All proposals concerning the national economic restructuring masterplan are aimed at improving the effectiveness of the economy.
Many economists propose cutting public investment, restructuring SOEs, reforming the financial market, shifting the economic structure by increasing productivity and added value of the products, and amending the land law.
Economists and policy-makers point out the shortcomings of the economy including the gradual decline in economic growth, which is mainly built on increasing investment capital and exploiting natural resources, the ineffective use of resources, and the low productivity.
In addition, they say, the production cost and energy consumption for each product remain high and even increased.
If Vietnam cannot deal with these problems, the economic growth will continue to slow down, they say.
According to financial expert Bui Kien Thanh, investment capital now contributes about 60 percent to the annual GDP growth while labour and labour-related factors contribute the remainder.
High-tech product make up only six percent of total export value, and the figure has remained unchanged for the past 10 years, Thanh says. Additionally, most of exports are outsourced products with low added-value, which is attributed to the over-reliance on imported materials.
Former Minister of Trade Truong Dinh Tuyen says restructuring is a must, proposing that businesses should associate product strategy with selecting target markets.
It is also necessary for businesses to have a plan to improve the competitive edge of their products by applying new production and management technologies, and developing their human resources.
Challenges and opportunities
In addition to the economy’s over-exploitation of cheap labour and natural resources, the allocation of resources remains inadequate. While SOEs fail to fulfill their leading roles in shifting the economic structure, the private sector cannot boost economic growth.
In the meantime, Vietnam’s economy has become more and more dependent on foreign sector as it is expanding rapidly.
What is more, there has not been a close link between economic regions that can support and supplement each other. Most localities pursue similar economic structure, creating unhealthy competition practices ditrimental to the common plan.
Regarding the operation of SOEs, financial expert Bui Kien Thanh says although SOEs account for 50 percent of the country’s value, their operational efficiency remains modest.
Former Minister Tuyen says it is necessary to address the involvement of SOEs in specific areas, and speed up their equitization to make their operation more transparent.
Tuyen also suggests creating a fair and healthy competition between the State economic sector and other sectors and renovating the management and the State ownership in SOEs.
Former Minister of Planning and Investment Tran Xuan Gia says the State should only involve itself in areas related to national security and defence and social protection that the private sector cannot cover.
The Government should not invest in areas, which the private sector can manage and earn financial profits or compete with other economic sectors, Gia notes.
Tuyen anticipates several challenges facing the economic restructuring such as the bankruptcy of some businesses.
However, in the long run, renovation will help stabilize the marcoeconomy, contain inflation, and lower interest rates, he says. Source: VOV