HANOI: Vietnam aims to lift its growth rate over the next five years to an annual average of 6.5%-7% by capitalising on multilateral trade deals, modernising agriculture and boosting investments, its communist party said on Tuesday.
The ruling party, which rarely details its economic strategy, is set for a shakeup in January 2016 after a five-yearly congress that will decide who leads a low-cost manufacturing hub with high-tech ambitions.
It will aim to maintain macro-economic stability and push for industrialisation while modernising agriculture and raising competitiveness, the party said in a draft political report ahead of the congress.
“The reform of the growth model is being shifted strongly from focusing on exports and investment capital to the development of investment capital, exports and the domestic market,” the report said.
The country will aim to “restructure and deal effectively with bad debts”, which have been lower but still at a high ratio, it said.
Vietnam’s US$186 billion economy is one of only a few bright spots in South-East Asia, posting growth of 6.28% in the first half of this year, the fastest since 2008.
It has embarked on liberal reforms to strengthen capital markets and position itself as a low-cost manufacturing alternative to China, especially for cell phones, TVs, footwear and garments.
Among firms expanding in Vietnam are Samsung, LG Microsoft and Intel.
The economy expanded 5.82% a year in 2011-2015, below a 6.5%-7% target, missed partly due to a toxic debt crisis in a banking sector that rippled through a fragile economy. The average annual growth in 2006-2010 was 7%.
“This target in long term may be feasible thanks to upcoming free trade agreements,” said Tran Minh Hoang, a senior economist at Vietcombank Securities.
Vietnam has signed a raft of free trade agreements (FTA), which includes top investors Japan and South Korea, the Russia-led Eurasian Economic Union.
Talks on an FTA with the European Union were concluded recently.
The main draw is a looming Trans-Pacific Partnership led by the United States and covering 40% of global gross domestic product (GDP).
Vietnam still battles with an inefficient state sector and bad debt currently at 3.72% of loans.
Opening up to trade pacts also risks exposing it to graft and low competitiveness, economists say.
The party called for tackling corruption, improving the legal system, assets declarations from its leaders and state employees and better oversight of law enforcement agencies.
