VINACHEM

The National Assembly (NA) Committee for Economic Affairs has predicted that Vietnam's GDP is likely to increase by 5.71 % this year but its economic growth will struggle to reach the set target.

According to the Committee, this year’s GDP will gradually recover by up to 5.98 % in 2015, based on comparable prices of 2010.

Meanwhile, since the end of last year, the Vietnamese Government announced a 5.8% GDP growth target in 2014.

Although the impact of short-term economic growth is still bound, there have been some positive changes, not only in improved credit growth for the economy but also high credit quality and investment efficiency.

Looking at this year’s economic outlook, the committee said the economy in general and trade in particular will have more opportunities as opposed to difficulties and challenges. Remarkably, after a long period of fluctuations between macroeconomic instability and economic downturn, the economy has become more stable due to the Government’s great efforts and international facilitation.

Vietnam’s participation in a host of free trade agreements (FTAs), including TPP and FTA with the EU, will bring more opportunities for the country’s market access and investment attraction.

However, export products, especially those from intensive labour or investment from foreign-invested sectors in the region based on static comparative advantage, have not yet contributed to creating dynamic comparative advantage (the elements of quality, generating higher added value from technology and a higher quality workforce).

More importantly, continual increased pressure of the international integration process on Vietnam requires more extensive reform to improve the investment environment and engage in the regional and global production networks.

In addition, the Government should promote technological transfer from FDI enterprises to domestic firms and improve employee skills.

"The lesson after 7 years of Vietnam’s WTO admission shows, staying active for international integration is a necessary condition. Opportunities for the country’s socio-economic development are only realized if we continue to maintain domestic reforms with a proper roadmap.” the committee noted.