Vietnam plans to accelerate growth and boost high tech industries

Communist Party says it wants to boost growth to 6.5-7 percent a year, focus on quality, not quantity, of foreign investment.

Vietnam's Communist Party General Secretary Nguyen Phu Trong says the country aims to be fully developed by 2045. [VNA/Handout via Reuters]

Having sidestepped the worst of the coronavirus pandemic so far, Vietnam aims to rev up its economy over the next five years, trusting in its mix of free trade deals, privatisation and tight COVID-19 curbs.

Armed with a raft of free trade deals envied by regional peers and increasingly luring factories away from China, the ruling Communist Party on Monday formally approved ambitions to raise growth beyond an annual 6 percent in the pre-pandemic era to 6.5-7.0 percent for the 2021-2025 period.

In an economic development blueprint confirmed at its five-yearly congress, it said it would boost its growing role as a key manufacturing hub for global giants such as Samsung Electronics Co and Intel Corp. At the same time, the Party is trying to raise the country’s profile beyond being a low-cost labour destination to a centre for science and technology.

With more than a dozen free-trade agreements now under its belt, Vietnam aims to expand and diversify export markets, the Party said.

The country has reaped the benefit of China and the United States, its largest trading partners, being locked in a bitter trade war that has seen Western manufacturers look to move more and more of their production out of China – with Vietnam emerging as a popular choice.

Speaking after the congress, Party General Secretary Nguyen Phu Trong – reselected on Sunday to serve a rare third term as party chief – said Vietnam would aim to be a fully developed country by 2045, and that an ongoing crackdown on corruption across party ranks would continue.

High tech investment

The lofty 2021-2025 targets come as Vietnam recoils from its worst outbreak of COVID-19 in nearly two months, a reminder that future success will depend in the short term at least on keeping the virus at bay.

Vietnam GDP growth rate chart [Bloomberg]
Vietnam’s annual gross domestic product growth rate in percentage terms [Bloomberg]

Last year’s 2.9 percent economic growth rate would have been welcomed in many countries around the world, but it was the worst year in decades for Vietnam’s economy as it suffered the effects of tight quarantines, border closures and other anti-virus curbs.

Despite the pandemic, in January, a unit of Taiwan’s Foxconn Technology Co Ltd, a key Apple Inc supplier, obtained a licence to invest $270m in Vietnam as it moves some iPad and MacBook computer assembly from China. Meanwhile United States-based chipmaker Intel said it raised its investment in Vietnam by $475m to $1.5bn.

The country will “focus on measures to basically complete the elements of a socialist-oriented market economy, better handling the relationship between the state and the market and society,” according to the Party’s economic blueprint.

Analysts say that is code for Vietnam continuing its drive to privatise state-owned enterprises, except for those operating in areas deemed essential for national security and defence.

The Party also said it will shift its focus on foreign direct investment (FDI) from quantity to quality, with a priority placed on lowering environmental risks.

After decades of development driven by robust FDI, largely in labour-intensive and environmentally unfriendly business, Vietnam “won’t allow projects with outdated technologies, environment pollution risks,” it said.

Source: Reuters