The forum entitled "Sustaining the Growth" attracted more than 600 domestic and foreign economic experts, policy makers and businesspeople who discussed changes in the world financial system, their impacts on Viet Nam’s economy as well as solutions to deal with existing financial, human resource and infrastructure problems.

In his opening speech, Permanent Deputy Prime Minister Nguyen Sinh Hung said Viet Nam had made great efforts to curb inflation and control the trade deficit during the past time.

However, currently most regional countries, including Viet Nam, still faced many difficulties as a consequence of global economic upheaval.

Therefore, stabilising the macro-economy towards medium and long-term sustainable growth while successfully integrating into the world economy was still the Government’s key task, said Hung.

"This forum with the theme ‘Sustaining the Growth’ is very appropriate to Viet Nam’s current economic situation in the context of the world’s spreading recession," he said.

Secretary-General of the United Nations Conference on Trade and Development (UNCTAD) Supachai Panitchpakdi said the Government had rightly changed its economic priorities from supporting fast growth to ensuring stability in February 2008, choosing to fight inflation and to reduce the trade deficit.

"Such a course continues to be appropriate for Viet Nam and indeed not too costly for an economy which is still projected to grow at about 6.2 per cent in 2008 and about 5.9 per cent in 2009," he said.

However, economists still worried that Viet Nam’s large current account deficit and increase in fiscal deficit in 2007, despite surging GDP growth, would constrain the country’s ability to respond to a financial shock.

Viet Nam saw a record trade deficit in 2007, reaching nearly US$11 billion, which was more likely to be due to domestic factors such as an increased demand in a fast-growing economy, said Supachai.

According to Don Hana, managing director and emerging market analyst at Citigroup, Viet Nam’s macro-economic and structural conditions, though improving from those seen at the time of the Asia Crisis, are still not so robust.

Hana attributed the rise in the current account deficit, which made up 14 per cent of GDP, partly to the rise in fixed investment to almost 40 per cent of GDP last year. This would expose the country to foreign investor sentiment to a much larger extent.

Panitchpakdi said the United States had been the single largest export market for several years, and in 2006, accounted for 21.2 per cent of Vietnamese exports. The EU ranked second with 19.8 per cent, thus the country’s exports were vulnerable when the major countries’ demand fell.

Therefore, he suggested that Viet Nam should diversify its export markets, increasing trade especially with other developing countries, rather than depending on the traditional markets.

Supachai said that some monetary tightening to reign in inflation was needed, but Viet Nam should not overdo the policy.

According to Supachai, global turmoil in stock markets might lead to a sudden reversal of capital flows to Asia, including Viet Nam, which would pose policy challenges in the management of the exchange rate.

He suggested that Viet Nam should not keep a fixed exchange rate between the US dollar and Viet Nam dong, saying that an appreciation of dong would not benefit the country in the short run but would serve its growth in the long term.

Supachai did not express much worry about the possibility of a decrease in foreign direct investment as most FDI flowing to the country originated from neighbouring countries and territories such as Singapore, Japan, Taiwan and Hong Kong.

However, how the country used the capital was one of the economist’s concerns. He said that Viet Nam should allocate capital according to project quality rather than licensing projects without planning.

He recommended that countries, including Viet Nam, should take this time to reform and consolidate their financial system.

Hana said that balance sheets on key financial intermediaries were less transparent and trusted, creating a larger hurdle to policy makers in attracting and maintaining capital.

According to Hana, there are two issues that Viet Nam should focus on to help promote long-term sustainable growth. They are improving the transparency, predictability and resiliency of financial markets, as well as developing a wider and more sophisticated array of financial markets while ensuring improvements in market infrastructure and regulatory capacity.

Experts suggested that Viet Nam should implement more consistent local accounting standards, and should have a standardised, transparent equity listing process. These reforms would improve market liquidity and stability.

Economists encouraged market-based pricing and allowing foreign exchange markets to serve as a natural mechanism to help adjust trade imbalances.

Deputy Minister of Finance Tran Xuan Ha predicted that in the last months of 2008 and early 2009, the production and business sector would still be affected by the Government’s strict monetary and fiscal policies.

As policies would continue to be tightened, businesses which had not accumulated sufficient capacity or whose sustainability had been surpassed, especially small and medium-sized ones, would suffer losses or even go bankrupt, he said.

Raising the efficiency of investment capital in an appropriate manner was an urgent and strategic task for Viet Nam’s economy in the coming time.

