Vietnam needs to speed up transformation towards an efficiency and innovation-driven growth model to meet requirements of sustainable and inclusive development, experts have said.

Nguyen Duc Hien, deputy head of the Party Central Committee’s Economic Commission, spoke at a workshop about economic restructuring held in Hanoi on April 26, saying the transformation of the growth model remained slower than expected.

Vietnam’s growth model was still mainly based on input factors, including capital, labour and resources, he said, adding that the contribution of the total factor productivity (TFP) to economic growth was limit ed, much lower than other countries in the region which were also at the same development stage.

He also pointed out that the labour productivity increase remained dependent of the increase in investment capital and the use of low-cost labour while capital mainly came to labour-intensive economic activities.

“Labour productivity is still low and the gap in labour productivity between Vietnam and other countries continues to widen,” he said.

Another problem was that the efficiency of public investment remained low and the disbursement was disappointing. The process of restructuring State-owned enterprises was below expectation while corporate governance had not been improved much, he said.

“The private sector has not been developed strongly enough to play an important role in the economy.”

Former Director of the Institute of Policy and Strategy for Agriculture and Rural Development Dang Kim Son said that Vietnam should be an economy ready for innovations with the restructuring of economic sectors in accordance with regional advantages.

Enterprises, economic organisations and the resource market must be restructured in a healthy way to catch up with other countries through the building of a development government, he stressed.

Tran Tho Dat, former president of the National Economics University, said that digital economy would be the new driver for growth model transformation and economic restructuring.

Vietnam needed to develop a strategy framework for digital transformation and create conditions to attract investment in developing digital infrastructure and services.

The education and training system should also be renewed and closely associated with digitalisation, Dat said, adding that support should also be given to encourage start-ups, promote innovation and technology application.

Former director of the Vietnam Institute of Economics Tran Dinh Thien said Vietnam needed to attach special attention to the synchronous development of input resource markets, such as land and labour markets.

In addition, an appropriate foreign direct investment (FDI) attraction strategy would be important for the country to bring into play its advantages. “Science and technology and human resources will be the most important drivers for growth in the next period,” Thien said.

Vo Tri Thanh, director of the Institute for Brand and Competition Strategy, said that Vietnam should move from a brown economy to a green economy. Problems related to basic issues of the economy must be reviewed for adjustments, such as the Law on Land, while the framework for new issues must be put into consideration such as developing a law on data, cross-boder data flow and cross-border human resource management.

According to Jonathan Pincus, UNDP Senior International Economist, besides maintaining export growth, it was important to create a fair playground for domestic and FDI enterprises with special attention paid to financial mechanisms for micro, small and medium-sized enterprises, he said./.