The Vietnamese economy is not lacking in lessons about ineffective capital use. There have been businesses that have had to narrow down production due to cash flow disruptions, production projects that have to wait for prolonged capital, or infrastructure projects that are behind schedule due to slow disbursement procedures. These stories show a truth: Capital allocated in the right place will create momentum for the economy to break through; conversely, when capital flows deviate, no matter how large the resources are, they can be wasted.
Vietnam is entering a pivotal stage when implementing the Resolution of the 14th Party Congress with the aspiration of double-digit growth, laying the foundation for moving towards the goal of becoming a developed, high-income country by 2045.
To achieve this goal, we cannot just rely on determination. The core is resources, especially capital. According to estimates by the World Bank, Vietnam needs about 1,400 billion USD in the next 5 years, equivalent to about 280 billion USD per year to maintain a high growth rate.
This number is very large, but not impossible if domestic and foreign resources are effectively mobilized.
Capital can come from many channels such as the State budget, bank credit, stock market, foreign investment, remittances and new financial channels such as international financial centers, carbon markets or digital assets.
Not to mention potential resources, such as the amount of gold in the people, capital that is "lying idle" in real estate, or resources saved from anti-corruption and anti-wastefulness, can all become new driving forces if properly unlocked. Even administrative procedure reforms, such as improving tax refund efficiency and shortening processing time, can also help businesses release more resources to invest and expand production.
However, the story is not only about how much capital there is, but also about the efficiency of capital use. Currently, Vietnam's ICOR index - that is, the ratio of capital needed to create a unit of growth - is around 6. This means that to create 1 dong of growth, the economy needs 6 dong of investment capital, nearly double compared to some economies in the region.
This index reflects a thought-provoking issue: Vietnam's resource utilization efficiency is still limited. If this is not improved, raising more capital may only increase costs but may not necessarily create commensurate growth.
To improve the efficiency of capital use, it is necessary to start from the public sector. Public investment must prepare projects better, shorten procedures. When implemented on schedule, public investment not only creates infrastructure for development but also plays the role of "bait capital" to attract more resources from the private sector and foreign investors.
Along with that, credit capital flows need to be oriented towards long-term value-creating sectors such as renewable energy, e-commerce, innovation or new technologies. These are sectors that both create growth momentum and limit the risk of inflation and spreading investment.
Finally, it is necessary to improve institutions to open up new capital channels. Fields such as the carbon market, commodity exchanges, cryptocurrencies or international financial centers need to build a clear legal framework. In parallel with that is the goal of upgrading the stock market to attract stronger global investment capital flows.
