First of all, it is necessary to confirm that Vietnam’s economic institutions have made a rather positive development, especially in terms of the private sector’s development, which is manifested at the development speed, activeness, efficiency and a gradually widening portion in the national economy.
Therefore, is it possible to say Vietnam’s economy has started becoming an economy owned by the people, where the people invest in business by their own money, and this in reality makes the economy much more active. We can believe that the non-state sector will integrate internationally in a very successful way.
However, just like in the draft political report for the coming 10th Vietnamese Communist Party Congress, it is important to continue completing institutions of a market economy. I have some points to contribute to these documents.
Firstly, frankly speaking, one should not use the concept of “socialist orientation” as it has two bad outcomes. First, it causes discrimination, creating favourable conditions for the “bad” in the state system to take use of this concept to issue and impose institutions and policies that serve their own interests only. Second, this orientation is unclear. Why has Vietnam had no large private enterprise? It is partly because they do not feel safe, as they fear once they put money in investment, they will be “fattened up and slaughtered”. We need to build up strong Vietnamese private corporations.
In my opinion, one should confirm that our goal is rich people, a strong country, social equality, democracy and civilisation. This goal is short, clear, easy to understand and more importantly, every person agrees on it and it is not far from the socialism goals.
Secondly, it is crucial to make more convenient institutions and policies for people to do business. Currently, the non-state economic sector is facing difficulties in terms of land and capital access, tax, red tape and harassment. These hardships are hindering the development and competitiveness of the sector.
Finally, people have to pay much money which, unfortunately, does not reach the state budget. Instead, it falls to the corrupt officials. That is why it is important to review the existing institutions and erase the troublesome and corrupt ones against business.
In particular, one must change the methods of drafting and approving institutions. I think this process should be profoundly reformed. At present, we still follow the way that a ministry, given the management of something, will issue the law on it. But a ministry can’t stand being local. So, it is necessary to construct an independent, objective organisation convening qualified people to work out and appraise institutions. One should not tolerate a situation that before the National Assembly, representatives of the law/policy drafting board say they accept critical comments [on the draft documents] but ask for no changes to them.
Thirdly, the foundation of the national economy must be constituted by all economic sectors. We should not emphasise in general wording the leading role of the state-owned and cooperative sectors. It should not be that the draft political report says “the state-owned and cooperative sectors are step by step becoming the foundation of the national economy”, because this means returning to discrimination and unfair competition. It is impossible to integrate successfully [into the world economy] given inequality between Vietnam’s own businesses and between Vietnamese and foreign businesses.
Moreover, the non-state sector is strongly developing in terms of production volume, the contribution to GDP, investment and employment. So, it is impossible to say the state-owned sector, with a low efficiency as it has shown for the past time, has appeared to take the leading role.
On the other hand, the cooperative economy is a form of cooperation among individual households, so in fact it is the economy of individuals instead of collective and public ownership as the past has shown. Truly, it is the partnership in a new form of various individuals.
All economic sectors are equal. Therefore, one must limit establishing SOEs and one must be fiercer in restructuring them. SOEs should be established in the fields where private investors do not want to get involved or where they are not allowed, like national security and defence-related fields. Whatever tasks the SOEs do, they should be tightly controlled.
Former and present experiences show wherever the SOEs operate, there is waste and capital leaking. SOEs themselves should be “corporationised” so as to do business and operate in close line with laws. In particular, the state capital should not be invested in producing such products as cement, paper, bricks and tiles, iron and steel, etc. It is unreasonable to say the non-state sector cannot succeed in these areas. Only one private business may not be able to do so, but they can cooperate to do so. And what they do is more efficient.
Eventually, whether the above proposals are realised or not depends on the reforms of the state system, in terms of institution, mechanism, and personnel. Reality proves without personnel reforms, there is no institutional reform, since civil servants are those who propose, draft and implement institutions.
I think a severely important measure is to publicise in a transparent way all of the state agencies’ works, excluding those concerning national security, from the drafting of the institutions, implementing them, operation and responsibility of each civil servant.
With such publicity, the state system is placed under the control and supervision of the public. This way helps curb corruption and waste. Of course, this is the most difficult method as “none breaks their own rice bowl”. Therefore, strong political commitment of the Party and state leaders is badly needed.


Source: Vietnam Investment Review, No. 751/2006