A Conference on the implementation of Resolution 19 took place in Hanoi on March 10th. The Resolution implemented by the Government of Vietnam aimed to improve the business environment and competitiveness of Vietnam in 2017, with a vision towards 2020.
According to the World Bank’s evaluation in 2016, Vietnam’s business environment is up 9 places to 82nd out of 190 from and achieves significant improvements in comparison to ASEAN countries. This is the most advanced improvement from 2008.
The programme’s implementation has been receiving the supports from international organizations, including support from the Restructuring for a more Competitive Vietnam (RCV) Project, funded by the Australian Department of Foreign Affairs and Trade (DFAT) over the past 2 and a half years.
On 28 February 2017, the Vietnam Chamber of Commerce and Industry (VCCI) released a report with a list of the 30 best and 30 worst business regulations for the year 2016.
The list is based on a vote by businesses that was initiated by VCCI with the support of the Restructuring for a more Competitive Vietnam (RCV) Project
The Restructuring for a Competitive Vietnam (RCV) Project aims to strengthen the institutional framework to address regulatory and institutional barriers to fair market competition in Viet Nam. RCV support is helping build capacity and transferring international experience to help the Vietnam Competition Authority (VCA) more effectively play its role as the national competition agency in line with international commitments. International good experience suggests that changes are needed to the Viet Nam Competition Law to allow VCA to function as an independent regulator. RCV support is laying the foundations for the reforms.
Speaking to the press on the sidelines of a seminar of rice sector restructuring in Can Tho City on October 11, veteran economist Pham Chi Lan said that the Government has added a new idea to the restructuring scheme, stressing the need to use less input materials such as water, soil, plant protection chemicals and labor while raising productivity and product quality. However, to realize this target, the Government should reduce its role in the program.
Guidance is necessary but if the Government gives too specific guidelines, it will become unreasonable intervention in activities of businesses and farmers, Lan said.
For instance, the Government should not tell farmers to raise which plant or animal but help farmers understand market conditions to make their own decisions.
Lan said that the Government must reduce intervention in the agriculture sector via State-owned enterprises since many such firms are more concerned about their own interests instead of farmers’.
She petitioned the Government to develop a favorable business environment and good policies to support farmers and businesses. The Government should adopt appropriate policies to attract scientists in the agricultural restructuring process.
She said local customers lost confidence in the quality of Vietnamese farm produce. Therefore, the Government has to strengthen its role in setting standards and ensuring consumption to help farmers.
Lan said the Government should take measures to enhance cooperation among farmers, businesses, scientists and the State to boost agricultural restructuring.
She explained farmers must be trained and get information about things such as market conditions and climate change that affect the rice sector in particular and the agriculture and food sectors in general.
Nguyen Trung Kien, head of the commodity markets division at the Institute of Policy and Strategy for Agricultural and Rural Development (IPSARD), told the seminar that perception about rice sector restructuring should be changed. Rice farming is not only to ensure food security but also to increase incomes and improve nutrition so rice processing and trade must get due attention.
Kien said the Government approach to the rice sector should be based on market rules. The State should take advantages of the nation’s international integration to support this sector
A study by CIEM called "Viet Nam's Economy: 2015 Performance, 2016 Outlook" released yesterday said that there is a high possibility for the country to realise its goals in GDP growth and total social development investment, which is targeted to equal to 31 per cent of GDP this year.
However, it needs to reconsider other goals, such as keeping the consumer price index growth below 5 percent while increasing import-export turnover by 10 per cent.
CIEM predicts that the consumer price index will increase 4.4 per cent, trade will grow 10.4 per cent with a trade deficit of US$4.1 billion.
The study points out advantages for the country's economy this year including continued economic restructuring, deeper international integration with the signed or to-be-signed free trade agreements and more public investment as 2016 is the first year Viet Nam applies a medium-term investment frame for 2016 to 2020.
However, the country will face challenges from unstable economies including slow economic growth, capital withdrawal from emerged markets and falling prices in world commodity markets, particularly key export products of Viet Nam.
Moreover, challenges could lie on changing business policies, pressure on the currency exchange and domestic interest rate, especially if the US dollar and interest rates increase.
There remains risk of inflation because of on-going State budget overspending, higher prices of goods and services like healthcare and education, higher business costs as firms pay more social insurance.
The country should keep ensuring a stable macro-economy through reducing State-budget overspending and thorough preparation for free trade agreements, the CIEM study recommends.
"Improvement of the business climate is very important to business," the study says, calling for fair and healthy competition for both private and State-owned enterprises, both Vietnamese and foreign firms.
CIEM director Nguyen Dinh Cung said that for the last 30 years, Viet Nam had made progress in ensuring business freedom and now was time to pay more attention to healthy competition.
Three major bottlenecks of Viet Nam's business climate related to import-export licence, business licence granting and land use, Cung said, urging actions for an improved business climate and national competitiveness.
