Vietnam Economic Restructuring on Lawmakers’ Agenda

The master restructuring scheme focuses on two contents: Immediate priority restructuring and long-term core restructuring. In the next five years, key restructuring contents are public investment, banking and financial system, and State-owned enterprises (SOEs). Regarding long-term goals, we will concentrate on the restructuring of manufacturing and service sectors on regional basis, step up corporate restructuring and market strategy adjustment, and quickly increase domestic value, added value and competitiveness of products, of enterprises and of the economy.

 

The objectives of economic restructuring are to ensure reasonable growth, strengthen macroeconomic stability with low inflation and steady and strong macroeconomic foundations, and solve social security issues; establish local and regional balanced development; Improve the development level of economic sectors in particular and the entire economy in general by using advanced and value-added technologies; and Build an economy of independence, autonomy and active international integration, consolidate the national position in international relations, and firmly maintain political stability, national security, social order and safety.

 

The Vinalines scandal and management of State-owned enterprises heated up the meeting. The SOE restructuring content in the Government’s scheme caught special interest. According to the five-year roadmap, SOEs will be rearranged, reclassified and reorganised to focus on core business scopes. The State will equitise SOEs it does not need to hold 100 percent of stake and divest in SOEs it does not need to hold controlling stake. In addition, SOEs have to operate in accordance with market mechanism and perform fair competition with other companies.

 

SOE restructuring content is of special concern of the National Assembly Commission on Economic Affairs. In a review report on the Government's document to this effect, the commission recommended the scheme give priority to construction of transparent management mechanism of SOEs and support fair competition.

Accordingly, SOEs must use capital and assets efficiently, reduce and eliminate non-business costs, periodically announce transparent information to the public. Most commission members suggested not using SOEs as a tool for macro regulation and economic stability, separating their profit-aimed production and business functions from not-for-profit social security tasks. The Government necessarily redefines roles of enterprises operating in national security and defence and having macroeconomic stabilising functions. Privatisation needs to be accelerated.

 

For investors, the Government plans to step up public investment reform and ensure budgetary incomes and outgoings as well as major economic balances. Regarding public investment, the Government advocates decentralising investment management, aiming to boost social and economic efficiency of the nation, of the industry and of the region, and guarantee local benefits in short, medium and long terms. It is urgently drafting the medium-term investment planning to submit to the National Assembly’s meeting late this year.

 

An important content of economic restructuring is financial and banking system restructuring. Recently, banks have been classified by the central bank, thus facilitating M&As in banking industry. The Government’s scheme sets the roadmap for financial and banking system restructuring which focuses on reshuffling commercial banking system, enhancing service quality and business performance, and ensuring system safety. The stock market will be developed healthily to form an effective capital channel for enterprises’ medium and long-term investment plans.

 

But, what resources back economic restructuring. According to the Government, restructuring is not a general economic bailout package and does not consume social resources. However, according to the National Assembly Commission for Economic Affairs, cost calculations are essential in the context of limited resources in Vietnam. This will help identify priority contents. All social, environmental, security, defence, foreign affair costs need to be taken into account.

 

According to the report of the Government, in the next few years, social resources will be distributed on a large scale, making economic growth lower than previous years, even old plans. Meanwhile, restructuring results can only be seen in the medium term. This is an enormous challenge in our country because we are used to looking at growth rate and based on extensive growth.