Economic reform is crucial to sustain long-term growth in Vietnam

The economy will likely report a solid growth performance of 6.6% for this year. But to sustain the sanguine economic outlook in the long-term, reforms will be crucial. In this regard, a steady process is already underway. The government has recently announced a decree to ban state-owned enterprises (SOEs) from non-core investments. Such measure is expected to gradually dilute the state's involvement in businesses and is certainly a step in the right direction in the SOE reform process. 

Moreover, the restructuring efforts have also gained fresh urgency after the recent agreement on the Trans-Pacific Partnership (TPP), which compel signatories to remove preferential treatment for SOEs. Note only 94 SOEs were equitised in the first nine months of 2015, which accounts for just about one-third of the government's target. 

Nevertheless, there are certainly bright sparks in the reform process. The residential property market was opened for foreign investment in July. The 49% cap on the foreign ownership of listed companies has also been lifted in most sectors. Furthermore, the ratification of the TPP and the implementation of several free-trade agreements (FTAs) will add extra impetus and bolster investors' confidence in the liberalisation process. 

Already, Vietnam is back in the radar screen of foreign investors. Though FDI inflows have been happening over the years, it is set to gain momentum. The domestic business climate is improving, which will be conducive for investment activity. And stronger investment growth will have a direct knock-on impact on income and consumption. Quite generally, all these will add to sustainable longterm economic development. But for all these to materialise, reform must persist. And thankfully, it is happening.