It’s necessary to narrow the shadow of the state enterprises

Vietnam is aiming for fast and sustainable growth. At present, according to the assessment, there is too much congestion in the Vietnamese economy to achieve this target. According to your opinion, what are the problems and the main problem?

We can see that the current Vietnamese economy has many constraints such as unbalanced budgets, difficult revenue sources and increased public debt impeding the state investment in infrastructure and welfare facilities which are the long-term service for human beings, such as education and health. These are the impediments to quality growth in Vietnam. In addition, there aren’t any sudden advances in the socio-economic environment, such as the education system, skills training, vocational training, local administration system ... The inherent impediments are like sand falling onto a running machine, that makes the state machine operate slowly. In addition, it is important to be concerned that the financial state, and securities markets are not exposed to excessive growth or bubbles, which would pose a risk to the macro economy.

However, in my view, the biggest congestion in the process of rapid and sustainable growth is the role of the state is too large. It’s to present everywhere with low quality, including the state management and the state enterprises. The state management sector, especially in localities, is hindering progress every day, making the business sector smaller, stunting it, so that it is always losing and giving way to foreign enterprises in negotiating with foreigners.Therefore, the most radical solution that the Government can do is to reform itself. The government should shrink with very specific solutions. It is necessary to focus on reforming the apparatus from the central to the local level.

Increasing labor productivity is a particularly important solution to promote sustainable growth. However, to increase productivity for industrial enterprises such as manufacturing and processing, we are calling on FDI enterprises to share technology for Vietnamese enterprises to boost productivity to help domestic businesses grow, thereby stimulating growth. Is this a difficult thing, sir?

In theory, we have to link FDI and domestic companies to develop, but this is not easy because foreign companies do not pay attention to small suppliers in Vietnam because the capacity of internal enterprises and the FDI enterprises already have their suppliers. Therefore, there is intrusion by internal enterprises into the production chain, but it’s very small. So, we can not just wait for that intrusion. In my opinion, Vietnam's big enterprises must have a sense of responsibility and the Government should pay attention to this issue. Vietnam enterprises are located in two areas: state enterprises and private enterprises such as Vingroup, Sungroup, Truong Hai Thaco...While state enterprises are shrinking, the big private firms have built up strong capital and human resources, so they are responsible for linking local businesses to help small businesses get bigger. This is the first kick and if there is no kick, there will be no growth. The domestic enterprises must first save themselves in order to develop sustainably. But it is impossible to enforce by law, so it is necessary to create a motivational policy system, encouraging big enterprises to support, associate and share with small enterprises. For example, the State ordered enterprises with large quantities of goods, but attached to them are dozens of partners, hundreds of small domestic enterprise workshops. This is the way developed countries have applied mutual growth.

Dear Sir, sustainable growth is based on internal resources, so improving the internal capacity of private enterprises is very important. How do you assess the support of the Government for this sector in the past as well as in 2018 ?

The government has done a lot in 2017 to support the development of the private sector. However, it may be easier at first but later it will be more difficult, which is related to the legal system in Vietnam. It is clear that there is nothing in the way for a developing country besides developing its own private sector, but it is not easy to make this sector prosper. First of all, there is a need for a transparent and fair legal system to protect the ownership and achievements of businesses and business people, where disputes can be solved in an effective manner. I know there are companies in Dong Nai that have gone to Canada to buy land for pigs. We are an agricultural country, not lacking land, not lacking breeds, we don’t even lack capital ... but the problem is the enterprises can not access them. This is a matter of the institution, making small businesses that can not access state resources.

Secondly, on the issue of the apparatus, the private economy is suppressed. Over the past 10 years, the best evidence is that the contribution of this sector can not exceed 10% of GDP, a very small contribution. While in developed countries, the contribution of this sector must be at least 80%. Thus, private business has to travel a terrible long road because Vietnam has a low starting point. In addition, there is an informal sector that is individual households, traders who do not want to go to the enterprise due to procedural barriers. Therefore, it is necessary to narrow the shadow of the state sector, including state management agencies and state enterprise. Now, this sector is like a big tree inspired full of sunshine of the private economy. It is forecasted that in 2018, the private sector will continue to grow but no leaps and bounds will continue to develop.

What are the main drivers for 2018 economic growth? To achieve GDP growth 6.7%, what are the challenges? Sir?

It can be seen that we have relatively good motivations. The first is the export sector, in 2017 Vietnam has a relatively large trade surplus after a period of no trade surplus. In 2018, if we can keep the surplus momentum as in 2017, this is a very good signal, which is very favorable in many aspects, it will make a big contribution to GDP growth and it shows that the Vietnam can export more than import. The second, Vietnam's economic reform and integration efforts have led to a surge in FDI inflows, with registered capital of nearly $ 36 billion and disbursements of $ 17 billion. If there are no policy mutations in the world as well as in Vietnam, there will be more FDI into Vietnam. In addition, the consumer confidence in the past year has improved. If this trend continues, it will also contribute much to GDP through growth of domestic consumption. I think these are three important factors for demand side to contribute to GDP and if these factors are higher than 2017 the economic growth will be promising.

On the supply side, the current state reform of the business environment, administrative procedures are promoting the business sector, creating better production capacity for enterprises, because the capacity of Enterprises generally is not high. The contribution of this sector to industrial production, for export, for GDP is generally weak and tends to decrease. But the government's reform is growing, this is a good signal. This is the basis for next year's economic growth. Over the past three years, GDP growth has been slowly rising, with this trend, I think next year's growth will not be less than 2017.