Following the first installment of our discussion with Dr. Vu Thanh Tu Anh, Senior Lecturer at the Fulbright School of Public Policy and Management, Fulbright University Vietnam, VietNamNet continues with part two.

Q: What are your thoughts on the goal of achieving continuous double-digit growth over the next two decades?

Dr. Vu Thanh Tu Anh: First and foremost, this target is a necessary pressure imposed by leadership to drive systemic progress.

Looking externally, Japan, South Korea, Singapore, and more recently, China, have all sustained double-digit growth over long periods, allowing them to transition into high-income nations.

Vietnam, on the other hand, has never achieved a 10% growth rate in nearly 40 years since the Đổi Mới reforms. The highest growth rate recorded was 9.5% in 1995, after which it declined, dropping by about one percentage point per decade.

Currently, Vietnam is drafting its five-year economic plan with an ambitious growth target of 7.55% to 8%, or possibly higher. Even if we manage to reach 8%, it remains modest compared to the aforementioned countries. Nevertheless, it would represent a significant reversal in our long-term growth trajectory.

Vietnam's economy relies on three fundamental pillars: exports, investment, and consumption.

Household consumption has been sluggish since the COVID-19 pandemic. After adjusting for inflation, household spending has only increased by 5-5.5%, nearly half of its pre-pandemic levels. Since household consumption accounts for over 60% of GDP, its weak growth makes an 8% overall GDP growth target difficult to achieve - especially considering Vietnam's aging population.

Investment, particularly in foreign direct investment (FDI), has been flowing into Vietnam due to global geopolitical shifts. However, we must also prepare for risks. If Vietnam is accused of serving as a transshipment hub for Chinese goods, this advantage could disappear overnight. While the opportunities are enormous, so are the accompanying risks. Thus, managing these risks is essential to optimizing our opportunities - yet, I have not seen a structured discussion addressing this issue.

Exports present another challenge. Vietnam was once listed as a currency manipulator due to its substantial trade surplus, which now ranks third globally. China leads with a trade surplus exceeding $200 billion, followed by Mexico at around $150 billion, and Vietnam at approximately $104 billion. If we continue on this path, we may soon climb to second place - but at what cost?

These contradictions raise an essential question: Have we thoroughly assessed the balance between our domestic aspirations and international political realities? If we fail to manage these risks effectively, much of our hard work could be undone.

Q: There is growing recognition that the private sector should become the key driver of economic growth. What is your perspective on this?

Dr. Vu Thanh Tu Anh: First, we must ask why officially registered private enterprises account for only 10% of GDP.

Where does the country's intrinsic strength lie? Clearly, it is within the private sector. Yet, this sector remains weak. That concerns me deeply. The core vitality of our nation - our deeply rooted economic strength - is struggling.

This reality underscores the vast opportunities for Vietnam’s growth. National policy must focus on empowering businesses, particularly small and medium-sized enterprises (SMEs). However, policymakers have yet to offer a clear, coherent strategy.

For example, the 2017 Law on Supporting SMEs lumps together businesses of vastly different scales. While this legal framework is administratively convenient, it fails to account for the distinct roles that micro, small, and medium enterprises play within the economic ecosystem.

Micro-enterprises, typically with only 10-15 employees, struggle to innovate or integrate into global supply chains with corporations like Samsung or Intel. They primarily serve local markets and play a role in employment and social stability.

Small and medium enterprises (SMEs), on the other hand, have significantly greater potential. These businesses employ more people and have the capacity to connect with global supply chains.

Yet, current policies treat all businesses alike, making it nearly impossible for smaller firms to scale. How can a tiny fishing boat with a dozen people latch onto an ocean-bound vessel?

A fundamental change in the relationship between the state and enterprises is essential. The Prime Minister’s advisory team raised this issue more than 20 years ago.

Policymakers must immerse themselves in the realities of business operations to understand their challenges. At the same time, they must maintain autonomy - avoiding corruption and undue influence.

Singapore, for example, offers highly competitive salaries for public officials, discouraging corruption. Civil servants there hold prestigious social status and take pride in their work.

In contrast, Vietnamese civil servants earn meager wages while wielding immense power over vast national resources. This creates an environment ripe for corruption and abuse. It is time for serious salary reform.

Q: Given these challenges, what will drive Vietnam’s growth moving forward?

Dr. Vu Thanh Tu Anh: In the short term, Vietnam will continue relying on FDI, exports, and state investment. Given the rapid closing of global economic windows, we cannot afford to wait for the private sector to mature overnight.

Therefore, FDI and exports will remain our primary growth engines. However, we must recognize that we have overindulged this sector for decades, even though its contribution to value-added production and job creation has been limited.

In the medium term, the private sector must take center stage. Unfortunately, domestic enterprises have been neglected. I believe we are making a grave mistake - suppressing our own economic potential.

State-owned enterprises are treated as favored children, foreign-invested firms as adopted children, and private businesses as stepchildren. This dynamic must change.

To ensure sustainable growth, Vietnam must decisively support its private sector, foster better governance, and create a more conducive business environment. As General Secretary To Lam has stated: "We must abandon the mindset of banning what we cannot regulate."

For too long, entrepreneurs have been shackled by excessive regulations. The state must not only improve its governance capabilities but also unleash the private sector’s potential. Only then can Vietnam achieve true economic independence and self-reliance.

We must genuinely reform our business environment, recognizing institutional transformation as the most critical breakthrough of all.

Additionally, workforce skills must be significantly upgraded. Many semiconductor firms in Vietnam report that they must retrain nearly all newly hired engineers due to skill gaps. Advanced industries require top-tier talent, yet companies struggle to find qualified professionals. Intellectual property protection is another crucial issue that Vietnam must address.

This is the defining challenge of our time - the key to Vietnam’s resilience in an increasingly competitive and unpredictable world.

Tu Giang - Lan Anh