Effective reforms to grasp opportunities from the shift in the global value chains and investment system and the rise of the contact-free economy could help Vietnam become a high-income country by 2025, according to Country Director for the World Bank in Vietnam Carolyn Turk.

Overview of the event. Photo: baodautu.

These two trends, which are not entirely new, are now the most important mega-trends and speeding up due to Covid-19, said Mrs. Turk at the annual dialogue platform titled “Vietnam Reform and Development Forum 2020” on September 29, discussing how to harness opportunities emerging from the Covid-19 pandemic to support a robust recovery and sustain longer-term growth.

“By strengthening reforms in these two areas in an effective manner, and the way it has handled the Covid-19 health crisis, Vietnam could leverage these trends to get back on track towards its aspiration of becoming a high-income country by 2045,” she added.

The forum takes place in a challenging context which requires Vietnam to make difficult adjustments to its medium-term development plan and long-term strategy. Covid-19 impacts are compounding the existing slow-down trends in growth of trade, GDP, and productivity since the global crisis of 2007-09 and have disrupted global production networks on an unprecedented scale.

“A commitment to inclusive and sustainable growth will help Vietnam overcome the economic challenges created by Covid-19, and help its economy thrive in a post-Covid world,” said Australian Ambassador to Vietnam Robyn Mudie.

The Covid-19 pandemic has revealed the fragility of global value chains which are built around just a few hubs and has provided new impetus to the ongoing reconfiguration of the global production network towards more flexibility and agility. The shift to a more diverse, short-distance network offers a unique opportunity for Vietnam to deepen its participation in global and regional global value chains. The World Bank estimates that a 1% increase in global value chain participation boosts per capita income levels by more than 1% – about twice as much as conventional trade.

At the same time, the pandemic might permanently reshape behavior habits towards the heavier use of digital technologies and may trigger lasting organizational changes to the way businesses operate more efficiently. In this way, Covid-19 could act as a catalyst for Vietnam to speed up the digital transformation it has already embarked upon. On this note, participants discussed the foundations that need to be in place to support the emergence of a robust and inclusive digital economy.

The Vietnam Reform and Development Forum is the biggest policy dialogue of the year between the Government of Vietnam and development partners. This year’s forum continued to be sponsored by the Australian Government through the ongoing Australia-World Bank Group Strategic Partnership - Phase 2 (ABP2).