, e-commerce, and innovation-led startups.

Prof. Dr. Ngo Thang Loi of the National Economics University likened the business environment to a “tight-fitting shirt,” pointing out that just 3.5% of Vietnamese firms qualify as medium-sized, while highlighting systemic barriers to growth and expansion.

Moreover, overlapping administrative procedures, hidden costs, and legal ambiguities have discouraged businesses from scaling up.

Dr. Dang Duc Anh, Deputy Director of the Central Institute for Economic Management, argued that while institutions may be a bottleneck to growth, poor implementation is the bottleneck within institutions. He proposed forming a government task force led by the Prime Minister to spearhead sweeping reforms to business conditions, warning that leaving the task solely to individual ministries would likely fall short.

Experts broadly agree that Vietnam must move beyond surface-level administrative tweaks and instead pursue a bold, coherent institutional reform strategy from policy design to enforcement. Without removing constraints on production, improving resource allocation, and safeguarding the economic rights of businesses and citizens, the nation may see growth without real development.

In this context, reforming economic institutions, especially those governing the business environment is no longer just an option. It is a strategic necessity that will define the country’s long-term development path.  – Source: VOV