Sustainable Growth and Development

Vietnam’s economy has attained impressive growth in 2007, with GDP up 8.48 per cent against 2006, ranking among the highest national economic growth rates in the region. According to an assessment by the Asian Development Bank (ADB), China’s economy grew 11.2 per cent in 2007, Vietnam’s 8.3 per cent, Singapore’s 7.5 per cent, the Philippines’ 6.6 per cent, Indonesia’s 6.2 per cent, Malaysia’s 5.6 per cent and Thailand’s 4 per cent.

 

In 2007, the country reported total investment of VND461.9 trillion for social development, accounting for 40.4 per cent of GDP (fulfilling the 40 per cent target), up 15.8 per cent on year. Of the total, the state-owned sector spent VND200 trillion, accounting for 43.3 per cent of the total volume and up 8.1 per cent on year; and the private sector spent VND187.8 trillion, representing 40.7 per cent and up 8.1 per cent. Meanwhile, the foreign-invested sector contributed VND74.1 trillion, making up 16 per cent of the total amount and up 17.1 per cent on year.

 

State revenue went up 16.4 per cent on year and accounted for 106.5 per cent of the year’s estimation, of which, domestic revenue met 107 per cent of its target, import-export revenue 108.1 per cent and assistance 156.7 per cent. However, crude oil revenue made up only 102.1 per cent of the target, with revenue falling from the previous year earlier on decreased production.

State expenditure in 2007 was up 17.9 per cent compared to 2006, and accounted for 106.5 per cent of the year’s estimation. Development investment spending witnessed the highest rise of 19.2 per cent and represented 103.2 per cent of the estimation. It was followed by regular spending rising 15.1 per cent and accounting for 107.2 per cent of the estimation, debt and aid payment up 20.5 per cent and completing the year’s plan. State budget overspending in 2007 accounted for 14.8 per cent of the total expenditure and is equivalent to the overspending estimation approved by the National Assembly, of which, 76.1 per cent was offset by local loans and 23.9 per cent by foreign sources.

 

Revenue of the agro-forestry-fishery sector reached nearly VND200 trillion, up 4.6 per cent on year with the agricultural field growing 2.9 per cent, forestry 1 per cent and fisheries 11 per cent. However, soaring input costs and the effects of natural disasters, epidemics and diseases hurt the sector.

 

Industrial production attained high growth in 2007 with value up 17.1 per cent against 2006, of which, the state-owned sector grew 10.3 per cent, the private sector 20.9 per cent and the foreign-invested sector 18.2 per cent.

 

Domestic trade also experienced good development in 2007 with various new business models creating a diversified, civilized and modern market structure to better serve production and consumption. The country’s total retail sales of goods and services were estimated at VND726.1 trillion, up 23.3 per cent on year. Of the total, individual production contributed 56.2 per cent and grew 25.9 per cent; the private sector contributed 28.8 per cent and grew 30.3 per cent; and the state-owned sector contributed 10.9 per cent and fell 1.3 per cent.

 

The country’s export value was calculated at nearly US$48.4 billion in 2007, up 21.5 per cent on year, with crude oil growing 2.6 per cent thanks to price hikes. Ten categories posted export revenues of over US$1 billion and 10 markets attained export value of over US$1 billion last year. National import spending in 2007 hit US$60.8 billion, up 35.5 per cent on year, of which the state-owned sector imported US$39.2 billion worth of goods, up 38.1 per cent on year and the foreign-invested sector $21.6 billion, up 31 per cent. The country’s trade deficit was estimated at US$12.4 billion, accounting for 25.7 per cent of total export revenue and increasing 2.5 times against 2006. Vietnam welcomed 4.23 million international tourists last year, up 18 per cent on year.

 

 

Most countries worldwide including Vietnam calculate their GDP in accordance with a common content and method under the System of National Accounts devised by the United Nations (UN). However, this calculation method does not reflect how and how much a country exploits and pollutes the environment, leaving the ecosystem deficient, in order to attain a specific GDP.

 

Currently, sustainable growth with balanced development of three elements including economy, society and environment has been a popular trend. Recent research has proven a tight relation between economic growth, environmental pollution and natural resource use. Environment and natural resources are two main criteria to assess growth quality. Green GDP is calculated by taking the traditional GDP figure and subtracting the costs of natural resource consumption and environmental damage incurred during economic activities. Green GDP is a good criterion to calculate economic growth while including environmental damage.

The consequences of unscientific exploitation of natural resources, including reduced biodiversity, ecosystem quality, affected human health, natural disasters such as flash floods, droughts, tide waves, storms, desertification and global warming, are getting worse. According to estimation of CIECC, the world emitted around 33.2 billion tons of carbon dioxide (CO₂) in 2000, which causes the greenhouse effect. Green GDP has been calculated and announced in countries with high economic growth rates. Japan estimated its green GDP accounted for 98.8 per cent of its NDP in 1995, and China 94.9 per cent in 1992. If the indexes are announced regularly, they will be a good reminder to governments, central agencies, enterprises and people to be responsible for developing sustainable economy and life.

 

Vietnam’s natural resources are of great potential, but are not inexhaustible. The country is gradually experiencing deficiency in natural resources, environment and ecosystem. Economic development at all costs is blamed for the red alert on Hanoi’s vegetable and air quality; the “dead” rivers of To Lich, Kim Nguu in Hanoi, Thi Vai in Ba Ria – Vung Tau; dying rivers of Cau, Day, Nhue, Dinh and Dong Nai; and “cancer villages”. Dr Vu Trong Binh, director of the Centre for Agriculture Development under the Institute of Policies and Strategies for Agriculture and Rural Development (IPSARD), said that Vietnam loses around 102,000 hectares of agricultural land for economic and transport development annually. The General Statistics Office (GSO) estimates annual losses caused by natural disasters at over VND11.6 trillion, accounting for 1 per cent of GDP. The Vietnamese Prime Minister on April 17, 2004 issued Decision No. 153/2004/QD-TTg to ratify “Sustainable Development Direction in Vietnam”. Since then, Vietnam has been more responsible for maintaining sustainable development. The Council for Sustainable Development chaired by the Deputy Prime Minister was set up in September 2005.

 

Vietnam has carried out many environment protection activities, including using unleaded gasoline, cleaner production, relocation of polluting production units out of residential areas, ratification and amendment of environmental standards, and compulsory environmental appraisal for new investment projects.

 

However, enterprises, state offices and the whole society have not yet paid due attention to sustainable development. The proportion of crude exports is still high in Vietnam. The country has not yet controlled water, land and air pollution, particularly in big cities, urban areas and industrial zones. The Ministry of Natural Resources and Environment said that Vietnam relocated 49 per cent of total polluting units in 2007, 1 per cent below the target approved by the national assembly. Environmental protection spending represented 1 per cent of the state budget in 2006 and will climb to 2 per cent by 2010, but this is still insufficient.

It’s high time for Vietnam to calculate and announce green GDP, warned economists and environmentalists.