Building an independent, self-reliant economy has always been a matter of fundamental needs for Vietnam, particularly during this time of proactive international integration. Documents from the 11th Congress of the Communist Party of Vietnam (January, 2011) stated the importance of “Persevering to build a more independent and self-reliant economy in the context of greater international integration”(1).
1 – Building an independent, self-reliant economy set out, supplemented and developed by the Communist Party of Vietnam’s resolutions has been a running theme of the congresses since 1986. Given the pace of globalization, any country burdened with an isolated and closed development policy will lag behind in various aspects: economics, politics, science and technology, the ability to utilize internal and external resources… So international integration is a must. Building a self-reliant economy will create the conditions for greater and more effective international integration, while effective international integration will create the necessary conditions for building such an economy because it can develop the resources and environment necessary to nurture an independent, self-reliant economy. Documents of the 11th Congress of the Communist Party of Vietnam affirm: “Upholding our national strength must be a decisive factor, but taking advantage of contemporary external developments is also an important factor in the sustainable and rapid development of an independent, self-reliant economy”(2). The Communist Party of Vietnam stressed that proactive international integration should go hand-in-hand with this aim.
In the face of globalization, an independent, self-reliant economy means one which is capable of expansion and integration into the world economy, while still being able to adapt to international upsets and maintain normal social activities in any situation, such an economy would contribute greatly to defense and security at home. Therefore, for Vietnam, first of all, building an independent economy means independence and self-reliance in terms of a socialist market-oriented economy; industrialization and modernization in line with the rise of the knowledge-based economy; developing the nation’s scientific, technological and economic potential; developing an appropriate, effective and competitive national economic structure based on a fully socialist-oriented market economy; maintaining the macro-economy; focusing on fast and sustainable economic growth; ensuring that the economy is strong enough to respond to complex world developments that may potentially have an adverse national impact, and help effectively implement international commitments.
2 – Following 11 years of patient negotiation and active preparations to meet the necessary conditions, on January 11, 2007, Vietnam officially became the official 150th member of the World Trade Organization (WTO). This milestone marked the beginning of a new period – Vietnam joining the global economy as an equal member of the world’s largest trade body.
Soon after Vietnam’s admission to WTO, in the second half of 2008, the financial crisis which started in the US presented a series of risks and challenges to national economies. The crisis has had an adverse impact on production, daily life and the development of the Vietnamese economy. However, international integration has also brought benefits to the economy;. By proactively integrating into the world economy and implementing bilateral and multilateral trade agreements, Vietnam has had many opportunities to expand its export market and increase export turnover. For example, Vietnam’s export turnover was 48.5 billion USD in 2007 and nearly doubled, to 96.3 billion USD, in 2011. Notably, there has been increasing number of exported items whose revenue topped 1 billion USD each: 10 items in 2007 and 14 items in 2011. Vietnam has become the world’s leading rice exporter, while ensuring domestic food security. Rice exports stood at 4.5 million tons in 2007-2008 and jumped to more than 7 million tons, worth 3.6 billion USD, in 2011.
With regards to foreign investment, since the Foreign Direct Investment (FDI) Law came into force in 1998, FDI flow into Vietnam has increased in terms of project quantity, registered capital and the number of investor countries and territories. In the 5 years between 2006 and 2010, total implemented FDI capital reached 45 billion USD, 77.8% higher than expected; the total committed Official Development Assistance (ODA) was 31 billion USD, 1.3 fold higher than targeted, in which 13.8 billion USD was disbursed, up 17.5%. In 2011, 14.7 billion USD of FDI poured into Vietnam, equivalent to 74% of 2010. Newly-registered capital was 11.6 billion USD, 65% of 2010 figure, implemented capital reached 11 billion USD, equivalent to the 2010 figure. FDI and ODA have helped boost the national economy.
In general, over the past 20 years of renewal, Vietnam’s economy has grown rapidly. The annual GDP growth rate achieved 7.4% in the 1991-2000 period and 7.26% in the 2001 – 2010 period. From 2007 to 2011 (a difficult and complex period), the annual GDP growth reached 6.52%.
In addition to economic growth, the economic sectors’ structure saw positive changes and matched the industrialization process, although the changes were slow. In 2011, the proportion of agriculture in GDP was 20.3%, industry and construction was 41.4%, and services 38.6%. In line with the economic restructuring, a higher proportion of the labor-force moved into industry, construction and services. In 2011, agricultural workers accounted for 48% of the total labor force, industry and construction 22.4% and services 29.6%. Fast economic growth and an expanded economic base raised Vietnam out of the ranks of the underdeveloped nations into that of a middle-income status country.
