The first signal is the decrease in the ratio of social investment capital/gross domestic product (GDP). The total social investment capital increased from 33% in 1996-2000 to 39.1% in 2001-2005 and 42.7% in 2006-2010. However, the rate fell down to 34.6% in 2011 and is about to further go down to 33.5% in 2012.
The above figures show that the Government is actively reducing social investment capital in an effort to lessen dependence on credit expansion for growth. This is the first step for long-term growth model transformation.
Of the social investment capital, the ratio of public investment in the first six months of 2012 dipped to 34.5% against 38.3% of the same period last year.
Another outcome is the encouraging change in labor structure. The labor force in agriculture-forestry-aquaculture sector accounted for 48.4% in 2011 compared to 65.1% in 2000. On the contrary, the labor force increased to 21.3% from 13.1% in industry-construction sector.
Despite the positive outcomes, Vietnam needs to settle a string of issues, including reducing the Incremental Capital Output Ratio (ICOR). This ratio rose steadily over the past years, from 4.7 in 1996- 2000, to 5.2 in 2001- 2005 and 6.1 in 2006- 2010. It decreased to 5.9 in 2011 and the target for 2012 is 5.2-5.6.
To raise investment efficiency, the State needs to focus public investment on infrastructure development while preventing scattered investment and accelerating the implementation of investment projects.
At the same time, policies should be designed to encourage capital resources from non-public sectors.
Meanwhile, foreign direct investment inflow should be directed to areas like high-tech and clean energy, manufacturing and processing, technology transfer.
The other issue the country should tackle is productivity. It is considered as one of the three breakthroughs to transform growth model, restructure the economy.
To raise productivity, it is necessary to increase trained workforce rate from the current 40% to 55% by 2015 and 70% by 2020 and improve the quality of vocational training schools./.
By Kim Loan