VINACHEM

Experts urge reform as the country restructures government, pushes tech, and eyes global leadership.

Vietnam is entering a decisive phase of development that will define its destiny, according to economist Ha Huy Ngoc, Director of the Center for Local and Territorial Economic Policy Research at the Vietnam Institute of Economics and World Affairs. He emphasized that the goal of achieving double-digit economic growth in the coming decades is not just aspirational - it is a practical necessity.

This ambition is key to closing the development gap, strengthening Vietnam’s internal capacity and resilience, building an independent and self-sufficient economy, and positioning the country for a meaningful role on the global stage.

Science and innovation are the central pillars

Ha Huy Ngoc stressed that transitioning toward a green and circular economy is now an irreversible global trend, driven by economic prosperity, environmental sustainability, and social equity. At COP26, 147 countries pledged to reach net zero emissions by mid-century, and by the end of 2021, 50 countries had already adopted long-term low-carbon strategies.

Advanced economies like South Korea, Canada, the EU, and Japan, as well as developing countries like China, Malaysia, and South Africa, are all investing in legal frameworks, roadmaps, and concrete actions to achieve green growth.

Vietnam has made significant strides by adopting major strategies and policy frameworks, including the National Green Growth Strategy and Action Plan for 2021–2030, and its Net Zero pledge at COP26, reaffirmed in the country’s Nationally Determined Contributions (NDC).

These initiatives have helped transform Vietnam from a latecomer into a global model for green transformation - pioneering efforts in line with global sustainability movements.

Despite this, Vietnam still faces the threat of the middle-income trap if it neglects what Ngoc calls “phase two” of its economic journey. A report from the Ministry of Science and Technology (2020) shows that between 2015–2020, Vietnam’s average economic growth was 5.6%. Of this, 3.06% came from investment, 3.29% from technological innovation - but a negative 1.36% was attributed to inefficiencies in performance improvement.

Vietnam needs breakthrough momentum

The nation is now at a critical juncture, requiring bold and strategic decisions to ignite scientific, technological, and innovation breakthroughs that can propel Vietnam into a new era of prosperity. The vision is to become an upper-middle-income industrialized country by 2030, and a high-income developed nation by 2045.

According to Ngoc, the only sustainable and decisive path to escape the middle-income trap is through science, technology, and innovation.

“The 13th Party Congress has set a clear vision: Vietnam must become a modern industrial country with high income by 2045,” Ngoc stated. “To realize that dream, sustained, stable, and high growth is essential.”

He emphasized that achieving double-digit GDP growth is not an unrealistic goal - it is a strategic imperative to reduce the development gap, avoid stagnation, and establish Vietnam’s international stature.

"If we fail to build a strong foundation and adopt a new growth model in time, the middle-income trap will be unavoidable,” Ngoc warned. “Vietnam must drive substantial breakthroughs in thinking and action to shift from an outdated, resource-heavy model.”

Currently, Vietnam’s growth still relies heavily on resource extraction, public investment, and low-cost labor - elements that are rapidly losing relevance in today’s global economy.

Ngoc called for a new growth model, one based on quality, efficiency, and productivity. At its core, this model must be driven by innovation, technology, and high added value.

Beyond technology adoption, Ngoc highlighted the need for Vietnam to develop products rich in knowledge, culture, and innovation. The private sector is expected to be the main engine of this transformation - driving job creation, productivity gains, national competitiveness, and deeper integration into regional and global value chains.

Ngoc reiterated that Vietnam, from once being a laggard, has now caught up and is even leading in key areas of green transition. It stands as a symbolic pioneer of circular economic transformation among developing nations.

Institutional reform: the backbone of sustainable growth

Vietnam is now undergoing major institutional transformations, with central government restructuring and a shift toward a two-tier local governance system. These changes, rare in any generation, are meant to build a more efficient, transparent, and accountable state apparatus.

Though Vietnam has historically taken a cautious, incremental approach to reform, the institutional overhaul that began in August 2024 marks a rare, bold departure.

These changes aim to tackle the country’s most pressing governance challenges, improving performance and accountability across all levels of government. A proactive reform mindset could set the stage for even greater leaps forward.

As Vietnam sets its sights on becoming a high-income economy by 2045, deep structural reforms are needed to drive sustainable, innovation-led growth.

Ngoc stressed that Vietnam must build a modern, transparent institutional framework that promotes fair competition, supports private sector innovation, and mobilizes societal resources efficiently.

Administrative barriers - especially in public investment - must be removed. More importantly, there must be a rethink of central-local governance responsibilities, streamlining the public sector and creating better incentive structures, especially in the public wage system.

Most crucially, Vietnam must eliminate overlapping regulations and conflicting policies. A modern institutional framework should enable innovation, bridge the public-private divide, and link central policies with local action - moving beyond bureaucratic rulebooks to become a true engine of transformation.