After the “Doi Moi” economic reform, Vietnam has maintained a good track record. It has successfully managed to prevent the economy from being derailed again after the economic crisis of the 1980s. Ranging from social indicators to the macroeconomic indicators, all depict a positive growth in the economy of the country.
However, there are various challenges of Vietnam economic reform as discussed below. The following paragraphs depict instances of the aforesaid.
The market economy to which the country changed over failed to reciprocate to the necessities of economic reforms. The state administration proved to be corrupt, ill-chosen and bureaucratic. It was found that the state administration was also not competent enough to handle matters related to entrepreneurs, Vietnamese and investors.
The legal structure prevailing in Vietnam speaks volumes of inefficiency, undefined portfolios. The Vietnamese government had taken measures to improve conditions, especially for the foreign projects. Initially, it was implemented but with time it began to wane again.
Quality of agricultural products:
Even though the agricultural output of the country has been remarkable, one of the challenges of Vietnam economic reform lie in the quality of the agricultural products. The quality of the agricultural products are considered to be no match as compared to the nations like China and its adjoining areas.
Savings and investment:
Rate of investment and saving rates are not up to the mark. In the year 1995,
Saving rates were recorded as 0.4 percent of the GNP (gross national product).
Capital formation rate was 4.9 percent of the gross national product or the GNP.
On the other hand, countries like China and other ASEAN nations, domestic saving rate was 15.4 percent during the same period. In spite of Vietnam having a positive trend in foreign trade, especially in the industrial as well as the services sectors, the growth has been registered as very sluggish. With the advent of agricultural products, gas and oil, export activities were found to gear up again. Majority of the export commodities comprised agricultural products. With oil and gas coming into the picture, the manufacturing segment of the economy got a major boost. The commodities of export do not face much competition as the quality of the products are not up to the mark.
Reforms pertaining to SOE or State owned enterprises:
Reforms pertaining to SOE or state owned enterprises are executed very sluggishly. Moreover, the policies governing the function of the state owned enterprises are not transparent. So, this too remains as one of the challenges of Vietnam economic reform. Despite all these drawbacks, this segment of the economy contributed the maximum during 1995. It constituted the bulk of the revenues earned by the government. Records show that in the year 1994, it comprised 60 percent of the revenues of the government.
Private sector being alienated:
The private sector was not given much attention and was alienated from the privileges extended by the Vietnamese government. In the year 1995, Vietnam had as many as 22,438 enterprises, which were privately owned.
Foreign investment in Vietnam have not been able to lighten spirits of the Vietnamese people. There have been instances when foreign investors have withdrawn from investing in Vietnam causing much embarrassment to the Vietnamese government. Withdrawals took place due to the legal system of the country being inefficient.
Training and education:
Challenges of Vietnam economic reform also comprise expenses incurred on training and education. Records in the year 1995 show that there were rarely instances when the government spent more than 10 percent for the purpose of training and research work. It had been often suggested that the country needs more educated people to control and frame different policies of the government. Appropriate policies pertaining to the sectors, which pose to be hindrances in the growth of the economy need to be attended to at the earliest.
Last Updated on : 26th June 2013