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Building an independent, self-reliant economy in a turbulent world

10/06/2022    82

The COVID-19 pandemic which broke out over two years ago has dealt a heavy blow to the global economy, whilst the Vietnamese economy, which boasts a high level of openness, has also suffered profound consequences.

The recent successful control of the pandemic has contributed to creating positive circumstances for the country to reinvigorate its ailing economy and make breakthroughs in terms of economic restructuring moving into a completely new context. 

The fourth Vietnam Economic Forum held on June 4 in Ho Chi Minh City once again showcases the country’s desire to build an independent and self-reliant economy that is associated with extensive economic integration in the new situation.

Local economy faces a turbulent world  

Recent global events such as military conflicts, trade wars, and COVID-19 outbreaks have occurred in an increasingly complex and unpredictable manner. In this context the national economy has revealed its shortcomings which must be addressed in order to ensure its sustainable development.

Among the problems identified are the general lack of production materials and the reliance of the economy on certain supplies, not to mention the lack of skilled labour, capital, and competent corporate governance.

Most notably, Vietnam’s main production industries for export heavily rely on the import of raw materials. For example, the steel industry imports 9.3 million tonnes of steel annually, the textile industry purchases 90% of cotton and 40% to 45% of fabrics from overseas markets, while the plastic industry typically imports 70% of its raw materials.

Military conflicts and trade wars have also caused disruption to supply chains and have impacted the prices of key raw materials for production.

According to Dr. Vu Thanh Tu Anh, director of the Fulbright School of Public Policy and Management in Vietnam, both Russia and Ukraine value their trade, investment, and financial ties with the country. Although their ongoing conflict has not directly affected the nation, the indirect impact is rather big due to supply chain disruptions that fuel oil and food prices.

Meanwhile, Assoc. Prof. Dr. Tran Dinh Thien, former director of the Vietnam Institute of Economics, says these changes also open up fresh development directions that require firms and the entire economy to respond in order to survive, develop, and thrive. Current risks range from epidemics and natural disasters to wars, all of which are global issues that affect every country. As a result, Vietnam faces huge challenges, but has so far shown great determination to build an independent and self-sufficient economy in the context of increased globalisation.

“The Vietnamese economy is not powerful yet, while the world is strongly transitioning to a high-tech era. We are witnessing a world with a lot of risks and uncertainties that require us to restructure our economy. This presents a great opportunity and also a big challenge for a weak economy like Vietnam,” says Dr. Thien.

High expectations

Economic experts share the view that among the four pillars of economic development (institutions, capital, labour, and innovation technology), technology remains a factor that still has ample room for exploitation. Given the impact of epidemics and natural disasters, applying technology in production and economic development can be viewed as a matter of urgency for the country. 

Nguyen Duc Hien, deputy head of the Party Central Committee’s Economic Commission, says that there are two key tasks for building an independent and self-reliant economy associated with deep international integration. They are implementing technological innovation and moving towards technological autonomy.

“Though Vietnam has recorded achievements in science-technology and innovation in order to build an independent economy, our level of technological autonomy remains limited. Therefore, the first thing to do is to change policies to help businesses access technology, promote the application and improve the innovation capacity,” analyses Hien.

Furthermore, Dr. Vo Tri Thanh, director of the Institute for Brand and Competitiveness Strategy, argues that in order to develop an independent and self-reliant economy in the current new context, the country has no choice but to increase its resilience to external shocks. 

“Keeping macroeconomic stability, ensuring major balances, and maintaining supply chains are very important to achieve that goal. The 4.0 industrial revolution, if well utilized, will help us gain independence and self-reliance through integration…. In economic integration, we not only accept playing by the rules but engage in formulating the rules,” says Dr. Thanh.

Speaking at the recent Vietnam Economic Forum, Prime Minister Pham Minh Chinh reiterated the country’s consistent policy of developing an independent and self-reliant economy that is associated with extensive international integration.

He also pointed to the fact that Vietnam’s urgent requirements are to handle emerging challenges and diversify markets and supply chains to develop the local economy. This can be done by combining the country’s aggregate strength and support from outside sources.

Source: VOV