The 13th National Party Congress of Vietnam concluded in February 2, and outlined the need for further reforms to make it a developing economy and a promising destination for foreign direct investment. In the year 1986, the Doi Moi economic reforms programmes were initiated. This paved the way for further reforms in the equity markets and disinvestment of the state-owned enterprises. Before the 13th party Congress in the period between 2016-2020, the Vietnamese economy has done remarkably well. This includes economic growth of 6.2 per cent in the year 2016 under which industrial output and construction were the two sectors which showed 7.6 per cent growth. The trend continued for the next five years.
The Communist Party of Vietnam undertook extensive anti-corruption drive in 2016. This was appreciated by even the international institutions such as World Bank. It stated fact that the domestic economy has been resilient and the export has been promoted since 2016.As a result of this anti-corruption drive Vietnam was seen as a more feasible and lucrative investment destination.
On an average in the last five years (2016-2020) as per the IMF reports the average Real GDP growth has hovered between 6 to 7 percent and even in 2020it is expected to reach 2.4 per cent which is one of the highest among the Asian economies. In the year 2021 it is stated that the projected real GDP percentage growth would be around 6.7 per cent while the inflation rate would remain stable at 3.8 per cent. This is a fulfilling prophecy which clearly outlines that Vietnam has come out of the COVID- 19 pandemic and there are signs of domestic recovery as well as consolidation of trade from the trading partners.
In fact, one of the achievements of the Communist Party of Vietnam has been in reducing the budgetary deficit and outlining new restrictions with regard to government guarantees. It was seen that the public debt reduced by 5 per cent to 55 per cent from 60 per cent which was there at the end of 2016.Vietnam also took measures for recapitalising the commercial banks which were under the Vietnamese government and made sure that the Vietnamese currency Dong should be kept within a narrow band. It has been seen in the last five years, the Vietnamese Communist Party has taken active interest in reforms in terms of disinvestment of the state-owned large enterprises and also modernising of the monetary and fiscal systems. The fight against the corruption led by the Party General Secretary Nguyen Phu Trong (who got well deserved third term of five years) has paid dividends.In 2016 under his leadership the party has promulgated a new anti-corruption law as well as focus was given to the anti-money laundering mechanisms. These structural changes have brought about changes in economic conditions of the people and also these economic reforms have brought about a level playing field for the domestic private sector investment. The reduction in the licensing procedures and active state intervention on administrative matters have facilitated the growth of private sector in Vietnam. As a result of these initiatives Vietnam is now enlisted as one of the fastest growing economies in Asia.
Additionally, it has been seen in the last five years there has been sincere efforts in promoting productivity and strengthening governance institutions. There have been structural changes in tax policy and administration. The government has also imposed higher environmental taxes, and extra efforts were made to reduce public debt. These help in widening the tax base and reducing exemptions as well as promoting transparency in tax administration. The government efforts dictated by the party have provided conducive market conditions and ushered in greater exchange rate flexibility. This has helped in building foreign exchange reserves and protecting Vietnamese economy from any currency fluctuations. In fact, since 2016 it has been seen that the banks have started lending to private firms and small enterprises run by individuals and households. This has widened the lending base and provided financial stability. Vietnam has also aspired for BASEL II standardsin banking, and upgraded the existing banking infrastructure to that of international standards. The continuation of the Party General Secretary shows that the Vietnamese Communist Party is very sincere on anti-corruption legislation and providing structural oversight of state-owned enterprises.
The Gross Domestic Product (GDP) of the country has also increased to from USD $ 200 billion to USD 300 billion in 2020 while the per capita GDP which was around USD $2100 in 2016 has now reached nearly USD $ 2700 US dollars. This means nearly 33 per cent appreciation both in terms of growth of GDP and the per capita income.
By the end of 2020, as per the World Bank reports, it was stated that Vietnam has performed exceptionally well in containing the COVID- 19 crisis and is on the way to recovery. The merchandise trade surplus as well as foreign exchange reserves are on the upswing. The losses which were incurred because of drastically reduced international tourism activities and reduced remittances have been offset by increased merchandise exports.
This need to be highlighted that this performance was when Vietnam weathered floods and natural disasters. Vietnam is on its way to realise its the climate targets as per the Paris Agreement. It was one of the first countries to sign the agreement. The Communist Party of Vietnam has been very considerate with regard to taking the economy forward and acting as an alternate destination for other growing economies in Asia.
In 2019, nearly three years after the anti-corruption drive, Vietnam experienced strong domestic demand and accelerated export-oriented manufacturing. Incidentally, the world had experienced recessionary trends in the period between 2016 to 2019 Vietnam was one of the exceptions. Vietnam’s population which is now 96 million with nearly 55% of the population in the young working age of less than 35 years and a growing middle class of 13% shows promising future for the economy. Basic sanitation needs have improved drastically. In terms of infrastructure services, electricity, access to clean water and child mortality Vietnam has done exceptionally well. Vietnam has woken up to the need of rapid urbanization while at the same time catering to waste management and addressing environmental challenges. This visionary approach undertaken by the Communist Party of Vietnam shows that the party is keen to project Vietnam as a middle-income country, and a middle power in Southeast Asia.
