Unprofitable State-owned enterprises (SOEs) should to be sold as soon as possible, said Dr Nguyen Dinh Cung at a seminar on “State roles in the market economy - Institutional reform issue in 2016-2020” held recently in Hanoi.
At present, public investment tends to be shrinking but still accounts for a large proportion of total social investment (40 per cent), only below China and Malaysia while much higher than other countries, especially developed nations (below 20 per cent). The high ratio of public investment in total social investment shows high risk of “crowding out private investment” and increasing State interventions in economic activities.
The Government of Vietnam has reduced public investment in ineffective economic sectors but this approach still has many limitations. Meanwhile, public investment in public services sectors directly related to human development is almost visibly changed. Moreover, public investment efficiency tends to decrease as it is always lower than the overall investment efficiency of the economy and the gap tends to even widen. He analysed that one of major reasons for low public investment efficiency is weak investment estimation in addition to weak management.
Meanwhile, State investment in the business sector is still quite big. Among 781 wholly State-owned enterprises, 49.3 per cent engage in commercial production and business operations which can be done well by other economic sectors. Another weakness is unfocused public investment which is channelled into so many small and medium companies with weak economies of scale and low competitiveness.
Privatisation needs to be accelerated
Mr Cung said that Vietnam is currently in the transitional process of national development, while its resources are not actually abundant. Therefore, the Government should carefully choose investment projects, aimed to have best projects with lowest costs rather than fulfil the desire of ownership and control.
At present, with their capacity and competence, many private companies can replace SOEs in many projects. It is important that whether they are given opportunities or not. We need to change our thinking and choose private enterprises to engage in economic development in an appropriate manner. Poor-performing SOEs engaged in hotel, trade, restaurant, wholesaling, retailing and waterway transportation should be eliminated from the system, Mr Cung pointed out.
Backing institutional reform, Dr Tran Dinh Thien said that economic changes must come with institutional reforms and systematic troubleshooting rather than changes in certain sectors and fields. If we are late in this process, all changes will be a waste of time and waste of economic development opportunities.
Dr Nguyen Minh Phong said many private companies can undertake the construction of highways along the coast of Vietnam. When the Government actually sees the private sector as the backbone and plays an important role in the economy, it will not need to worry too much about capital demands for development. Importantly, Vietnam necessarily has mechanisms on protection of assets and freedom of business. If it can clear these restraints, the market will have capital inflows. In addition, it is noted that the private sector does not lack capital, but it lacks confidence, feasible projects and guarantee for private involvement.
Anh Phuong
Vietnamese
