Drastic reform to promote growth

Priority should be given to the private sector as this is an important driving force for economic development. Photo: H. Anh.

According to experts, there are still plenty of room for policy reforms, but more importantly, that reform needs to be fiercely implemented and groundbreaking.

Public spending reform

According to experts, after many years of pursuing the model of economic growth based on investment expansion, public spending in Vietnam is continuously maintained at a high level, the state budget deficit for many years is nearly 5% has caused many problems to affect macroeconomic stability such as high inflation and instability, slow growth due to low utilization of resources, investment spread.

Assoc. Professor, Dr. Vu Sy Cuong (Finance Academy) said that the budget deficit (excluding principal payment) in the period of 2004-2006 is only about 1% but in the last three years it has reached nearly 3% GDP. The overall budget deficit (including principal repayments), according to the Ministry of Finance, has been close to 5% of GDP since 2001. In addition, even though public debt remains within the allowable range, it is now facing major risks as it approaches the ceiling of 65% of GDP.

Other inadequacies in public expenditure affect economic growth that Assoc. Professor, Dr. Vu Sy Cuong pointed out that the expenditure structure is unreasonable when the expenditure on investment is decreasing and the current expenditure accounts for the majority. In the context of a developing country, the need for investment in infrastructure is still huge, the sharp reduction of public investment without alternative sources will also have negative long-term effects. He affirmed that Vietnam's problem now is to improve the quality and effectiveness of investment in general, including investment from the state budget, not just in terms of quantity.

According to Dr. Nguyen Dinh Cung, Director of the Central Institute for Economic Management, to reduce the overspending and safeguard public debt, must reduce recurrent expenditures and improving the efficiency and discipline of budget spending rather than constraining public investment. According to Dr. Cung, cannot afford to spend too much on a regular basis. Regarding the shortcomings in public investment, Dr. Cung emphasized that most public investment projects had to adjust the total investment, the adjustment level was 1.5 to 2 times higher than the approved level. This has become commonplace but has not been dealt with, and stressed that it can not last forever.

An important solution in public expenditure reform that was suggested by Assoc. Professor, Dr. Vu Sy Cuong is necessary to gradually reduce and stop the trend of investment expenditure reduction, especially at the central level, to improve the investment budget by paying more attention to the maintenance needs involves investment, thereby supporting economic growth. "Controlling and reducing spending is rampant, ineffective, but if the current downturn continues over the long run, the volume of public assets will not be enough to fully support economic development. In addition, capital expenditures for asset formation and asset maintenance to extend their life cycle must go hand in hand. If both demands are met, it will help to avoid poor growth results, "Assoc. Professor, Dr. Vu Sy Cuong said.

Cut off at least 1/3 to 1/2 business conditions

One of the driving forces for growth needs to be promoted as a solution for institutional reform, improving the business environment and supporting business development. According to experts, this is a very important reform because now, despite many changes, there are still many bottlenecks, difficulties for businesses in the production process.

From the angle of enterprise, Mr. Nguyen Tham, former Vice President of the Vietnam Freight Forwarders Association, said removing the bottleneck meant clearing the flow, opening trade, speaking in the direction of socio-economic development, or as socio-economic development orientation is going from a good place to the better one. For enterprises, enterprises have encountered many difficulties when doing business in the socialist-oriented market economy in Vietnam and these bottlenecks need to be removed immediately. First and foremost, it is a matter of group interests, the benefits of the backyard, this bottleneck has a clear impact on the market mechanism, the enterprises, the economy should be eliminated and considered as the task level. the. Taking the evidence that the conditions for obtaining an international multimodal transportation license are making it difficult for businesses to deny the other condition, Mr. Nguyen Tham said, this regulation is hindering the business of enterprise and confirmed, there are many legal documents on business conditions make it difficult for businesses.

The first bottleneck to remove, according to Mr. Nguyen Tham, is to reform, improve the capacity of management staff, management system. In addition, it is necessary to review the legal system, legal documents, the legal documents related to production and business, which do not appropriate to abolish early to clear the flow, to facilitate the production and business progress; and at the same time need to give priority to the private sector as it is an important driving force for economic development.

In this regard, Dr. Nguyen Dinh Cung emphasized that pressure should be placed on the ministries to remove at least 1/3 to 1/2 of business conditions, eliminating at least half of the goods subject to inspection. It also changes the basic way of state management. Besides, Dr. Nguyen Dinh Cung also said that in order to promote economic growth, it is necessary to increase the efficiency of SOEs' capital use, management reform, and SOEs' financial efficiency. Specifically, as the owner, the government assigns mandatory targets to SOEs by increasing at least 1 percentage point from the current level for criteria such as revenue/capital, gross profit/business income, profit before tax/property (including the value of land use rights), profit/equity etc.

According to experts, in every field, there are bottlenecks and find growth motives in which when the knots are removed, the problem is that after identifying the bottleneck, need to reform drastically and strongly, accept trade-offs for optimal results in economic development.