He suggested to develop a land use right certificate transaction market where the certificate could be auctioned for effective use.
The move would help remove the "ask-give mechanism" in which land was allocated or rented to State-owned enterprises who use it ineffectively, causing huge waste, he said.
He also said a clearer understanding about socialist-oriented market economy and the roles of the State, State-owned enterprises, public sector and private sector could be a foundation for better reform.
The socialist-oriented market economy in Viet Nam was seen as an economy with many sectors and recently the State sector was no longer considered decisive in directing economic development, Cung said.
Former Trade Minister Truong Dinh Tuyen said that Viet Nam's economy last year was mostly driven by foreign enterprises, which is not sustainable.
"Free trade agreements (FTA) are expected to bring a new wave of foreign investment into Viet Nam as happened when Viet Nam joined the World Trade Organisation," he said, noting that preparation for FTAs were crucial to gaining positive results.
Economist Le Dang Doanh said that last year saw difficulties for the agriculture sector – one of major pillars of Viet Nam's economy but farming was still small-scaled, farmers cared little about marketing and distribution networks were modest.
He also noted that employers complained over the quality of human resources and workers working discipline. — VNS
This Report assess the implementation of the Resolution 19/NQ-CP dated 12 March 2015 on key duties and solutions to improve business environment and national competitiveness in the first three months of 2016
Download here: http://en.rcv.gov.vn/UserFiles/Files/160408143628_Du-thao-Nghi-quyet-19-ENG-.docx
The function was held by the Central Institute for Economic Management (CIEM) to review outcomes of economic restructuring between 2011 and 2015 and prepare for the design of a blueprint for the work in the next five years.
Since 2011, the Government has focused economic restructuring on ensuring the safety of the financial-banking system, and improving the effectiveness of capital mobilisation and allocation through measures to stabilise the macro-economy, monetary and fiscal policies, and interest rates.
As a result, inflation has been strictly controlled and kept at low levels, facilitating business growth and people's livelihoods.
The Government has also conducted public investment restructuring to renovate mechanisms for and methods of mobilising, managing and using the State capital. It has issued Resolution No.11 and related directions and increased bidding in order to ease the burden on the State budget.
The divestment of the State capital at State-owned enterprises (SOEs) and SOEs equitisation have been widely implemented with the aim to improve the firms' transparency and competitiveness. SOEs have divested more than 25 per cent of the State capital from non-core business so far.
Economists highlighted significant outcomes over the last five years, including a stabilised macro-economy, a continuously improved business climate, low inflation, and accelerating GDP growth.
However, they also pointed out certain shortcomings such as the modest progress in public investment restructuring, the prolonged settlement of bad debt, and the lingered preference for SOEs.
After years of being managed under the old-fashioned mindset, Viet Nam's economy is facing the risk of lagging behind, especially in comparison with neighbouring countries, said Director of the CIEM's Research Department on Macro-economic Policies Nguyen Tu Anh.
If Viet Nam's average growth rate is at 5 per cent annually, its per capita GDP will be only 75 per cent of China's and 83 per cent of Thailand's by 2035, he added, forecasting that the conundrum will get tougher as the State's resources are increasingly limited, causing a more severe budget deficit and public debt.
Many other experts voiced concerns over the acceleration of debt expansion and backward infrastructure which has failed to meet social demand. SOEs' ineffective operations, outdated management models and low labour productivity are also negatively impacting modernisation efforts. — VNS
The event was jointly held in central Thanh Hoa province on August 27 by the Committees for Economic Affairs and External Relations of the National Assembly, the Vietnam Academy of Social Sciences, the Vietnam Chamber of Commerce and Industry in collaboration with the locality.
The forum focused on reviewing Vietnam’s international economic integration since becoming a member of the World Trade Organisation, and bilateral commitments the country had signed or will sign.
Speaking at the event, NA Vice Chairman Uong Chu Luu reaffirmed Vietnam’s right policy of integrating into the global economy but pointed out many problems in the process such as weak competitiveness, slow administrative reforms, or limited human resources.
He pointed to agriculture, industry, commerce and qualified human resources as important factors for Vietnam to integrate and develop sustainably.
Truong Dinh Tuyen, former Trade Minister, said Vietnam has gone a long stride in integrating into the global economy but slow internal reforms cost Vietnam’s effort to seize opportunities arising from the integration process.
According to Victoria Kwakwa, the World Bank’s country director in Vietnam, Vietnam has achieved achievements since integrating into the global economy and integration is a foundation for the country to attain stronger growth.
Many opined that in order to have strong and effective representatives, enterprises need to be supported by the NA and Government in terms of mechanisms and helped to participate in the policy- and law-making process.
Take action to restructure the economy and transform the growth model in accordance with the roadmap and proper steps to establish, by 2020, a more in-depth model of economic growth that ensures the quality of growth and a more efficient and competitive economy.