Vietnam: Economic Growth And Sustainable Development

2003

Dr Binh Tran-Nam

Vietnam achieved reasonable GDP growth of about 7 per cent in 2002, just slightly below the targeted annual growth figure. This rate of growth is the second highest in the region, after that of China. However, many economists have pointed out that every external group attempting to estimate Vietnam's real GDP growth has come up with lower figures. For example, recent World Bank estimates for Vietnam's 2002 GDP are 2 per cent lower than official projections. In addition, it has also been argued pessimistically that the current industrial growth, which derives largely from gains in high-priced products such as cement, sugar, steel and motorbikes, is not sustainable when tariffs drop in a few years' time.

In addition to this problem, there are two further dimensions pertaining to the quality of economic growth. The first is related to poverty and income inequality reduction and the second to sustainable development with respect to the environment. According to official statistics, Vietnam has done rather well with respect to poverty reduction. Currently, Vietnam ambitiously aims to reduce the number of poor households from 16 per cent in 2001 to less than 10 per cent by 2010. Its performance in this area has drawn praise from international organisations such as the World Bank, the Asian Development Bank, IMF and, most recently, Nobel laureate Professor Joseph Stiglitz.

However, it appears that Vietnam has not made matching progress in terms of an environment-friendly development. The primary problem is that Vietnam needs to supply food for a very large (and growing) population from a relatively small area of cultivated land. In addition, as a low-income economy, there is a tremendous pressure to under-price and thus over-exploit natural resources by inappropriate means for short-term gains. As a result, only lip service is paid to the need for a sustainable development strategy. As a trading nation, Vietnam's comparative advantage lies in primary production, and that may add yet further pressure on natural resource utilisation. Finally, as a transitional economy, there exists no effective mechanism to protect the environment. Although there are various laws relating to the environment or specific aspects of the ecology, they are neither fully understood by economic agents nor rigorously applied by responsible authorities.

Examples of serious environmental degradation in Vietnam abound. Excessive use of chemical pesticide spraying, especially in the Mekong Delta, has left high levels of residues harmful to natural predators, other organisms and humans. Uncontrolled shrimp farming has destroyed a substantial part of Vietnam's southern mangrove forests. The air pollution problems in many cities have reached critical levels. All the signs strongly indicate that Vietnam needs to urgently devise and implement a well-coordinated approach to balanced growth and environment protection.

The fundamental difficulties in environmental management in Vietnam have been well explained by various researchers in the field. The success of the new, integrated policy requires a delicate combination of regulatory and market-based measures; management training and upgrading; technical programs; international networking to facilitate environment friendly technology transfer; population control; and, adequate financing of environmental protection. Vietnam's future economic growth, both in terms of level and quality, can only be sustainable if sufficient attention and resources are devoted to these matters. This is even more imperative in view of Vietnam's rapid level of international economic integration.

WATCHPOINT: Vietnam's natural environment is likely to continue to be degraded as a result of inappropriate means of exploitation to serve short-term trade gains.

 

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