Factbox: 2016-2020 Socio-Economic Development Plan

By Lam Le, Ha Phuong   March 29, 2016 | 07:58 am GMT+7

Vietnam aims to become an industrialized country by 2020 with GDP per capita of at least $3,200 in its latest plan.

In the Socio-Economic Development Plan (SEDP) for 2016-2020 in discussion by the current National Assembly, the government set 21 macroeconomic, social and environmental targets.

They include average GDP growth of 6.5 to seven percent per year, with 85 percent of output coming from the industrial and service sectors by 2020.

Given the target for GDP growth, total GDP at current prices over the five year period is estimated to be over VND30,600 trillion ($1.37 trillion).

Vietnam expects major advances in strengthening its institutions and legal system, increasing human capital and improving the transport network.

The plan is based on the socio-economic development strategy for 2011-2020 which lays out the path towards industrialization by the end of the decade through a socialist-oriented market economy model.

The SEDP draws on Vietnam’s stable economic growth in recent years, its commitment to United Nations Sustainable Development Goals and increased international integration as reflected in free trade agreements signed with ASEAN, the TPP, and others.

However, it also takes into account Vietnam’s low competitiveness, poor infrastructure, climate change implications (especially in the Mekong delta), weak institutions, transition towards an aging population phase and increasingly complex situation in the East Sea.

Given that, the government set out 12 solutions that will guide Vietnam’s socio-economic development for the next five years.

1. Development of a socialist oriented market economy, macroeconomic stability and a positive environment for socio-economic development

This includes institutional reforms towards freer markets and further privatization. Instead of direct provision, the government will support the development of a market for public services. More emphasis is also put on greater coordination among monetary, fiscal and other policies.

By 2020, Vietnam hopes to have a coherent, transparent and effective legal system.

2. Economic restructuring, increase in productivity and competitiveness

Vietnam plans to promote entrepreneurship, including setting up start-up training centers and venture capital funding. Businesses are to receive support in research and development and public private partnerships (PPP) will be prioritized.

Source: Vietnam’s SEDP for 2016-2020

Vietnam is aiming for agriculture to develop at a rate of 2.5 percent to three percent per year with up to 50 percent of communes meeting the new rural standard by 2020.

Application of biotechnology and information technology in production, management and agricultural extension services is encouraged. The country is also determined to ensure food safety.

Regarding industry, Vietnam eyes growth of eight percent to 8.5 percent per year. By 2020, industry is set to account for 40 percent of GDP.

Particular focus is put on high tech industries. Industries that serve agriculture will be prioritized, especially agricultural product processing and manufacturing of agricultural equipment and machinery.

Vietnam will also support development of renewable energy sources, especially wind and solar power. In parallel, it will invest in oil and gas extraction and processing.

Services are set to grow 6.6 percent to 7.1 percent per year and by 2020 make up 45 percent of GDP.

Vietnam hopes to develop tourism into the leading service sector. Meanwhile, priority is also given to intellectual and technology linked services with high added value. Key service sectors include transport, ecommerce, telecommunications, wholesale and retail distribution and branding of Vietnamese products.

3. Development of economic regions and clusters

Development of business clusters based on regional master plans is high on the agenda, noting the importance of connectivity. Emphasis is put on key economic regions, economic zones and industrial parks.

4. Construction of urban and infrastructure systems

Key construction projects planned to help upgrade and improve the connectivity of Vietnam’s infrastructure include:

- North-South roads

- Upgrade existing railroad gauge from one meter to 1.435m

- Phased construction of a North-South high speed train

- Construction of international sea ports in the North and South, and mobilization of funding for an international transit port

- Phasing of investment for Long Thanh International Airport

- Completion of the irrigation system in the Mekong Delta to prevent flooding, alkaline soils and salinity.

In addition, infrastructure projects to respond to climate change and sea level rise will be prioritized.

5. Mobilization and effective use of resources

Vietnam continues to re-structure investment, especially public investment in order to improve quality, effectiveness and competitiveness. Emphasis is put on saving, ensuring trade and budget balances and expanding the scope and opportunities for private investments.

The legal framework for public private partnerships will be further improved for greater transparency, stability and fairness to encourage businesses to invest in infrastructure projects.

Vietnam will promote cooperation with FDI companies to facilitate technology and knowledge transfer. However, it will “not attract FDI at all costs”. Legislation will be revised to attract foreign investment, especially high tech, environmentally friendly and value adding projects. Meanwhile, projects that widen the trade deficit, are energy intensive and extract resources without processing will be curbed. In addition, projects which waste resources, use out-dated technology and pollute the environment will not be permitted.

Vietnam will continue to improve relevant legislation on managing and usage of Overseas Development Assistance. Procurement will be fairer and more transparent, minimizing pre-assigning contractors and using land of high commercial value. Priority will be given to projects in large scale economic and social infrastructure, agricultural development, improving modern market economy institutions, human capital (especially development of a skilled workforce), environmental protection, climate change, green growth strategy and others.

Inspection and monitoring of investment projects will also be strengthened.

6. Improvement in human capital and strengthening the potential of science and technology

Vietnam plans educational reform towards a more open and comprehensive approach that has a greater emphasis on life skills, reduces workload in pre-tertiary education and encourages self-study and creativity.

Emphasis is given to developing a knowledge economy with a high quality workforce in science and technology.

7. Cultural development, implementation of social progress and justice, and improving living standards in harmony with economic development

Vietnam is committed to integrating United Nations Sustainable Development goals into the country’s socio-economic programs and plans.

8. Active response to climate change, disaster prevention, resource management and environmental protection

The country plans to improve regulations, policy and coordination of solutions for climate change, disaster risk reduction, natural resource management, environmental protection and land use.

Matters that require immediate attention include the drought in the Central Highlands and the Southern Central region and urgent projects to prevent salinity and retain freshwater.

9. Anti-corruption, thrift and anti-wastefulness

Vietnam continues to improve relevant regulations, focusing on areas easily prone to corruption. They include asset declaration by government officials and limiting cash transactions.

Inspections, auditing and prosecution are to be strengthened. The monitoring role of publicly elected bodies and the Fatherland Front in reporting corruption will be promoted.

10. Enhancing effectiveness and efficiency of state management, ensuring public freedom and democracy in socio-economic development coupled with compliance with the law

Government processes are set to be simplified and less bureaucratic. There will be clear distinctions between the functions of government agencies and the market, whereby the government only manages and provides directions for socio-economic development through legislation, planning and regulatory instruments appropriate for the market economy. Administrative intervention is to be minimized.

11. Strengthening national defense and security, fighting to preserve independence and sovereignty and ensuring political security, social order and safety

The SEDP stresses effective implementation of the strategy to protect the country under changing circumstances.

12. Improving effectiveness of external relations, active international integration, peaceful environment and favorable conditions for the country’s development

Vietnam wants to improve effectiveness of multilateral relations, especially within ASEAN and the United Nations. International cooperation to ensure regional and national defense, security and sovereignty is to be strengthened. Sea disputes are to be resolved by peaceful means in line with international law and regional code of conduct.

Furthermore, Vietnam intends to actively negotiate and sign new generation free trade agreements.

The Vietnamese government’s development strategy is based on a series of 10-year socio-economic development strategies (SEDS). The five year socio-economic development plan lays out the actions needed to translate the strategies into reality. The SEDP provides a framework and direction for ministries and sectors to develop their own plans.