Business Environment: Market Be Adjusted in Right Direction

Still holding critical perspectives, the "Fundamental issues of economic restructuring in 2016-2020" study presented by Mr Nguyen Dinh Cung, President of the Central Institute for Economic Management (CIEM), however, has an optimistic ending: Huge and diverse opportunities are ahead of us. “I'm not unfoundedly optimistic. The economy is facing numerous challenges and weaknesses, but what I see is opportunities of the economy if we can solve those challenges,” he explained.

 

But the challenges which must be overcome to get opportunities in the coming time are not small, especially in the correlation of strengths and weaknesses presented by the CIEM study. According to Cung and his colleagues, the State will play a decisive role in future changes.

 

"If State thinking fears the market and disregards fair competition, not understanding that fair competition is the core of the market economy and the motivation for businesses and people, it cannot make a change in the market. In the meantime, this is the core of the integration period and the principle of integration commitments that Vietnam is advancing further, and will continue to do so,” said Mr Cung.

 

This is not the first time CIEM indicates that the business environment in Vietnam has not promoted fair and orderly competition. But this time, CIEM experts bluntly pointed out that that is one of objectives that the economic restructuring has not reached. And, that is the biggest challenge in the next phase. “There is no primary market of land and natural resources; the secondary market is much distorted and misleading; and high risks and high transaction costs have led investors and private businesses to dilemma. After “buying and accumulating land,” companies have to carry out procedures to hire the land that they have bought,” he noted.

 

It is understandable that there is absolutely no role of allocating and regulating the efficient use of land and natural resources. Therefore, the relationship between citizens with State agencies and public officials concerning the allocation of these resources is give-and-take relation, a way of granting in an administrative manner rather than in market transaction.

 

“With this way, the opportunity of makeover and change of the agricultural sector in the upcoming integration process can only come when the land law is amended and the formation of agricultural land market is stable and well-operated. Only then will good practices like those of seafood exporters, TH True Milk, Vinamilk, sugarcane production of Hoang Anh Gia Lai Group in Laos and big fields become popular, and the nature of the Vietnamese agricultural sector will be changed,” he analysed.

 

Similar realities are also seen in market entry steps. The Law on Enterprises has removed a lot of barriers to market entry for businesses and lifted Vietnam’s position in ease of doing business rakings of the World Bank (WB). In the latest 10 years, market entry rankings of Vietnam have increased significantly.

 

However, enterprises are still very confused with the list of 267 conditional businesses, which are accompanied by thousands of pages of regulations on business conditions while many conditions change unforeseeably. Furthermore, the interpretation and enforcement of these conditions in practice are not always the same.

 

For example, the power decentralisation at State bodies results in lack coordination and lack responsible people in poor planning and policy enforcement. "When supervisory and inspecting institutions between same-level State agencies and different-level agencies are not strong, plus the dominant thinking of providing preferences for State companies, it is understandable that Vietnam's market is lacking market factors while the State overindulges it," Mr Cung said.

 

The lack of market features brings about a business community without long-term vision and motivation to play on global grounds with universal rules. But, the surplus of market features in State agencies also causes Vietnamese people and enterprises to be passively entrained into the flow and movement of integration. "Without making a change in thinking and playing an active part on the market, Vietnamese people and enterprises may not benefit from international integration, but may be buffeted by integration instead," he shared.

 

It seems that Vietnam's economy may have no other choice than continue to change the market to the right direction to match with the rhythm of integration. This time, the active and decisive role belongs to the State.