 |
| A production line at a factory of the Thai Nguyen Iron and Steel JSC, Thai Nguyen Province. — VNA/VNS Photo Hoang Hung |
HA NOI (Biz Hub) — The next phase of the Vietnamese economy's restructuring should focus on efficiency of resource allocation to renovate the growth model, experts said at a conference in Ha Noi on October 12.
Viet Nam has underwent the toughest five-year restructuring period since it embarked on the Doi Moi (Reform) process three decades ago, with overhauls of public investment, banking and State-owned enterprises (SOEs). However, the results were below expectation as with rising public debts, high bad debts and uncompetitive businesses, said Tran Dinh Thien, Director of the Viet Nam Institute of Economics.
"Little improvement is seen in the renovation of the growth model," Thien said, adding that 30 years was enough for the Republic of Korea to become a developed industrialised nation while Viet Nam only became a low-middle income country despite huge economic growth from 1990-2015, second only to China's globally.
"The problem lies in resource allocation which has proved inefficient," Thien said.
He said that resources had been poured into inefficient SOEs and labour-intensive and capital-consumed industries, which undermined national competitiveness and discouraged the private sector.
"As Viet Nam is entering the next phase of restructuring, the country needs to find a thorough and radical way to renovate the growth model towards efficiency."
"Economic restructuring should now shift to the efficiency of resource allocation from the goal of simply raising resources."
According to Nguyen Dinh Cung, Director of the Central Institute for Economic Management, Viet Nam was close to the limit of raising resources. "The important issue now is not how to raise resources but how to use them efficiently," Cung said.
Breakthroughs in mechanisms and in the restructuring of the financial sector are critical to economic overhaul, experts said, urging bad debts to be tackled.
Cung also said that a committee specialised in economic restructuring should be established.
Opportunity in integration
The difference of 2016-20 restructuring to the previous periods was that Viet Nam was rapidly integrating globally with several free trade deals with demanding requirements.
"Take advantage of the integration process," Cung said. Although this remained tough, this was a must for the Vietnamese economy to avoid being left behind, he said.
According to Thien, restructuring processes often made economies more fragile to outside influences, so Viet Nam should pay attention to the Chinese economy.
The project of restructuring the economy in 2016-20 period was proposed to the National Assembly for consideration. — VNS