Government Launches Action Plan for Economic Restructuring

Labor productivity grows over 6.5% annually on average, led by the processing and manufacturing sector which rises by 6.5-7%. Labor productivity growth in key economic regions and five centrally governed cities is higher than the national average.

Vietnam will strive for these specific goals stated in Resolution 54/NQ-CP of the Government dated April 12, 2022 on an action program for implementation of the National Assembly's Resolution on economic restructuring in 2021 - 2025.

The goals of the resolution are forming a reasonable and effective structure of each industry and field and among industries, fields and the economy; developing many national products based on new advanced technology; creating breakthroughs in sectoral competitiveness and significant and substantive changes in the growth pattern, productivity, quality, efficiency, competitiveness, autonomy adaptability and resilience of the economy.

Accordingly, by 2025, Vietnam will strive to narrow the gap in national competitiveness with ASEAN 4 countries, especially in institutional, infrastructure and human resource indicators. The state budget deficit averages 3.7% of the nation’s GDP in 2021 - 2025. At least 10% of public non-business units and at least 20% of self-financed units will be removed as compared to 2021.

The stock market capitalization will climb at least 85% of the GDP, the outstanding debt in the bond market to at least 47% of the GDP, and the outstanding debt in the corporate bond market to about 20% of the GDP.

The share of expenditure on scientific research and technological development will reach not less than 1% of the GDP. The number of enterprises adopting technological innovations will increase by an average of 15% per year in 2021 - 2025.

Vietnam will strive to have 1.5 million enterprises, including 60,000 - 70,000 medium and large enterprises. The contribution of the private sector to the GDP will be about 55%. At least 5 - 10 national products can build international brands.

By the end of 2025, the country will have 35,000 cooperatives, of which more than 3,000 cooperatives will apply high technology to the production and consumption of agricultural products. About 50% of agricultural cooperatives will join enterprises in value chains.

Restructuring public investment and credit institutions

To achieve the set objectives, the resolution clearly states main tasks and solutions. Accordingly, the first task is completing the objectives of restructuring public investment, State budget, credit institutions and public non-business units.

On public investment restructuring, the government assigned the Ministry of Planning and Investment to work with other ministries, branches and localities to formulate measures for a better quality of public investment management institutions; enhance the capital absorption capacity of the economy, especially public investment capital allocation and disbursement. It will complete the public investment management legal system in line with international practices, with the quality in tandem with ASEAN 4 average, in which priority will be given to reforming formulation, appraisal, assessment and selection methods of public investment projects.

On credit institution restructuring, the State Bank of Vietnam will coordinate with ministries, branches and localities to study and complete currency, credit and banking institutions based on market principles, ensure safety, soundness and stability of the system; enhance transparency and competitiveness in line with international practices and new development trends. It will complete and submit to the Prime Minister for promulgation in 2022 and effectively execute the Scheme on credit institution system restructuring associated with bad debt settlement in the 2021-2025 period.

Developing different market types and business forces

One of the important tasks and solutions stated in the Resolution is developing different types of markets and improving the effect of resource allocation and use.

Regarding financial market development, the government will assign the Ministry of Finance to coordinate with ministries, branches and localities to make solutions to diversify financial institutions, venture capital funds and guarantee credit funds, microfinance institutions, financial consulting organizations, accounting, auditing and credit rating services. It will research and develop policies and laws to encourage venture investment while developing a financial strategy to 2030 and submit it to the Prime Minister for promulgation in 2022.

The Ministry of Planning and Investment will work with relevant ministries, branches and localities to study and report the possibility of developing a Law on Venture Investment and submitting it to the Prime Minister in 2022 - 2023.

On land-use rights market development, the Ministry of Natural Resources and Environment will work with ministries, branches and localities to revise the Land Law 2013 and report the outcome to the Government to submit it to the National Assembly for promulgation in 2022; accelerate the application of advanced and digital technologies in collection and management of the land database system, update and communicate with the national database system; develop a master plan on building a national land database and submit it to the Prime Minister for approval.

In addition, the resolution also clearly states important tasks and solutions on the development of business forces; business connections in all economic sectors; innovation and economic development of collectives and cooperatives.

In particular, regarding State-owned enterprises (SOEs) restructuring and development, the Government will appoint the Ministry of Finance to cooperate with relevant ministries, branches and localities to effectively implement the project on the continued restructuring of State-owned enterprises, with a focus placed on key and essential areas. The Commission for the Management of State Capital at Enterprises will make a plan for SOE restructuring based on the scheme approved by the Prime Minister and submit it to the Prime Minister for consideration and decision.

On private business force development, digital transformation, joint venture, association and competitiveness improvement, the Ministry of Planning and Investment will coordinate with other ministries, branches and localities to effectively implement the business support program for digital transformation in 2021 – 2025.

By Quynh Anh, Vietnam Business Forum