Economy
From The Report: Vietnam 2017
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Among the world’s most impressive emerging market success stories of the past three decades, Vietnam has been achieving high growth rates, encouraging a huge reduction in poverty and attracting billions of dollars of foreign investment. What was, until relatively recently, considered a comparatively poor country by regional standards – with an economy previously weakened by decades of war – is now solidly middle-income. If Vietnam is able to maintain its current momentum, it might potentially achieve high-income status within the coming few decades.

This chapter contains interviews with Dinh Tien Dung, Minister of Finance; Le Luong Minh, Secretary-General, ASEAN; and Stephen P Groff, Vice-President for East Asia, South-east Asia and the Pacific, Asian Development Bank.

Articles from this Chapter

Overview

Rising in the east: Increased investment is encouraging economic development, although a number of challenges remain
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Among the world’s most impressive emerging market success stories of the past three decades, Vietnam has been achieving high growth rates, encouraging a huge reduction in poverty and attracting billions of dollars of foreign investment. What was, until relatively recently, considered a comparatively poor country by regional standards – with an economy previously weakened by decades of war – is now solidly middle-income. If Vietnam is able to maintain its current momentum, it might potentially…

Interview

Enhancing coordination: Dinh Tien Dung, Minister of Finance, on solutions to stabilise Vietnam’s economy and control public debt
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Interview: Dinh Tien Dung What measures need to be taken to sustain economic growth and stabilise Vietnam’s economy? DINH TIEN DUNG: Within the economic objectives for 2016-20, the government is aiming for a five-year average GDP of 6.5-7% per year. Furthermore, the scale of annual public debt should not exceed 65% of GDP; government debt should not exceed 54%; and foreign debt of the country should not exceed 50% of GDP. The average of total social investment capital is to be about 32-34% of…

Analysis

Remaining flexible: The central bank is steadily moving to a currency basket peg
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As part of its remit of maintaining monetary stability, the State Bank of Vietnam (SBV) manages the dong’s exchange rate against the US dollar, with an eye on preventing sharp depreciation. In recent years, it has loosened the dollar peg and moved in the direction of market rates. The exchange rate regime is sometimes described as a managed float, and other times a crawling peg, containing elements of both systems. The dong-to-dollar reference rate is set by the SBV, with the dong allowed to trade…

Overview

Tightening up: The government is working to improve the state’s balance sheet
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Rising public debt and persistent budget deficits are among the greatest downside risks to what is otherwise a generally robust economic outlook for Vietnam. According to official figures, public debt came in at 64.73% of GDP in 2016, just below the 65% ceiling set by the National Assembly, despite government revenues coming in 7.8% above target. With this in mind the government’s budget and financial plans for 2016-20 have been revised to agree with Decision No.25 2016/QH14 issued in November…

Interview

Beyond borders: Le Luong Minh, Secretary-General, ASEAN, on intra-regional collaboration and partnerships
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Interview: Le Luong Minh How can other ASEAN member states further collaborate with the Philippines? LE LUONG MINH: ASEAN member states will offer full support to the Philippines in continuing with the implementation of the ASEAN community integration agenda and in commemorating the 50th anniversary of the organisation. For the ASEAN Economic Community (AEC), the priority deliverables during the Philippines’ ASEAN chairmanship in 2017 will focus on inclusive and innovation-led growth. These are…

Interview

Facing forward: Stephen P Groff, Vice-President for East Asia, South-east Asia and the Pacific, Asian Development Bank (ADB), on reforms to ensure sustainable growth
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Interview:Stephen P Groff What strategies need to be emphasised to ensure Vietnam is able to remain below the National Assembly’s public debt limit of 65% of GDP? STEPHEN P GROFF: The government of Vietnam has undertaken an expansionary fiscal policy over recent years in an effort to step up investment in vital infrastructure and service delivery. However, due to these expansionary policies Vietnam’s public debt has risen steadily since 2010, and is now beginning to approach the public…