Restructuring: Facing facts to develop

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VietnamNet English - 76 month(s) ago 13 readings

Restructuring: Facing facts to develop

VietNamNet Bridge – Identifying hindrances for economic restructuring, Vietnam will be able to overcome them, said Dr. Nguyen Dinh Cung, Vice head of the Central Institute for Economic Management.

Restructuring and resistance from interest groups
A slice of Vietnam’s economic structure

The 11th National Party Congress highlighted the mission “restructuring the economy” as the way to change the country’s economic growth model.

At the 3rd meeting, the Party Central Committee solidified this mission: restructuring the economy in combination with renovating the growth model.

The question: “where will the restructuring begin?” is answered because the Party Central Committee has pointed out top priorities in the coming time, to make breakthroughs with three key areas: 1) restructuring investment, focusing on government spending; 2) restructuring the financial market, giving priority to restructuring the commercial bank system and financial organizations; 3) restructuring state-owned enterprises, concentrating on economic groups and corporations.

The three above missions are combined with measures to combat inflation and stabilize the macro economy and more importantly, with the change of thoughts on development.

“The Party Central Committee requires agencies to have thorough understanding of and well solving the dialectical relations between growth rate and development quality, between high growth and macro-economic stabilization; between inflation control, macro-economic stabilization with growth model renovation, restructuring the economy; between economic development with cultural development, implementing social equality and ensuring social welfares,” said Party Secretary General Nguyen Phu Trong.

That is a good sign for researchers because restructuring is not only a scientific topic of researchers but also a strategy that is approved by the Party Central Committee. That is the only way to turn discussions into policies, said Dr. Nguyen Dinh Cung.

That is the “conclusion” of a many-year discussion process on restructuring Vietnam’s economy. Vietnam now enters the process of action, Dr. Cung added.

It is important that the priorities highlighted by the Party Central Committee are “dangerous spots” of economic renovation in Vietnam in the coming time.

The Party Central Committee’s orientations are products of the spirit “facing facts” and “assessing facts” to know the position and the situation of the Vietnamese economy.

Party Secretary General Nguyen Phu Trong’s summary report at the recent Party Central Committee’s meeting said that the Vietnamese economy is now under the impacts of the global financial crisis, global economic recession. The economy has many inner weaknesses, with backward growth model and economic structure; shortcomings in leadership of state agencies at all levels, particularly in running monetary and fiscal policies; weakness in managing planning, investment, land, natural resources and estate market.

By pointing out problems, Vietnam can be able to solve them and restructure the economy, Dr. Cung said.

Around two weeks ago, at a discussion on restructuring the economy, senior economist Pham Chi Lan asked a former member of the Party Central Committee about the unanimity at the central level in assessing the existence and the influence of interest groups over the economy, she received a shrug as the answer.

At that seminar, Dr. Vo Dai Luoc, former chief of the Institute for World Economics and Politics, cited the warning by Dr. David Dapice from the Harvard University about the formation and existence of the so-called “Devil’s Triangle” among officials – businessmen – bankers, in which the national policy is the hostage. Policies are only formed and implemented to benefit this triangle.

Prof. Mancur Olson, from the Maryland University (USA), analyzed in the book “The Rise and Decline of Nations”, any country that has long-enough time for political stability will have special-interest groups. These groups know how to control the nation’s policies and legal system to benefit themselves, which restrains the new motive forces of development, leading to the country’s decline.

However, experts wonder whether Vietnam has the Devil’s Triangle and interest groups? How is the impacts of interest groups in policy making? Whether Vietnam is capable to overcome hindrances from interest groups?

After the Party Central Committee’s 3rd meeting, which closed on October 6, economist Pham Chi Lan has had the positive answer.

In the closing speech, Party Chief Secretary Nguyen Phu Trong mentioned hindrances for Vietnam’s renovation, including the impacts of interest groups besides partial thought, vying for achievements, subjectivism and voluntarism.

“That is the difference and difficulty of Vietnam in renovation policy this time, in comparison with the renovation policy issued in 1986,” Dr. Cung analyzed.

In 1986, Vietnam changed the economic thoughts by from the centrally managed economy to the market-based economy. That change benefited everybody though the benefit was different.

The current restructuring will not benefit all. The beneficiary will be almost Vietnamese people and the entire economy and those who suffer losses will be interest groups which are holding back the national economy.

“Group interest is great but it is a small matter if Vietnam has highly political determination and creates highly social agreement to overcome it. If Vietnam can realize hindrances, it will be able to overcome them,” said Dr. Cung.

Phuong Loan

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