The Working-paper aims to: first, conduct an analysis on state management capacity of governmental bodies and bureaucrats in the state administrative apparatus, and business capacity of entrepreneurs, as well as advantages and disadvantages given requirements of the new time, namely: sustainable development of the nation and successful international economic integration; second, propose solution for enhancing state management capacity of governmental bodies and bureaucrats in the state apparatus, and business capacity of entrepreneurs, in which focusing on particular solution for each targeted group while taking into account close connection between the two groups.

The significance of the working paper: in the process of international economic integration, the State and enterprises are defined as major players; moreover, given a fact that the economy is facing with remarkable difficulties, management capacity enhancement of governments and entrepreneurs is of crucial meanings. The paper tries to provide an in-depth analysis so that each targeted group can recognize their advantages and disadvantages, and to recommend some major and practical measures for overcoming difficulties and further sustainable development; in which, the enhancement of state management capacity of governmental bodies and bureaucrats plays a decisive role in promoting business capacity of entrepreneurs.

Part I. Enhancing state management capacity of governmental bodies and bureaucrats

I. Current status and existing problems

1. Concepts and policies

State management capacity is reflected through capacity of the whole state administration apparatus, including: the institutional system, the state apparatus, bureaucrats and public financial system. Management capacity of governmental bodies at different levels is of curial meanings to national development, playing as a motivation or constraint to the development.

Over the last time of renovation since 1986, there have been many milestones in concepts and policies development regarding state administration reforms.

By the X^th National Party Congress (April 2006), the Congress Resolution saved a separate Chapter on “enhancing the role and effectiveness of state management” in a market economy. In which, the Congress stressed “to further build up and complete a socialist jurisdiction state”; and decided “to accelerate administration reforms, renewing the organization and activities of the Government towards establishing a consistent, synchronous, and modern system of executive agencies. To institutionalize the structure and organization of the Government; to set up a multi-sector and multi-field management mechanism, while ensuring streamlining and reasonability. To decentralize, and grant more initiative to local governments, particularly regarding decisions on budgets, finance, investment, human resource, and fulfillment of financial duties to the Centre.”

2. Current status and existing problem

It is possible to say that the importance of administration reforms has been increasingly aware of; with many guiding documents on the implementation provided by the Party and the Government. So far, however, administration reforms are still slow and remain some weaknesses. Followings are burning matters requiring more attention

Institutions. There are many weaknesses and shortcomings in the institutional system, which cause adverse impacts to the development of enterprises; notably in terms of developing various forms of markets, the principle of equality in doing business, administrative procedures, transparency and publicity of administration bodies’ performance.

Mechanist organization. The mandate of functions and tasks of the Government and central agencies remains irrational, and overlapping. Therefore, the content of state management duties of ministries and departments are found confusing, causing difficulties in assessing working results and performance of each authorized body.

Civil servant apparatus. So far, the quality of civil servant apparatus fails to meet requirements of reality: knowledge, management capacity in legal and administration terms remain limited. Still, one of the most concerning problems is the degrading of professional virtue of some civil servants and officials. The Party and the State have provided many measures to build a more transparent and professional civil servant and official system.

Public finance. Most burning matters are: (i) investment spending by the state sector with poor effectiveness; ICOR coefficient is supposing to increase (from 4.5 to 4.8). (ii) Many groups and corporations make out-of-business investment to non-relevant fields which are not of their profession and advantage, particularly financial, real estate, and securities sectors with so many risks.

II. Recommendation on solution

1. Common points of measures

It is necessary to make thorough transformations in four terms, as follows: implementing comprehensive state management function to various economic sectors; building a discipline and effective administration; preventing and punishing violations to laws and freedom of citizens; pushing up a transparent administration; establishing a scientific and modern administration.

2. Improving professionalization

The professionalization of the state administration apparatus should be built at two different levels: the professionalization of each organization in the apparatus, and the professionalization of civil servants.

3. Combining various forces

The course of sate administration reforms, improving state management skills is required to be carried out along with the combination of various forces in the state apparatus, between the state apparatus and organizations in the politic system and civil organizations.

4. Up-holding core stages

Reforming state administration and enhancing state management capacity of the administration apparatus consist of many different contents, of which, the core stages are institutions, mainly economic and administrative institutions.

5. To do what you say

This is a measure deriving from the reality. Policies provided by the Party and the State should be closely relevant to the people life. State officials and civil servants should try to do what they say to gain public confidence.

6. Really server the people

This matter belongs to moral responsibility of the civil servant. Among other issues, one thing that enterprises complain about most is the attitude and behaviour of cadres and officials at public agencies.

7. Improving management culture

This is to mention culture of public agencies, ways of thinking, conception, behaviour, and living style, etc, of each body in the state administration system.

Part II. Enhancing business capacity of entrepreneurs

I. Current status and existing problem

1. The establishment of business class in Vietnam

The business class has been established and increasingly developed since the embankment of renovation. And the fact has proved that entrepreneurs in Vietnam are an actual leading force, making significant contribution to economic development of the nation.

2. Current status and existing problems of entrepreneur force in Vietnam

Common condition

Number of entrepreneurs in Vietnam is too limited. They are of advantages, such as: high educational levels, intelligence, dynamics to access and apply new knowledge; however, they are also have some disadvantages, in terms of: management capacity, knowledge regarding laws, business morality, and notably lacking the sense of community, the spirit of doing big business, hesitation to venture and risks, poor prestige.

Weaknesses regarding business administration

Given requirements of sustainable development and international economic integration of the new time, Vietnamese entrepreneurs are exposed with many weaknesses, including: limited vision, poor business administration skills, and shortcomings regarding the fulfillment of social responsibilities.

II. Recommendations of some measures

1. To improve business spirit

Business spirit is reflected in (i) innovative ways of thinking, dynamics, creativeness, adventurousness; (ii) intelligence, knowledge, capacity to improve performance and competitiveness of the enterprises; (iii) the high sense of building prestige, ensuring business morality, respecting customers, running business in accordance with laws and regulations; (iv) appreciating human factor, taking human beings as a source of development, trying to combine and intertwine interests of the enterprises and interests of the society, serving sustainable economic development; (v) leading a healthy life, practicing economy, decisively fighting against corruption and bureauctaticism.

2. In terms of business strategy and policy

Running business in the time of globalization requires each businessman must prepare their own business strategies and policies marching certain condition of a concrete circumstance.

3. To apply advance technologies in modern business administration

The application of science and technology to production and business administration has been defined as the most important factor to increase labour productivity, reduce price, and create products with higher added-values, thereby, enhancing products, commodities, and business competitiveness. In fact, this factor has not received proper attention.

4. To build and mobilize human resource

This is the core factor to improve national and business competitiveness. Without a human force of good quality, an enterprise hardly achieves necessary technology levels, and thus, is impossible to compete and develop sustainably.

5. To improve business scale, take part in international production and business chains

In accordance to WEF, development is divided into o three phases. Vietnam is just at its first phase which is fundamentally basing on production factors. Therefore, Vietnam should do its utmost to improve its product position in international value-added production and business chains.

6. To appreciate business culture

Business culture means co-operation, co-competition, doing competition without illegal and unmoral tips for chasing immediate profits. Business culture is reflected in concrete products, quality of products and commodities and in relationship of enterprises with its partners.

7. To unceasingly make innovation and creativeness

To make innovation and creativeness in this time, it is necessary to base on tapping human potentials, putting human beings into the center of development. While, it is necessary to mobilize people dynamics and creativeness for sustainable development, because people creativeness is inexhaustible.

Source: VNEP, June 2008