Hanoi (VNA) – Vietnam’s economy had a good start in 2018 with a7.38 percent GDP growth in first quarter, but experts warn of challenges andrisks ahead in the remaining of the year as well as following years.

At a recent workshop on prospects for the Vietnamese economy in 2018 andto 2020, Minister of Planning and Investment Nguyen Chi Dung said the countrywill benefit from the recovery of the world economy this year and there aremany reasons to be optimistic about domestic economic growth from now to 2020.

The advisory group to the Prime Minister on economic affairs saideconomic development in the recent past was driven by reform efforts withdrastic measures, which improved the business and investment environment, alongwith flexible and coordinated macro-economic policies and the effect of newpolicies such as developing the private sector.

The group devised three scenarios for Vietnam’s economic growth in2018-2020, which envision annual average GDP growth rate at 6.7 percent, 6.83percent and 7.47 percent, respectively. The group also proposed the target ofan average annual growth of 6.85 percent for the next three years (2018 to2020).

The forecast demonstrates economists’ optimistic viewpoint of thecountry’s economic prospects.

However, in-depth analysis of Quarter 1 economic performance alsorevealed potential problems, participants at the workshop said.

It is noteworthy that the high economic growth in Q1 was driven by themanufacturing sector, especially big foreign-invested enterprises such as electronicsmanufacturer Samsung Vietnam and steel maker Formosa Ha Tinh. The question iswhether those enterprises will be able to maintain the high growth rate infollowing quarters in the context of unforeseeable factors in the world economysuch as the trade protection policy of the US and the risk of a US-China tradewar.

Economist Le Xuan Nghia said the manufacture sector is currently dominatedby foreign-invested enterprises, and the domestic enterprises are saddled withhigh interest rates, logistic costs and informal expenses.  

In particular, the enforcement of laws and policies is not strictenough, many documents guiding the execution of laws and decrees areinconsistent, incomplete and lack transparency, and administrative procedures,especially those related to land and investment in capital construction, revealmany shortcomings.

PHan Duc Hieu, Deputy Director of the Central Institute for EconomicManagement, was of the opinion that despite certain results, the pace of institutionalreform is still slow and fails to meet expectations of the business community.  

The restructuring of the economy also fell short of expectations, Hieusaid.

He added that it is necessary to change the way of thinking not only amongpolicy makers but also those who implement the policies.

“Changing the way of thinking throughout the administrative apparatus isan important content of institutional reform,” Hieu said.

Minister of Planning and Investment Nguyen Chi Dung shared the view onthe need to accelerate institutional reform.

“This is the fundamental driving force of economic growth, which is bothan urgent need in the context of rapid changes and a requirement fordevelopment,” he said.  

Speaking on the Government’s reform priorities, the minister alsohighlighted the need to increase labour productivity, stressing that this isthe most important factor in improving growth quality and renewing the growthmodel.

According to the Minister, the most effective way to enhance labourproductivity is to capture opportunities brought about by the 4th Industrial Revolution.

“This is one-in-a-thousand-year opportunity,” Dung said.

He also mentioned other factors that can contribute to economic growth,such as infrastructure and human resources.

“There is plenty of room for improvement, and the question is how toimprove in the most rapid and effective manner,” the minister said.

He agreed that in spite of the optimism, challenges and difficulties shouldnot be overlooked.-VNA