SUMMARY

PART 1: SOME THEORETICAL ISSUES

I – CONCEPT OF RESTRUCTURING

In general, “restructuring” aims at bringing about a new structure for an organization in order to obtain better performance.

Enterprise restructuring is a process of redesigning one or some dimensions of an enterprise. The target is reorganizing enterprise to get a better business performance to reach its objectives as well as strategies proposed before. Enterprise restructuring may include process of downsizing, re-engineering, transition or organizational change, outsourcing or offshoring.

Financial sector restructuring is restructuring financial institutions. It is the key for recovering and developing the economy. The top priority in financial sector restructuring is systematic bank restructuring that is improving efficiency of banking system.

Restructuring in real economy is a process of reorganizing the economy, changing economic components and relationship.

Restructuring in transition economy is a process of liberalizing economic activities, stabilizing macro economy, privatizing and equitizing enterprise sector and restructuring institutional and legal aspects.

Restructuring in developing countries aims at minimizing competitive disadvantages, supporting to develop infrastructure and human resources, and improving institutional capacity of the countries.

II – SOME VIEWPOINTS ABOUT RESTRUCTURING

Referring to the concept of restructuring, they often discuss about historical, macroeconomic and institutional viewpoints.

III – WORLD ECONOMIC SITUATION AND REQUIREMENT OF RESTRUCTURING

The world economy has been facing with the worst financial crisis and economic recession since the 2^nd world war that pulled down the most solid financial bastions in the world and has spread all over the world. Economic restructuring has become an essential requirement at the present to overcome the crisis before it becomes a depression.

PART II: EXPERIENCE OF SOME COUNTRIES

I – CHINA

1. Economic growth and development of China in 30-year reform

1.1. Achievements

From a poor and underdeveloped country, by now China has become one of the greatest and most important countries in the world. The average growth rate of GDP of China is 9.8% during the period of 1978-2007, three times higher than that of the world. In 2008 while almost countries fell into economic recession, China still reached the growth rate at 9.8%. With the high and stable economic growth, China’s economy has ranked the 3^rd from the 11^th at the beginning of its reform.

1.2. Main causes

The above achievements are results of the effort of continuous reform from central to local authorities during 30 years including: decentralizing administration; changing from the direct regulation role of plan to indirect regulation role of the market; reforming state-owned enterprises and encouraging private economic sector to develop; committing to maintain macroeconomic stability; opening foreign trade and investment.

1.3. Shortcomings

At the present, the China’s economy has to face with some problems those are the low quality of development, the wider and wider gap between rich and poor; seriously damaged and polluted environment; the far and wide spread of corruption; and the burden of state-owned enterprises. Furthermore, there are some other problems affecting the China’s economy including a lack of skilled labours and employment, low salary and shortage of policies on labour safety and insurance, the dependence of China on foreign investment and export and the extremely low quality of products being made in China.

2. Guidelines and solutions

In the recent years, China has paid attention to adjustment of the development model towards quality of economic growth and social security. The guideline of China is “developing scientifically” and “building a harmony society”. To do so China has implemented some important policies such as abolishing agriculture tax nationwide, subsidizing prices of agricultural products; stimulating domestic consumption; encouraging domestic enterprises to invest abroad; increasing investment for education, health care, science and technology, rural infrastructure; strengthening to combat against corruption, etc.

Moreover, in order to cope with the global financial crisis, from the end of 2008, China has implemented a flexible fiscal and monetary policy and a series of economic stimulus measures. In which, the worthiest is the economic stimulus package with the value of RM 4,000 billion (equivalent to USD 586 billion) focusing on 10 sectors.

3. China’s recent economy and prospects

Owning to policy measures and adjustment of the Government, the economy of China continued to grow in the crisis though its growth rate decreased a bit. The average GDP growth rate in the first 6 months of 2009 was 7.1%. The stock and real estate markets also grew strongly. However, in order to deal with the 2008 global financial crisis, China has pumped a huge amount of capital into the economy that leads to risks of overabundance in manufacturing capacity, new stock market and real estate bubbles. To obtain a stable recovery, China should balance well between controlling the crisis and restructuring the economy.

II – JAPAN

1. The miraculous economic development period and lost decade

1.1. The miraculous economic development period

The two decades from 1970 to 1990 is considered the “miraculous development period” of Japan with the average economic growth rate of over 4% per year. This is due to the factors of internal force of this country those are the hard-working and diligent spirit as well as spirit of thrift of Japanese to speed up export to the West. Moreover, the reasonable development strategy at that time focusing on pushing up industrial manufacture towards export and allocating equally interest nationwide is an important factor that contributes to “the miraculous stories of Japan”.

1.2. The lost decade

Economic expansion came to a total halt in Japan during the 1990s. The economic growth rate dropped sharply at about 1.3% per year during the period of 1991-2001 and unemployment rate increased rapidly over the years. The causes are the decrease of productivity and working hours, stagnant debts, decrease of private investment, liquidity trap, inefficiency of demand stimulus measures, inappropriate monetary policy, etc.

2. Japan’s recent economy and prospects

2.1. Before 2008 global financial crisis

It seems to be that the innovation of Japan to help the economy get out of the “lost decade” is satisfactory. Economic growth rate rose to 2.7% in 2006, employment and CPI as well also increased; the real estate and stock markets began to go up and be stable.

2.2. Impacts of 2008 global financial crisis

Due to much dependence on export, Japan has suffered from serious impacts from the 2008 global financial crisis because markets for export have been curtailed. Japan’s trade deficit in 2008 reached the highest value during the past 28 years. Also, the income inequality and percentage of poor all increased.