Economic growth helped settle major social problems. In the 5 years between 2006 and 2010, 7.5 million people were provided with jobs. In 2011, the unemployment rate among working-age people was 3.27%, 3.6% in the urban areas and 1.71% in rural areas. The number of poor households fell from 18% in 2006 to 10.7% in 2010, in accordance with new national standards applied during the 2006-2010 period. The number of malnourished children under 5 years of age dropped from 25% in 2005 to 18% in 2010. By the end of 2011, 57 of the 63 centrally-administered provinces and cities were recognized as meeting the standards for universal primary education for all children of school age, and all 63 centrally-administered provinces and cities met the standards for universal lower-level secondary school education. Average life expectancy increased from 71.5 years in 2005 to 72.8 years in 2010. The Human Development Index (HDI) constantly increased, reaching 0.733 (according to the previous criteria) and 5.7% (according to the new criteria), placing Vietnam in the international upper-middle rank.
Reviewing national development during the 2006-2011 period, including 4 years of WTO membership, the 11th National Congress of the Communist Party of Vietnam said that over the past 5 years – despite international and domestic challenges as a result of the global economic crisis – the Party and people made great efforts and managed some momentous achievements: “Vietnam has effectively responded to adverse economic developments both at home and in the world, essentially maintained macro-economic stability, and sustained sound economic growth in the various sectors. It has also increased its economic base, raised people’s living standards, stabilized the socio-political situation and strengthened defense and security. Foreign relations have also expanded alongside the country’s international integration, enhancing the nation’s prestige and status”(3).
But apart from these positive outcomes, the macro-economy also showed some unstable signs: import surpluses have risen since 2007; Government bad debt increased, threatening national financial stability; the inflation rate was higher than GDP growth rate; economic restructuring was slow; investment effectiveness was low; and economic competitiveness remained largely stagnant. These factors showed that although the national economy grew rapidly, the internal strength of the economy remained weak and vulnerable to disruptive external forces.
3 – To this end, it is essential to build a more independent and self-reliant economy in the context of the ongoing process of global integration. Vietnam is well aware of the opportunities and challenges it may face on the path to achieving this goal.
Opportunities: Vietnam is likely to expand its economic relations as it integrates more deeply into the global economy. The expansion of economic and trade relations will enable the Vietnamese economy to develop more effectively and avoid being too dependent on any one partner. Foreign capital, technology and management experience should help Vietnam to reform its growth-model more quickly, restructure its economy, accelerate industrialization and modernization, and boost fast and sustainable economic growth, thus building a more independent and self-reliant manner.
Challenges: The domestic economy will inevitably become more dependent on the global economy. Becoming a part of the global production chain will bring both opportunities and challenges for Vietnam. It will face the threat of becoming the recipient of the kind of low value-added production model, which uses labor-intensive workforces and is moved from other countries. Other potential adverse effects from global competition include the problems of climate change, energy and food security. In these areas Vietnam is likely to lag far behind other countries in the region in its ability to cope.
Establishing an independent, self-reliant economy cannot be realized overnight, but is a lasting and unending process. The work therefore requires great determination and is the responsibility of everyone, of all members of the Party and people as a whole.
To build such an economy in the context of international integration, Vietnam must give priority to the following measures:
- By taking the necessary steps to solve its problems, and by utilizing the many strengths and resources of the nation, Vietnam can firmly safeguard its independence, self-reliance, sovereignty and territorial integrity, ensure socio-political stability, proactively integrate into the world, and create an environment of peace and stability and favorable conditions for national development. At the same time, we should sustain macro-economic stability and the overall economic balance to ensure economic security. Vietnam is actively adapting itself to global change, ensuring effective international integration while safeguarding the national interest.
- Building an economy with strong future potential, because the inner strength of the economy will help drive greater and more effective international integration, a condition for building an independent, self-reliant economy. To do so, it is necessary to boost fast but sustainable industrial growth through industrialization and modernization. Efforts should be made to restructure the economy, reform the growth model and consider quality, productivity and competitiveness as being the top priorities. In the short term, attention should be paid to the three most important areas as pointed out by the Party and State: investment restructuring with a focus on public investment, restructuring the financial market with a focus on the restructuring of commercial banks and financial institutions and restructuring state-owned enterprises with a focus on the state economic groups and corporations. Priority should be given to vertical growth, moves towards a more knowledge-based economy, economic growth in parallel with the implementation of progress, and equality and expansion of the domestic market (both in terms of production and consumption).
- Socio-economic development should go hand in hand with maintaining defense and security, improving the ecological environment, and effectively responding and adapting to climate change, particularly the issue of rising sea-levels.
To perform successfully, it is necessary to fully uphold the leadership role of the Communist Party of Vietnam, reform the methods of Party leadership in all political, economic, cultural and social areas; improve the role and efficient management of the law-governed socialist State of the people, for the people and by the people; promote the role, dynamism, creativity and high sense of responsibility of the entire political system as subjects of the socialist-oriented market economy and people from all walks of life for the goal of a “wealthy people, strong, democratic, fair and civilized country, firmly advancing towards Socialism”./.
(1), (2) Documents of the 11th National Party Congress, theTruth-National Political Publishing House, Hà Nội, 2011, page 31, 102
(3) Quoted documents of the Congress, page 176
Chu Van CapProfessor, Doctor, Hồ Chí Minh National Academy of Politics and Public Administration