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Middle income trap a risk: experts

HCM CITY  — Viet Nam needs to shift from a low middle-income to higher-income nation and avoid the middle-income trap by reforming policy content, structure and organisation, heard an international seminar that ended Friday in HCM City.

Per capita income of Viet Nam surpassed US$1,000 in 2008 (currently about $2,000) so the country is now classified as a low middle-income country, according to the criteria of the World Bank. — Photo

Per capita income of Viet Nam surpassed US$1,000 in 2008 (currently about $2,000) so the country is now classified as a low middle-income country, according to the criteria of the World Bank. — Photo

Pham Thi Minh Uyen, from the Trade University, said based on the theory of the middle-income trap of Japanese economist Kenichi Ohno Viet Nam was now stuck in a low middle-income trap.

Per capita income of Viet Nam surpassed US$1,000 in 2008 (currently about $2,000) so the country is now classified as a low middle-income country, according to the criteria of the World Bank.

Experts have said that Viet Nam relies too heavily on extracted resources, monoculture exports, subsistence agriculture and foreign aid.

Traditional industries such as mining and agriculture, which have the most potential, remain small.

Without strong reform, especially if Viet Nam does not resolve the issue of corruption, it will be difficult for the country to escape from the low middle-income trap, they say.

Vo Tri Hao, of HCM City University of Economics, said that the capital, labour and land markets had developed slowly, as well as the reform of State-owned enterprises (SOEs).

Many small SOEs have been equitised or privatised, but large SOEs were reorganised into economic groups and turned into interest groups. These are protected and enjoy privileges such as priority access to capital, land and investment information, according to Hao.

Meanwhile, private enterprises, especially SMEs, find it difficult to access capital and land to build production facilities.

The distribution of resources for public investment is also distorted by corruption and interest groups, he added.

Meanwhile, according to Hao, many economists have said there were too many incentives for FDI businesses, and that foreign firms had not cooperated with domestic businesses, failing to transfer technology to local companies.

As most Vietnamese enterprises are small, their participation in the global supply chain is limited.

Only 36 per cent of domestic firms have been able to join the world’s production network while the percentage is 60 per cent in Malaysia and Thailand.

Economic experts have underscored the need for the country to speed up reform to fuel economic growth and integrate into the world economy.

Scholars researching economies similar to Viet Nam also said that Indonesia and Bangladesh faced the same issues.


Viet Nam continues to cope with challenges such as the inefficiency of State-run enterprises and public investment.

Speaking at the event, Nguyen Duc Thanh, of Institute for Economic and Policy Research, said a major challenge was to retain high economic growth while ensuring environmental and social sustainability.

The Trans Pacific Partnership (TPP) would enable Viet Nam to increase exports to other Pacific Rim countries, including the US, which is one of Viet Nam’s biggest export markets, he said.

The TPP countries account for 28 per cent of the world’s trade and 37 per cent of the world’s gross domestic product (GDP).

He added that the TPP and the Viet Nam-EU FTA would create big opportunities for Viet Nam but also put pressure on the country to boost reform.

However, whether the country can make the most of these opportunities would depend on its own efforts, he said.

Around 21 per cent of small- and medium-sized enterprises (SMEs) in Viet Nam take part in the global supply chain, compared to 30 per cent in Thailand and 46 per cent in Malaysia.

“This is why Vietnamese SMEs benefit little from foreign direct investment (FDI) projects in terms of technology transfer and productivity improvement,” Hao said.

Thanh said that Viet Nam had drawn up a clear roadmap for reform and that it had resources for reform but lacked strong determination.

“Time waits for no one and opportunities will slip away soon in this rapidly changing world. We must take action right now,” he said.

Most speakers agreed that the new FTAs would bring opportunities for Viet Nam to reform institutions and build a model for a market-oriented economy.

Dang Quang Vinh, of the Central Institute for Economic Management, said Viet Nam would have to face many challenges when the Viet Nam-EU FTA takes effect.

