Dr Le Dang Doanh, former Director of Central Institute for Economic Management (CIEM) shared heartfelt concern for Vietnamese businesses and the forecast for the Vietnamese economy in 2016, at a recent seminar sponsored by CIEM in Hanoi. Anh Phuong reports.
XII Party Congress has concluded, do you think that socio-economic objectives have been achieved?
Objectives are far reaching; I wish to refer to objectives in 2020 to make Vietnam basically an industrialised and modernised country.
To me, it is quite a high and ambitious objective of policy planners. From what we have done, in fact, we have to do much more to attain those macro objectives.
For instance, the standard for an industrialised economy in 1990 was US$6,800/person/year in GDP. China has achieved it with US$7,000/person/year. Vietnam is now at US$2,109/person/year. Therefore our objective is more on qualities than quantities.
Besides, for an industrialised and modernised country, agriculture must be down below 10 per cent of GDP. As Vietnamese agriculture remains at 16-17 per cent of GDP, Vietnamese industry-service must increase 12-15 per cent. It is quite difficult.
Another problem is to increase productivity to upgrade the economy. It also aims at increasing salary for workers. At the present level, businesses cannot ensure higher pay for the workers.
Is it true that 2015 is a successful year?
It is even a very successful year. Our economic growth attained a very beautiful figure 6.68 per cent. FDI flow increased. More businesses registered. Inflation remained low. Domestic consumption increased visibly. Those are good signs of sustainable economic growth and everyone can see it.
And what are the challenges for Vietnam in 2016?
To me, challenge is an opportunity to make headway. Like a sportsman, without challenge, he remains a simple man. With competition in products, manpower, production lines, Vietnamese businesses will surge up and thrive. For example, the expansion of Thailand with their products is dominating the Vietnamese market. The pressure will increase as ASEAN Economic Community has been established. Vietnamese businesses must engage in the competition to avoid losing in their home court.
As you refer to Vietnamese businesses, how do you see their potential?
First, private enterprises in the past 10 years contributed only 11.2-11.3 per cent of GDP, while household businesses contributed up to 33.2 per cent of GDP. One may ask, in the same basket of private enterprises, why are the figures so different? But it is true to Vietnamese businesses. According to current Enterprise Law, businesses with 10 workers upward must register. In reality, many household businesses have hired hundreds of workers. Without registering as companies they are free from bills and taxes. It is, in fact, tax evasion, and business owners and tax collectors can negotiate. That is why household economy contributed only 2 per cent to budget and make up 33.2 per cent of GDP.
It explains why private enterprises are not small, but intentionally remain small and refuse to become big. It comes back to the question of institution.
With the new leadership, do you think the question of institution can be overcome?
We are happy to note that the number of Politburo increases five members with higher education standards, younger generation ensuring the succession. I am hopeful of the new leadership with their deeds. However, until May after the election of the National Assembly, in June the new government could be officially established.
In the interim; however, I hope that government officials concerned will perform well their remaining responsibilities.
As for the most important political task in 2016, I think we must continue the institution reform, making it definite and systematically. Specifically, the State machine must operate in the framework of laws, without privileges or preferences for private relationship. Interest groups must be ended. For instance, no ministry can be owner assigning managers at the same time inspecting the implementation, failing to make any conclusion. Such a practice must be changed and can only be changed by a new institution to establish an economic order.
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