2.3. Solutions

Previous government: The government of the Prime Minister Taro Aso issued 4 economic stimulus package with the total value of USD 404 billion focusing on tax and government expenditure cuts, supporting unemployed labours, speeding up consumption of cars and electrical goods. Thank to that, manufacture for export has been recovered, Japan’s economy reached a positive growth rate in the 2^nd quarter of the year 2009 after 4 quarters of negative growth rate.

New government: Japan has undergone a turning-point in politics with the victory of the Democratic Party of Japan (DPJ) in the election in 8/2009. The short-term plan of DPJ is putting more money on the consumers’ pockets via tax cuts, government expenditure reduce and better support for health care and education. In the long-term, DPJ commits to partly adjust economic innovation program of the previous government. DPJ will continue the program on cutting down bad debts and restoring the public confidence in banking system, narrowing the gap between rich and poor, rural and urban. Moreover, DPJ will drive the economy towards a new direction that is reducing dependence on export, focusing more on domestic market, improving social welfare and equally allocating social wealth.

2.4. Shortcomings and challenges

The economy is still unstable with many challenges such as the stability of fiscal and public debts, risk of deflation, population crisis and social security, increased employment rate and trend of equality in society.

III- THAILAND

1. Thailand’s economy before and in the 1997 Asian financial crisis

1.1. Before the 1997 Asian financial crisis

Thailand was considered a mirror of efficient economic management with a high and stable economic growth rate at 9% during the period of 1985-1995 was 9%. The characteristics of Thailand’s economy in this period were low inflation, state budget surplus, under-controlled payment balance, high investment, close-to-zero unemployment. These achievements owned to the appropriate and efficient domestic policy of Thailand.

1.2. The 1997 Asian financial crisis

The Asian financial crisis started with the devaluation of Thailand’s Bath, which took place on July 2, 1997, a nearly 50% devaluation that occurred two months after this currency started to suffer from a massive speculative attack. It led to sharp declines in the currencies, stock markets, and other asset prices of Thailand. Causes of the crisis are weak macro-economic foundation, mistakes of domestic investors and other exterior factors such as disadvantaged changes of the world economy, massive speculative attack and capital withdrawal.

To deal with the crisis, Thailand asked help from IMF and implemented comprehensive restructuring which includes reforming macro-economic management methods, management manner of enterprise sector, financial sectors and market system.

2. Thailand’s recent economy and prospects

2.1. Unstable politics at home

Due to the unstable politics at home from the beginning of 2008, Thailand’s economic growth declined sharply. Stock market and key economic sectors such as tourism, investment, etc went down drastically while inflation increased.

2.2. Impacts of 2008 global financial crisis

Under the impacts of the 2008 global financial crisis, Thailand’s economy officially fell into a recession. GDP growth rate in the 1^st quarter of 2009 decreased at 7.1% against the same period of 2008, the highest level in the past 10 years. Along with the economic recession, Thailand faced with increased unemployment.

2.3. Solutions

To restore the economy, Thailand has approved 7 economic stimulus measures relating to support enterprise sectors and a series of economic stimulus packages with the total value of USD 222 billion focusing on developing infrastructure, ensuring social security and creating employment. As a result, the economy has been recovered with the increase of GDP in the 2^nd quarter of 2009 against the 1^st one. Stocks increased while decrease of export and industrial manufacture is slowdown. However, the key economic sector, i.e. tourism, still faces with many challenges.

IV- MALAYSIA

1. Malaysia’s economy before the 1997 Asian financial crisis

Owning to the appropriate and efficient policy, Malaysia’s economy grew stably and rapidly during the period of 1965-1997. GDP growth rate during the period of 1965-1983 was 6.3% per year while that of the period 1983-1990 was over 7% with low inflation. From an agriculture country, it became an export-oriented one.

2. Malaysia’s economy in and after the 1997 Asian financial crisis

Malaysia is one of countries that suffered heavy impacts from the 1997 Asian financial crisis. The exterior causes are globalization, infectious effect from Thailand, and monetary speculative activities. The interior causes are: rapid increase of short-run debts; large short-run capital flows running into stock market; strong turning of capital investment into real estate sector; massive and drastic withdrawal of capital from the economy; and herding effect of investors, decrease of credit rating.

Malaysia maintained a fixed exchange rate regime, prohibited to transfer capital abroad in a certain time, and refused to get the assistance from IMF. Also, it implemented large expenditure programs to stimulate the economy and reformed enterprise sector as well as financial system. Thank to that, Malaysia’s economy recovered rather rapidly with strong financial system, low unemployment rate, high foreign currency reserves, appropriate payment balance and high trade surplus. GDP per capita per year increased to USD 5,770 in 2006.

3. Malaysia’s recent economy and prospects

Like Japan and Thailand, Malaysia is a country depending much on export. Therefore, the 2008 global financial crisis had significantly negative impacts on its economy. GDP declined sharply, many enterprises went to bankruptcy and unemployment increased.

To cope with the crisis, Malaysia implemented many policy measures which mainly focused on supporting domestic demand and minimizing effects of the crisis on economy. Malaysia brought out 2 economic stimulus packages with the total value of RM 67 billion (USD 18.17 billion) and subsidized prices for some essential goods for people.

As a result, there are some evidences that economy of Malaysia has been restoring. The economic indexes in the 2^nd quarter of 2009 were better. GDP growth rate in 2^nd quarter of 2009 increased 4.8% against 1^st one. At present, Malaysia is planning to carry out a plan of economic restructuring right after overcoming the crisis to change from an export-oriented economy to a service-oriented one with less dependence on cheap labours and traditional markets.

Source: VNEP, October -2009