Such challenges include the restructuring of SOEs, Government procurement, institutional reforms, geographical indications, and transparency and investor protection.

He said institutional reforms were pivotal to improve the business environment and the legal system, and that Viet Nam must respect intellectual property rights, restructure SOEs, remove subsidies and foster competition, among others.

Prof Hansjorg Herr, of the Berlin School of Economics, said many trade agreements had recently been signed with Viet Nam, but that these pose risks.

Many private businesses had not grown well enough, State-owned companies were influenced by politics and the economy was affected by FDI businesses.

Viet Nam was still an outsourcing exporter, which only created benefits for other countries, and was still stuck in the low middle-income trap.

Recently the World Bank released a new report that lays out the path for Viet Nam to reach upper middle-income status in two decades.

The Viet Nam 2035 report, themed “Toward Prosperity, Creativity, Equity and Democracy”, suggests that Viet Nam foster private sector competitiveness, promote social inclusion, and bolster the state’s effectiveness to climb up the economic ladder into a higher bracket.

Without this, Viet Nam will find it very hard to avoid the “middle-income trap” and will fall well short of its significant potential.

Viet Nam’s economy was estimated to grow 5.88 per cent per year during 2011-15, the slowest pace since 2010.

Viet Nam became a low middle-income country (MIC) in 2008, and remains at that level.

Recently, Japanese economist Kenichi Ohno said that Viet Nam had fallen into the middle-income trap, and his diagnosis sparked a heated debate about the country’s true economic situation.

The middle income trap is a theorised economic development situation, where a country which attains a certain income will get stuck at that level.

A country in the middle income trap will have lost their competitive edge in the export of manufactured goods because their wages are on a rising trend. However they are unable to keep up with economically more developed economies in the high-valued added market.

The seminar in HCM City was organised by the HCM City University of Social Sciences and Humanities and the Friedrich Ebert Stiftung (FES) Foundation.


Campaign ramps up cybersecurity

Intellectual protection enforcement agencies nationwide have handled 26,004 cases, with imposed fines totalling VND68 billion (US$3 million), according to Tran Minh Dung, chief inspector of the Ministry of Science and Technology.

Dung announced the figures yesterday at the launch of the one-month campaign commemorating World Intellectual Property Day.

Vice Minister of Science and Technology (MOST) Tran Viet Thanh speaks at the event. — Photo VNA

Vice Minister of Science and Technology (MOST) Tran Viet Thanh speaks at the event. — Photo VNA

Dung said that according to rough statistics from Task Forces (Program 168) in the term 2012-15, enforcement agencies confiscated and destroyed or removed about 70 tonnes of food; tens of thousands of imported bottles of liquor; nearly 27,000 medicine products; 80,900 fertilisers, and millions of electronic goods, handbags, footwear and clothing, all of which faked trademarks and infringed the rights of genuine industrial property owners. They also confiscated tens of thousands of stampless and illegally-imported CDs and DVDs.

In computer software ownership enforcement alone, Chief Inspector of the Ministry of Culture-Sports-Tourism (MOCST) Vu Xuan Thanh said, “In 2015, MOCST inspectors spot-checked 89 companies for compliance with existing computer software ownership laws in various places nationwide. Inspecting teams examined 3,942 computers and issued fines for civil offenses worth VND2.5 billion.”

As chairman of the one-month campaign’s launch, Vice Minister of Science and Technology (MOST) Tran Viet Thanh said the purpose of the initiative is “press ahead the establishment, application, development and enforcement of IP rights; ensure that IP rights become a useful tool to promote science and technology development, and socioeconomic development as a whole; and create society-wide awareness on the need to observe international agreements related to IP.”

The campaign, lasting from March 31 to April 30, will sponsor educational and training activities, followed by enhanced enforcement activities in the following months, Thanh said.

