This points at some positive aspects in the Vietnamese economy, and hence, significant and comprehensive reforms over the next few years will be essential to continue to maintain a strong and stable growth rate.
Positive macro-economic trends
Considering the four key macro-economic indicators of GDP growth, namely, inflation control; price stability; employment increase; and export increase, it is obvious that Vietnam’s economy is a high light among world economies. This result is not only significant in terms of growth, but also more importantly, the economy is making a U-turn from slow growth to high development, putting an end to the 15-year phase of slow growth. The annual growth rate was 7.33% in the 2001-2005 period, 6.32% in the 2006-2010 period, and 5.96% in the 2011-2015 period. This fell in the 2016-2020 period in the second quarter of 2017, caused by a U-turn that created significant momentum for a stable growth rate.
However, in addition to a positive growth trend, the contributing factors have not been stable. Several sectors with high growth rates like processing industry, agricultural, forestry and aquatic products, exports, domestic market consumption, tourism, and real estate, still faced many problems, causing adverse effect on the growth rate in 2019. Another concern is public investment which is declining.
However, Vietnam’s macro-economic plans for the coming years will still focus on quality and growth, in context with new policies and complicated situations in global economy and trade. Thus, the Government economic and financial policies will still target double goals in quality and growth.
In general, it is very likely to see a positive growth rate of 7% per year in 2019 and 2020 and an average of 6.8% in the 2016-2020 period (the goal is 6.5%-7%). Considering the potential, the national geo-economic properties and the chances this era may enjoy breakthroughs in science and technology if the country is able to take the great advantage of the four following economic poles. (1) It is essential to make the best use of tropical farming, creating crucial materials for the processing industry and exports, through new production models and hi-tech application. (2) It is imperative to take the huge advantages of marine economy, including coastal economic zones, port and logistic services. The marine economy does not only play a pivotal role, but also ensures security, national defense and marine water protection. (3) It is vital to promote the development of the tourism industry to make Vietnam a globally interesting tourist attraction. (4) It is important to enhance significant urban development in the process of urbanization as there is plenty of land since urbanization has taken up only about 36-38% of land area. Additionally, application of the 4.0 technology revolution, digital economy, reforms, initiatives and start-up activities could be ways to boost the development of these four economic poles.
Policy reforms necessary
Major reforms and comprehensive policies in coming years will help accelerate development and bring about breakthroughs. Administrative reforms and higher public service efficiency have been the national goals for several decades, yet problems still exist in state governance of socio-economic issues in different sectors. This complexity has been accompanying economic growth, market development and international integration.
The problem is, if there is a lack of systematic ideas for appropriate state management of the market economy, all efforts will prove ineffective, and contradictions and complexities will worsen. For instance, dozens of acts introduced by the National Assembly in its previous term had to be revised and changed in its present term because of contradictions in practice.
Over the past few years, the Government has shown determination in improving the quality of public services, especially administrative formalities to enhance trust and hope in an active Government, and there have been certain initial positive improvements. However, it is vital to have synchronous reforms in the three fields of administration, operations and human resource, in order to make Government resolutions more practical in socio-economic issues and increase competitiveness in business and investment in context of further regional and international integration.
Improvement of economic regulations is not only improvement of acts directly related to the operation of companies, but it should also be put in a larger scale, including the entire national administrative system, with three key factors of economic regulation, public administration and public financial management. All the reforms should be synchronous in these three factors. This is crucial for us to improve the legislative system.
To enhance fair competition, it is necessary to ensure that the State management is suitable to the market economy. The State pursues the goal of national development, rather than profits in business, because profits in business are market matters. Narrowing business activities of state-owned companies is currently creating favorable conditions for the market to effectively arrange development resources and promote fair business and investment.
In the current context of our country, support for companies to improve competitiveness depends on three factors: stable macro-economic growth, good legal environment and service-oriented administration. These three factors provide the most significant contributions to corporate development and good integration, rather than any other policies of the State. These are the major resources and drive for development.
Therefore, it is fundamental to have new ideas for significant synchronous improvements, based on five groups of contents. First, the State management must be clear, and wisely set one of the three factors of market economy, the State, manufacturers and consumers, companies and people. The State does not act in the position of the market or the people in civil relationships. This is the basis for construction of the public service and public administrative mechanism.
Second, it is important to do away with local economic structures, separating economic activities from public administration; establish economic regions; and construct national development programs instead of wide and ineffective preferential policies.
Third, it is urgent to separate national affairs from local affairs. This is a firm foundation for a significant local government model, particularly decentralizing management activities from the central government to local governments in different state sectors, controlling excessive use of power and promoting greater autonomy and delegating responsibilities.
Fourth, it is essential to separate national budgets and local budgets and do away with mixed budget policies currently termed as state budgets. This could pave the way for national financial reforms and put an end to request-and-give policies for state budgets.
Fifth, it is crucial to promote the role of non-profit financial institutions to replace the current idea of social contributions for public services. The state can provide public services, especially healthcare, education, science research and technology in part and indirectly through non-profit institutions. A market economy cannot work smoothly in the current centrally controlled mechanism. The unity of the national administration has turned into a uniformity of administrative mechanism. This is the very cause of the country’s heavily inefficient administrative system.