Vietnam sees tough action to meet ambitious growth target
HANOI - Vietnam's communist authorities assured foreign donors Thursday that they understood swift action to boost investor
confidence was essential if they were to achieve their ambitious goal of doubling gross domestic product (GDP) over the next
decade.
The government recognized that 2001 would be "critical" to the success of the 10-year development plan to be adopted by a
congress of the ruling communist party in March, Planning and Investment Minister Tran Xuan Gia told a key donors' review
meeting.
"We are required to take breakthough measures ... to create a liberal business and production climate which is transparent and
predictable ... and accelerate the process of integration (with the world economy) already under way," he said.
Gia said authorities were encouraged that growth had already begun to recover from the regional financial crisis of 1997-8,
which had been compounded in Vietnam by serious floods in both of the past two years.
Growth had rebounded to nearly seven percent this year from 4.8 percent in 1999, its lowest level in the 1990s.
But the minister acknowledged that still higher growth was needed if Vietnam was to avoid falling further behind its neighbours.
"The economic growth tempo, which has recovered in 2000, is still lower than the average rate recorded during the past 10
years," he said.
"This is due to the low level of technology, delays in economic structural adjustment, failure to bring into play comparative
advantages, weak competitiveness ... high cost of production and business, and low efficiency."
Foreign investors have long complained that high power and telecommunications costs here cancel out any competitive
advantage gained from Vietnam's huge pool of cheap labour.
On Wednesday, First Deputy Prime Minister Nguyen Tan Dzung promised foreign investors Vietnam would move to follow
China's example by phasing out the two-tier pricing system long in force for foreigners for everything from hotels to domestic
transport.
Vietnam's state-owned railways have already moved to cut the fare surcharge payable by foreigners from 100 percent to 50
percent.
Vietnam's General Department of Posts and Telecommunications also held a three-day seminar with the International
Telecommunications Union earlier this week to review its pricing system.
Dzung added other "difficulties" to the list in his speech to donors Thursday.
Vietnam continued to be slow in disbursing the large amount of overseas development assistance it received, while foreign
investment was still concentrated in the big cities further accentuating the income gap with the countryside.
Agricultural goods and raw materials still formed a high proportion of Vietnam's exports, yielding low returns on the world's
depressed commodities markets.
Domestic savings also remained low, reaching only 21.5 percent of GDP over the past five years and limiting the amount of
capital available for investment.
The key multilateral lending organizations identify the low level of investment from the domestic private sector here as the
biggest challenge facing Vietnam's growth plans.
Given the stagnant or falling levels of investment likely from other sources, the government will need to nearly double the
proportion of investment coming from the domestic private sector, the World Bank, the Asian Development Bank and the UN
Development Programme said in a joint report last month.
The government's growth target of 7.5 percent a year was "ambitious and appropriate, but difficult to reach," World Bank
representative Andrew Steer told the meeting.
Vietnam's "astonishing achievements" over the 1990s "provide great hope for the coming decade, but must not blind us to the
very large task that remains."
Agence France Presse - December 14, 2000.
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