“Going forward, to stick to Viet Nam’s TPP commitments, we will scan, revise and update our legal framework related to intellectual property, especially in association with patents, trademarks, geographical indications, know-how, copyrights and enforcement of intellectual property rights,” Thanh said.

“Keeping this in mind, the Vietnamese Government and the country’s entire intellectual property right registration and enforcement system are making steps to improve and take to new heights the efficacy of intellectual property right protection and enforcement in Viet Nam.”

Building on the many years of co-operation with Vietnamese governmental bodies, Roland Chan, a senior director of BSA-The Software Alliance, said that over the years, BSA has initiated many awareness campaigns aimed at educating and assisting companies to address their software licensing and management issues.

Roland said the programmes have been successful, but they are now seeing a rise in cybercrime, which transcends borders. Organisations and business owners must be vigilant to protect themselves and their businesses from the growing threats of malware and data theft through the adoption of an effective and efficient software license management practice, Roland said.

The good news is that with effective management of software assets, the risk of a cybersecurity breach is greatly diminished. Part of BSA’s goal in this new campaign is to draw greater awareness of cybersecurity risks that come with the use of unlicensed software.

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Kaspersky Lab, WISeKey launch mobile app to secure users’ data

Kaspersky Lab and Swiss cyber security company WISeKey have launched a special edition of the cyber-resilience app WISeID Kaspersky Lab Security that integrates the best technologies from both companies to offer safety for mobile users’ data.

WISeID Kaspersky Lab Security protects mobile users' personal information from cyber criminals. — VNS Photo

WISeID Kaspersky Lab Security protects mobile users’ personal information from cyber criminals. — VNS Photo

The new app locks personal data such as account usernames and passwords, credit card numbers and access PINs into a secure personal data organiser, creating accountable identities for online activity while the data itself remains protected in a secure cloud vault.

It includes Kaspersky Mobile Security SDK, a robust and proven solution for protecting mobile phones against security threats. Its inclusion delivers advanced security features like web and network protection, device protection and risk detection.

WISeID keeps passwords in an encrypted vault, generates hard-to-crack passwords, and safely synchronises data between computers and devices on multiple platforms using secure cloud storage.

Mobile security threats are increasing in number and sophistication. Though mobile operating systems provide app developers with significant security features, hackers are still able to use many different infection vectors to place malware.

WISeID is available for iPhone, iPad, Android, Mac OSX, Windows, and Kindle.

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VN network security at high risk: experts

Viet Nam is a main target for hackers in the network environment, said Nguyen Van Thinh, deputy head of the Department of Cyber Security under the Ministry of Public Security, at the Security World 2016 conference on Tuesday.

Up to 600 hacker groups attacked Vietnamese e-portals last year, and most of the attacks came from abroad. — Photo

Up to 600 hacker groups attacked Vietnamese e-portals last year, and most of the attacks came from abroad. — Photo

The event aims to set up security measures, ensure information security for e-Government, propose measures to protect enterprises’ databases and curb data leaks.

Thinh attributed the increasing number of attacks to serious security loopholes that have not been repaired on most electronic websites and information portals.

Up to 600 hacker groups attacked Vietnamese e-portals last year, and most of the attacks came from abroad. Foreign hacker groups continuously attack specific targets with upgraded malware, experts said.

According to Truong Thi Le Thuy, director general of Cisco Viet Nam, hackers are continually developing their technology and strategies, which are becoming more sophisticated in order to steal information, data and money without being detected.

“Network security in Viet Nam is facing an alarming situation, which requires organisations and businesses to urgently find technological solutions to protect themselves from unforeseen security invasions,” Thuy said.

To protect information security in Viet Nam, Thinh suggested solutions including strengthening communications and education to raise awareness on insecurity, as well as writing and enacting provisions and laws to address the problem.

In addition, he also proposed the early promulgation of instructions for the law of cyber information security and international co-operation in the field of information security.

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