Illustrative image (Source: internet) Hanoi (VNA) – Drastic, comprehensive and consistent economic restructuring is needed in order to optimise opportunities brought by the strong international integration process in 2016-2020, experts have said.
A report by the Central Institute for Economic Management showed that the master plan on radical overhaul of the economy in 2011-2015 has brought about positive and profound outcomes.
Most remarkable were macro-economic stability, enhanced national safety index and obvious economic recovery trend.
Investment efficiency and productivity have been greatly increased, and the investment and business environment was improved thanks to the promulgation of laws on businesses and investments. Public investment and activities of State-owned enterprises (SOEs) and banks have become more transparent under stricter supervision. The country has moved up the ranking list of world credit ranking agencies.
The equitisation of SOEs has met 90 percent of the plan for 2011-2015. However, the quality of equitisation needs to be further improved when many SOEs sold only a small percentage of stocks to investors, and many strategic investors are not strong enough to push for changing the business administration mechanism.
On the other hand, many SOEs in which the State holds the control stake are slow in withdrawing capital from non-core operations.
Nguyen Tu Anh, head of CIEM’s macro-economic department said while the restructuring’s outcomes are encouraging, they still fall short of expectations because of the State’s strong influence on the distribution of resources.
According to Anh, the restructuring of public investment just stopped at tightening investment rules, failing to impose measures to increase investment efficiency and prevent wastefulness.
He noted that risks of macro-economic instability still exist due to the rapid increase of public debt and the existence of many factors that can drive up public debt.
Sharing this view, Nguyen Xuan Thanh of the Fulbright economics teaching programme said if the Government maintains the budget deficit at the current level will raise the ratio of public debt to GDP to an unsustainable level. He also expressed concern about the monetary policy when credit grew strongly but was not directed into production activities.
CIEM Director Nguyen Dinh Cung noted that the expectation that FTAs will propel reforms in SOEs may not be realized, explaining that the deals only emphasise the equity between Vietnamese SOEs and enterprises of FTA members without mentioning the inequality or “preferential treatment” of SEOs over their private peers.
“The nature of FTAs is to promote more freedom and favourable conditions for businesses, better protection of investors’ rights and interest and fairer competition,” Cung said, stressing that integration means firstly Vietnam has to change the way of thinking and push stronger reforms in the direction of full and modern market economy.
Meanwhile, a senior advisor to the project on assisting Vietnam in restructuring and competitiveness enhancement, Ray Mallon said Vietnam’s reforms are not enough to create a favourable and market-friendly business environment in comparison to other regional countries.
He added that Vietnam’s indexes on business climate and State administration are lower than that of regional countries.
Discussing the directions for restructuring in 2016-2020, CIEM Director Nguyen Dinh Cung voiced his opinion that the country should continue to address issues related to assets and asset ownerhip. He also urged improving State management and the ineffective use of minerals and natural resources as well as human resources.
Fulbright programme’s Nguyen Xuan Thanh also put stress on changing the way of thinking and the role of the State apparatus in economic management. According to him, ministries now perform many functions as policy maker, asset owner and market supervisor at the same time while there is a clash of interests among those functions.
In addition, the equitisation of SOEs should be more drastic with the involvement of more private and foreign investors instead of cross ownership among SOEs.-VNA
