Hanoi (VNA) - Productivity and innovation are considered leadingfactors for Vietnam’s international integration, said Dang Huy Dong, Deputy Ministerof Planning and Investment.

Dong told a workshop titled "Vietnam economy’s innovation and productivity: Evidence fromempirical analysis" held in Hanoi last week that the twofactors are required for the Fourth Industrial Revolution as well as joiningglobal supply chains that take advantage of digitalisation in production.

Dang Duc Anh, head of the Analysis and ForecastBoard under the ministry’s National Centre for Socio-economic Information andForecast, said Vietnam had exploited traditional resources such as capital,natural resources and cheap labour for its economic development, exhaustingsuch resources. The quality of growth therefore was not high and lackedsustainability.

“If the country continues this developmenttrend, it would result in environmental pollution and a loss of competitivenessin comparison with the region and the world in the long-term,” Anh said.

However, Vietnam’s productivity has longsuffered a gap with the region. In another way, the quality of its humanresources has not provided momentum for productivity growth. The rate of younglabourers who were not given training and education is too high, becoming abarrier for the country’s productivity to increase.

Experts agreed that Vietnam has a shortageof skilled labourers. As many as 11 out of 20 economic sectors which hadpositive growth rates in the 2006-16 period were not due to increasingproductivity. Of which, four of 20 economic sectors saw declines inproductivity in the period and another 7 had added value based on productivityless than the ideal level of 60 percent.

They suggested that the Government shouldspeed up renovation and restructuring of State-owned enterprises effectivelyand drastically. It was expected that economic output could rise by 10 percentthrough increasing productivity.

Experts calculated that if SoEs’productivity rises by 2 percent, it would lead to a GDP increase of 1.14 percent,industrial production of 2.26 percent and export output of 1.15 percent.

The rapid growth requires activeparticipation of the private sector with small-and-medium sized enterprises(SMEs). Research also revealed that if SMEs promote the application of newtechnologies, productivity would increase by 25 percent.

Anh also said the country’s growth ratehad been relatively impressive and sustainable with positive export results.However, export and GDP growth depended on the FDI sector while local firms andtheir investment effectiveness had not significantly improved.

In addition, one of the main reasons forlow productivity was education and training quality as well as human resourcesthat did not meet requirements. Vietnam risked moving backwards in terms ofhuman resources and losing the advantage of its cheap labour.

He proposed that the Government andrelevant agencies should focus on institutional and business environmentimprovement to serve businesses in combination with speeding up theprivatisation of SoEs.

Especially, the Government should enhancestart-up spirit and support the training of entrepreneurs to help them increaseadded value through new technologies.

Dr. John FitzGerald from the EconomicsFaculty of Trinity Dublin University said Vietnam should concentrate on threefactors including capital, science and technology and human resources forsustainable development and catching up with developed countries. Vietnam couldimprove its productivity through developing science and technologies whileresolving issues of economic structure, labour, working environment andadministrative reform to increase productivity.-VNA