Vietnam falls short of socio-economic development targets for 2011-2015

However goals relating to inflation, the trade deficit, poverty reduction and household income were met or exceeded the target.

In a 17-page report delivered to the National Assembly on March 22, Prime Minister Nguyen Tan Dung gave an overview of Vietnam’s socio-economic performance during the last term.

Prime Minister Nguyen Tan Dung

“Limited and differentiated understanding of the concept of a socialist oriented market economy” has been one of the main reasons for inconsistencies in government policies, according to Prime Minister Dung.

He added that limited forecasting ability has resulted in many unrealistic targets being set.

Nevertheless, Deputy Prime Minister Nguyen Xuan Phuc noted on March 21 that the results achieved over the last five years are important in light of the many challenges the country has faced.

Below is a summary of Vietnam's socio-economic development over the last five years.

Macroeconomic indicators

According to Dung, Vietnam’s economy has seen stable and sustainable development overall. However, he noted that average GDP growth over the last 5 years did not match its potential.

Among the 13 macroeconomic indicators, seven failed to meet their targets. GDP growth averaged 5.91 percent compared to the target of 6.5-7 percent.

Social investment as a percentage of GDP, the budget deficit and government debt balance also fell short of their targets.

This was due to inefficient policy coordination, Dung said. Issues like loss of revenue, tax debt and lenient management of public finance and projects have contributed to a growing budget deficit and debt.

Furthermore, restructuring of economic sectors, including public companies, public investment, financial institutions and agriculture, remains ineffective. Policies to connect industrial clusters with local economies are still lacking, and the development and execution of socio-economic plans have been inadequate.

Inflation, on the other hand, was stable at only 0.6 percent in 2015, compared to the target of 5-7 percent.

Vietnam significantly underperformed in technological innovation. The rate of high tech products to the total value of industrial output was only 18.4 percent compared to the target of 30 percent, while the rate of innovation was 10.7 percent, over 2 percentage points short of the target.

Similarly, improvement in labor productivity recorded for 2015 was 23.6 percent, while the target was 29-32 percent.

“Development of human resources in line with scientific and technological advancements and infrastructure development is still very limited. The business environment has not met our expectations,” said Dung.

Social indicators

There are 11 social indicators, of which nine reached or exceeded their targets. Vietnam only fell short on labor market indicators.

Dung said that job creation policies targeting agricultural workers and new graduates were slow and ineffective.

The number of new jobs created over the past five years was 7.8 million, 200,000 short of the target, while the rate of trained workers was 51.6 percent, 3.4 percent below target.

Vietnam did particularly well in household income, which increased almost three-fold in 2015 compared to 2010. The poverty rate in poor districts and communes also fell significantly by six percent, compared to the four percent target.

However, poverty reduction in areas occupied by ethnic minorities is still ineffective according to Dung.

Regarding health care, Vietnam achieved the target of having eight doctors per 10 thousand people and exceeded the target for hospital beds by one unit, namely 24 beds per 10 thousand people.

Nevertheless, hospitals are still overcrowded while private medical practices and drugs need to be better managed, Dung’s report said.

Environmental indicators

Vietnam’s environment and climate change legislation, policies and management still have some inconsistencies and a lot of limitations, especially with regards to use of natural resources, land, pollution, development of natural ecosystems and forest protection. Policies to encourage development of renewable energy and environmentally friendly materials are still not strong enough.

Vietnam failed to meet its forest coverage goal. As of 2015, the country’s forest coverage was 40.7 percent, almost two percentage points short of the target.

Meanwhile, 90 percent of heavy pollutants were treated in 2015, 5 percent above target.

Commenting on the report, Phan Trung Ly, chair of the Legal Committee of the National Assembly, said there is insufficient analysis on corruption, which has recently become increasingly complex and serious.

On March 21, Deputy Prime Minister Nguyen Xuan Phuc announced the socio-economic development plan for 2016-2020, including the target for average GDP growth of 6.5-7 percent.