Why do you say that financial support breeds inequality?

Everyone understands that financial support is very important. But only a certain number of State-owned enterprises (SOEs) enjoy that privilege. It means that some enterprises have advantages that many others do not – to the cost of the whole economy.

Many world economies have described the subsidy system as a trade distortion.

Subsidies discourage competition in the market. They take from the State budget money that could be used to invest in infrastructure development for the benefit of all.

That is one reason why many countries have imposed anti-dumping tariffs.

Subsidies appear in different forms, such as preferential loans, tax discounts or even debt relief.

Some SOEs have incurred loses. They are unable to pay back their bank loans, so certain authorities have decided to freeze their debts. Gradually those debts become bad debts and have to be cancelled.

More recently, the government has released from debt even co-operatives and individuals engaged in the national programme of off-shore fishing and stilt-house building for people living in Cuu Long (Mekong) Delta.

I could say these programmes were misguided.

Debt release seems to be easily granted. Does Viet Nam conduct any research to see if the businesses concerned are better off as a result?

Yes, the government has initiated plans to monitor those enterprises – but monitoring and evaluation are sometimes not taken seriously.

Enterprises operating at a loss must analyse why they are in such bad shape and find ways to resolve their problems.

There is a suggestion that unsuccessful businesses should declare themselves bankrupt – or be leased to others. What are your thoughts about this?

Debt release or subsidy is an administrative solution. Viet Nam is very good at initiating administrative measures.

But, if these enterprises are sold or leased, those acts become economic solutions. These, if not properly monitored, could result in wrong administrative decisions leading to losses of billions of dong.

So, do you think the government should support enterprises or not? And if so, what form should that support take?

I think the government should help enterprises develop by improving the legal system.

For example, at the recent APEC meeting, participants said that traffic policemen should concentrate on keeping the traffic moving, not on trying to fine as many people as possible for personal gain.

In a nutshell, it is important to say no to corruption – that is the best way of helping enterprises grow.

What advice would you give the Government when reforming policy?

I think the Government has realised it needs to change its policies. For example, its decision to impose a higher import tax on auto parts. Though the higher import tax was designed to protect domestic car makers, in effect it helped foreign-invested manufacturers.

Does providing legal aid mean the government should have an effective and creative apparatus?

I think the government apparatus must be efficient and effective to help enterprises compete in the marketplace before failing companies declare themselves bankrupt in the face of fierce market competition.

Do you think the privileges enjoyed by some enterprises are detrimental to the majority?

Our country’s economy has many economic sectors [state-owned, foreign-owned, private... ]. That’s why we need a level playing field.

It is accepted that enterprises should "feed" the State, but in Viet Nam, it is the other way round.

It is high time we changed this unhealthy practice. The government should eliminate that practice for the sake of the national economy.

Source: Vietnam Net