A crucial time for transformation

Monday, 2020-10-26 11:35:02
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EVFTA helps boost Vietnamese goods exports to meet EU standards. (Photo: thuysanvietnam).
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NDO - Vietnam's economic growth achievements as well as its resilience against the COVID-19 pandemic have been highly appreciated by participating economists at the annual Vietnam Reform and Development Forum 2020, which was recently held in Hanoi.

The economy which can respond quickly to the crisis will also find opportunities from significant changes created by COVID-19. Many experts shared a common view that COVID-19 is an opportunity for Vietnam to move up the global value chain since the economy has high level of openness and has become a bright spot in attracting foreign direct investment (FDI).

However, Vietnam's participation in global and regional value chains remains limited as the level of Vietnam’s sophistication in participation in the supply chain remains low.

The World Bank has estimated that a 1% increase in GVC participation is estimated to boost per capita income levels by more than 1% - about twice as much as conventional trade, so strengthening global value chain participation will be important for accelerating Vietnam’s productivity and growth.

Moreover, Vietnam is also a country which has deeply integrated into the international economy by participating in 13 free trade agreements, including many new generation free trade agreements including the EU-Vietnam Free Trade Agreement (EVFTA), Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).

This is also a great opportunity for the economy to further integrate and deeply participate in the world production network and attract quality FDI projects to move up the global value chains.

The COVID-19 pandemic is changing the situation of global trade and the global supply chain, which has creating new opportunities for Vietnam, especially in attracting FDI.

Before COVID-19, Vietnam was an attractive destination in the ASEAN region for FDI attraction, and the opportunities for Vietnam are now even bigger greater as the country has initially succeeded in preventing epidemics and gradually making growth recovery whilst other countries are still struggling to contain COVID-19.

At the moment, we absolutely have the right to opt to optimise the use of FDI while promoting transformation in the digital economy rather than simply attracting a lot of FDI.

It is a crucial time for Vietnam’s transformation towards rapid and sustainable development. The transitional period requires us to proactively develop a strategic direction with a breakthrough and bold mind-set in order to catch up and go along with the world’s development. Opportunities are wide open, but it's important to find a sound way and to take action to turn opportunities into reality.

International experts and scholars have recommended that Vietnam should be well prepared to join the global supply chain by developing a vibrant and creative private economic sector which has close links with the FDI sector while improving the quality of education.