Following recent announcements by the PM and the Party Secretariat suggesting further liberalization of the climate for private enterprise, the public is watching intently for follow-through.
 |
The warehouse of a private coffee company. |
VietNamNet
Bridge – Following recent announcements by the Prime Minister and the Party Secretariat suggesting further liberalization of the climate for private enterprise, the public is watching intently for follow-through. In this article, we provide comments by the respected consultant Nguyen Quang A and a number of hopeful VietNamNet readers.
Private sector must drive growth< />
On-line discussion: ’party members to work in private economic sector’
Sustainable growth big concern for 2010
Dr. A writes: The Prime Minister instructed ministries to deal resolutely with money-losing state-owned companies and to speed up reorganization in the state-owned economic sector.
Meanwhile, earlier in February, the Secretariat of the Central Party Committee released its conclusion based on the results of a review of the implementation of the Ninth Central Committee’s resolution (March 2002) on renovation of economic structure and policies to encourage the development of the private sector.
In its statement, the Party Secretariat asked the Government to amend and issue new regulations and policies and simplify administrative formalities in order to facilitate the development of the private economic sector. More importantly, the Secretariat proposed that private firms be enabled to get loans from official assistance development (ODA) sources on the same footing as state-owned enterprises.
Reform of the state-owned enterprise sector and encouragement of the private economic sector have been fundamental policies for a long time. Still, the PM’s instruction and the Party Secretariat’s conclusion, happening at nearly at the same time, must be taken as significant indicators of intent.
Though the private economic sector in Vietnam has made great progress [in the Äoi Moi era – ed.], compared to other countries, our private enterprises are still relatively weak and in reality, the playing field is not level. Private firms must face a lot of difficulties related to capital, land, technology, human resources, administrative procedures, and officials’ expectation of ‘presents.’ The legal environment for the enforcement of contracts among private firms is not clear, pushing up the cost of settling claims. All these things are harmful to their competitiveness.
Notwithstanding these innumerable obstacles to doing business, the private sector still grows faster and its contribution to the country’s gross domestic product (GDP) is increasing. It has become the key sector for Vietnam’s economic development. It continues to attract new investors and entrepreneurs, and they are less nervous than before.
Perfecting the economic structure, especially with regard to access to capital and resources, simplification of administrative procedures and reduction of petty harassment will create an opportunity for private enterprises to ‘break out’ to become firms that can compete successfully within Vietnam, in the region and in the world.
The job of the State should be to remove obstacles and serve the private sector, creating opportunities for its development. If that were so, they would daily create new jobs, pay more taxes, and increase in strength and international competitiveness.
The Party’s decision to allow private firms to access ODA capital is a new and welcome sign, though it comes late. When, very soon, Vietnam is graduated from the World Bank’s poor country group to the group of countries of low-average per capita income, ODA grants to Vietnam will fall, perhaps very sharply in the next three years. With that comes the turn of the private sector, which will be challenged to pick up the slack.
Under current conditions, only big private firms that have good relationships with government agencies can hope to approach this source of capital. If this policy on equal access to ODA is not implemented well, economic deformations and corruption may grow even more serious.
This isn’t just speculation; the intimate relations between government and big business are every day more evident. In this context, clear standards and transparent procedures are critically important. We can hope that the aid donors don’t count too much on the State, and don’t shrink from setting appropriate criteria and paying attention to their implementation, demanding openness and transparency.
It would also be good if the State were to create opportunities for private firms to buy shares when state-owned enterprises are equitized, up to 70 percent for example.
If the policies related to the two above events are implemented seriously and well, they will be a very positive signal, even though they aren’t entirely ‘new.’ Still, it’s a big ‘if.’ Many “breakthrough policies” have been announced, but when they are not implemented well, the people’s hopes are dashed. One can hope that it will be different this time and from now on.
Many readers have written to VietNamNet to applaud the Secretariat and the Prime Minister’s initiatives. They hope that these policies will be implemented well.
Reader Nguyen Van Nam analysed the situation as follows: In recent years, small and medium sized enterprises have developed strongly in scale, contributing to the development of the national economy. These firms have created many jobs, especially in the rural areas.
However, this sector faces a lot of difficulties, especially in recovery from the recent economic crisis. It can be said that the government’s assistance came late. The policies just announced give new hope that private firms will have equal opportunities for development.
“The private sector in Vietnam will be an abundant source of strength if it is nurtured and used well,” wrote reader Tran Chi Chung.
“We defeated foreign invaders thanks to the ‘people’s war’ policy,” Chung emphasized. “In the time of integration and economic development, we have to bring into full play the strength of the entire people, including the private sector.”
Reader Thu Hien wrote that the two documents are a good basis for Vietnam to distribute and use its resources to serve the countrys’ development.
According to this reader, scrutinizing public investment and improving the effectiveness of state enterprises were emphasized before the economic crisis but the initiative was not implemented well. This is now an opportunity for Vietnam to deal with this problem at its roots, and a necessity for further development.
“Restructuring the economy, going from broad but shallow development to development in depth, from stress on quantity to emphasis on quality should start from reconsideration of the relative position of the private and state sectors and the individual enterprises in these sectors,” Hien added.
Readers hope that these policies will become real.
“Evaluating state enterprises is necessary but it is more important to have timely rewards and criticism,” wrote reader Ai Lien. “I hope that the people will see loss-making state firms and their leaders punished. Only on the condition that all perform their roles properly can we say gladly and proudly that we don’t punish anybody.”
“The State must practice what it preaches, otherwise the people and businesses will lose confidence in it,” reader Thu Hong declared.
|
Dr. Nguyen Quang A (chief of the now defunct Institute of Development Studies – IDS).
Comments
You must be logged in to post a comment.
