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Faced with corruption and slow direction, vietnam under pressure tochange by ferujkll sdff
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Faced with corruption and slow direction, vietnam under pressure tochange |
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Business,Business News,Business Opportunities
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Opinion: Since the introduction of doi moi (renovation) policy in1986, Vietnam s economic growth has lifted millions out of abjectpoverty. Increasingly, however, the country s growth anddevelopment trajectories are showing signs of distress. Macroinstability, increasing inequality, lurking environmental problemsand simmering public discontent are putting Hanoi under risingpressure to change. Last year, with an inflation rate of 18 percent, Vietnam saw asurge in labor strikes. Despite a GDP growth rate of 5.9 percent,the lives of the poor worsened as their meager income levels couldnot keep up with rising food prices.
In an attempt to ease thepublic s anxiety, the government promised bold fiscal and monetarymeasures to fight inflation. But the fiscal reforms have not worked because cutting governmentspending proved difficult in the face of entrenched interests. Andtightening monetary measures has put tens of thousands of small andmedium firms out of business or in distress; they have troublegetting credit amid high interest rates and preferential treatmentreserved for state-owned enterprises (SOEs). The situation isposing a significant threat to the development of Vietnam sprivate sector.
It is widely recognized in policy circles that the country sgrowth model of relying on cheap labor, natural resourceexploitation and capital growth has lost its appeal. Vietnamachieved its middle-income status in 2010, but the country also sawthe average income of the top 20 percent income group increased to9.2 times that of the bottom 20 percent in the same year. Vietnam s Prime Minister Nguyen Tan Dung has called for economicrestructuring and change in its growth model. To move toward thisgoal, he emphasizes the need to improve market institutions, anaspiration that is easier said than done. For one thing, the statesector has a leading role in Vietnam s socialist-oriented marketeconomy.
As Vietnam strives to become a modern industrializedcountry by 2020, it will continue to pour resources into stateowned enterprises. This means picking winners and Hanoi has notbeen successful at that; examples are found in shipbuilding andsteel, which have performed poorly. Another issue is corruption. Although the leadership vows to fightthis deep-seated problem, the result is not encouraging.
Accordingto the latest Corruption Perception Index by TransparencyInternational, Vietnam ranked 112 out of 183 countries andterritories surveyed in 2011, performing worse than many of itsSoutheast Asian peers. Corruption has not only undermined its efforts to improve marketinstitutions and the legal system, but also has eroded the publictrust. At a recent Communist Party conference, General Secretary NguyenPhu Trong emphasized the need for party members to engage inserious criticism and self-criticism to help redress problems.Still, bold and fast-paced reforms are not expected anytime soon.The challenge in achieving more sustainable and inclusive growthrequires greater government accountability and publicparticipation. Less politically sensitive is the task of raising Vietnam sproductivity growth rate. A recent report by McKinsey GlobalInstitute estimates that Vietnam needs to raise its annual averagelabor productivity growth rate to 6.4 percent from 4.1 percent toachieve an annual average GDP growth rate of 7 percent.
Sustained productivity growth requires more investment in humancapital through reprioritizing its resource allocation by divertingstate investment, now going to inefficient industries, towardvocational training, health, and education. Improving property rights in land is another area of opportunity.Vietnam s current land law, which stipulates land belongs to theentire people with the State as the representative owner, hasmany loopholes and thus creates a fertile ground for corruption.Changing the law to provide more well-defined and well-protectedrights will help reduce corruption and land disputes, and boostcommercial agriculture. As top-down reform has proved difficult in the face ofwell-entrenched interests, a bottom-up approach could providemomentum. Policymakers and advisors that favor reform, as well asinternational development institutions, should advocate for theadoption of grassroots politics. These have been shown to promotemore market-based development and citizens participation ingovernance.
The idea is to move political leadership towardconsensus by presenting evidence of what works but does not undulythreaten the central government. Relaxing media control is also vital to the reform process. Recentexperiences show that the media plays an important role in exposingcorruption and abuse-of-power cases. Benefits of a more independentmedia run both ways: it helps the central government monitor theactivities of provincial and local governments, but it alsoeffectively communicates the people s concerns and desiresdirectly to top leaders, putting them under more pressure to act. Although the political will of the Hanoi leadership will largelydetermine Vietnam s direction and pace of change, it can still beshaped by the country s stakeholders through targeted and activeadvocacy and well-thought-out pressure.
Anh Le Tran is a professor at Lasell College in Newton,Massachusetts. He has written commentary on Vietnam developmentissues in both Vietnamese and English-language publications. Hisviews are is own. I am an expert from Consumer Electronics Production Lines, usually analyzes all kind of industries situation, such as black beads bracelet , artful dodger hoodie.
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