The Government would continue to adjust spending on development investment with an emphasis on the agricultural and rural sector to produce reasonable economic shifts, co-ordinate with the private sector but avoid overlapping in what the private sector can achieve alone.

Talks on workforce

Delegates at the forum discussed human resources training, which is considered an important factor in ensuring sustainable growth.

"Quickly increasing investment has generated both opportunities and challenges for the education system in general and the vocational education institutions as well as the universities in particular," said Deputy Prime Minister and Minister of Education and Training Nguyen Thien Nhan.

The demand for education was high in Viet Nam while training services capacity was limited; the rate of labourers who had at least some training accounted for a low proportion of 30 per cent; and management, technical and technology experts who could lead the industry sectors or business development were insufficient, he said.

According to the deputy prime minister the training quality in such fields as IT, mechanics and banking and finance have been improved, but the quality in general is still far below requirements amid the inflow of more investment. Manufacturing industries require advanced technology, new industries needed to better understand international laws, and business administration and commerce are facing a shortage of skilled staff.

Therefore, renewing workforce training to meet the economic requirements was one of the most important tasks of the education system today and in the many years to come, he said.

Taking the advantage of a young, low-paid and diligent labour force with relatively good secondary education, the Government was directing workforce training to meet social and business demands, Nhan said.

The Ministry of Education and Training put forth solutions to this problem, including setting new requirements of standard knowledge, skills and behaviours for secondary education and vocational training; boosting training in response to business requirements and developing labour market instruments and institutions; renewing the financial mechanism; developing teaching and education management staff; and renewing the training mechanism and curricula. Viet Nam needs about 20,000 standardised vocational teachers by 2015.

To this end, various measures will be taken, focusing on improving the application of information technology and English language teaching for schools and universities; strengthening the links between training and businesses, especially on training institutions being updated on the demands of businesses through organising forums for both businesses and universities to meet and set up training co-operation; and building priority programmes and policies for universities.

The ministry plans to train 20,000 doctors to be lecturers at colleges and universities in the 2007-20 period.

Speaking at the forum, Singapore Ambassador to Viet Nam Lim Thuan Kuan, said from Singapore’s perspective, key factors contributing to the quality of the education system were qualified teaching staff, a rigorous flexible curriculum and a conducive environment.

According to the ambassador Singapore focuses on improving teaching quality, which has a great influence on students at all levels; investing in teachers’ colleges; creating favourable conditions for teachers to fulfil their roles; supervising and appraising students’ learning quality to have in-time adjustment; boosting co-operation between local universities and their foreign partners; improving facilities and infrastructure in schools and creating opportunities for students to join immersion programmes, while combining programmes with overseas schools and community projects overseas.

"In Viet Nam, human resources training still faces difficulties although the country’s economy has rapidly developed. There are more and more foreign investors coming to the country to build factories, requiring more skilful workers to meet their demands," he said.

He said one of the important measures to meet businesses’ workforce demands is to open training courses in industrial zones to help supply professional workers for factories located at these zones.

High on the agenda of the forum is building Viet Nam’s infrastructure in response to the integration and socio-economic development requirements.

Viet Nam’s transportation infrastructure had gained remarkable development in such fields as transport, industry and construction of transportation infrastructure, helping to further national development, said Minister of Transport Ho Nghia Dung.

During the 2001-07 period, the transportation service enjoyed an annual growth rate of 11.6 per cent and 8.3 per cent in terms of tonnes of goods and passengers, respectively, according to the minister.

The transport and communications industry grew significantly with a high and sustainable growth rate of 44.3 per cent annually while transport and communications infrastructure has been fundamentally upgraded.

However, the sector is still facing major challenges such as low quality development plans, traffic accidents; serious traffic congestion; overloaded sea ports and airports; and difficulties accessing remote and mountainous areas.

In response to the rapid and sustainable development of the nation in the trend of further integration with the regional and international countries, the transport ministry will focus on various measures to boost the sector, including speeding up the implementation of transportation infrastructure, developing public passenger transportation and boosting urban and rural transport development.

Ensuring traffic safety; improving sustainable development and environment protection in transportation are also the ministry’s priorities.

The forum was organised by the Ministry of Planning and Investment in co-ordination with Vietnam News Agency and the Asia News Network, an organisation grouping 19 Asian newspapers.

It was sponsored by Citigroup, Vietnam Posts and Telecommunications Group, VinaCapital, and Vincom.

Source: VNS