VietNamNet Bridge - The average wage for Vietnamese workers is $1 per hour, far below the pay to Filipino workers ($2.1) and Chinese ($2.5).

Vietnam has gained great achievements in economic development

In his speech at the 48th CFO Conference, Nguyen Thien Nhan, Secretary of the HCMC Party Committee, said Vietnam has gained great achievements in economic development, but still needs to deal with a lot of issues or it will lag behind other regional countries.

Nhan said there have been many driving forces for Vietnam's economic development over the last 32 years, including institutional reform; social and political stability; abundant labor force; increased skilled labor; cheap labour; high export turnover; and the increasingly high contribution of the foreign invested economic sector.

Since 1975, Vietnam has experienced 13 important institutional reform milestones. In 1999, the Enterprise Law was enacted. In 2000, Vietnam signed a BTA with the US. In 2006, it joined WTO. In 2008, it became a low income country and in 2015, it completed  negotiations for FTA with Europe. In 2018, it will become a member of CPTPP.

Since 1975, Vietnam has experienced 13 important institutional reform milestones. In 1999, the Enterprise Law was enacted. In 2000, Vietnam signed a BTA (bilateral trade agreement) with the US. In 2006, it joined WTO. In 2008, it became a low income country and in 2015, it completed  negotiations for FTA with Europe. In 2018, it will become a member of CPTPP.

Vietnam is now a strategic partner of 15 countries and a comprehensive partner of another 10 countries.

One of Vietnam’s greatest advantages in attracting FDI is its young labor force now in the “golden population” period. In the last 30 years, Vietnam had 1 million more workers each year, and the growth rate is expected to continue until 2035.

In 2017, Vietnam’s population was 93.7 million, while the figures are expected to rise to 96.5 million by 2020 and 110 million by 2030. The number of people of working age accounts for 50-65 percent.

The qualification of workers has improved. The number of trained workers only accounted for 12 percent in 1996, but rose to 50 percent in 2017, or 27.7 million workers, and is expected to reach 70 percent by 2020.

While the quality of the labor force is getting better, the labor cost remains very low. In 2012, the average wage in Vietnam was $1 per hour, while it was $20 in South Korea and $24 in Singapore.

One of the most important driving forces behind Vietnam’s economy is the high growth rate of exports, 39 times increase over the last 22 years, from $5.4 billion in 1995 to $214 billion in 2017.

In his presentation, Nhan also mentioned three weak points of Vietnam’s economy. First, Vietnamese productivity is too low, 15 times lower than Singapore’s and 11 times lower than Japanese.

This is attributed to outdated technologies used at enterprises. At least 60 percent of enterprises are using out-of-date technologies, 28 percent medium-tier technologies, 10 percent above-average and only 2 percent modern technologies.

The other two problems include poor infrastructure and climate change.