There are nine key tasks that must be accomplished in 2019-20 to restructure Viet Nam’s economy, according to the Minister of Planning and Industry Nguyen Chi Dung.

Minister Dung told the National Assembly on Monday afternoon that the Government needed to improve the mechanisms of the market-oriented economy to restructure the economy.

Private companies and people must be empowered and given more incentives and reductions in taxes and administrative procedures to nurture their business development, he said.

Secondly, a competitive market must be built on two main pillars: better allocation of resources for the private sector and better practice of property rights, Dung said.

In addition, the Government has to improve the quality of land right regulations and try to figure out how to improve the productivity and efficiency of agriculture, service and industry sectors, he said.

“The Government needs to improve its management of public investment so that the State-funded projects meet international practices while it should also provide assurances on the method of project evaluation and selection,” Dung added.

The public investment projects should be concentrated and aligned with the ultimate goal of economic restructuring, while infrastructure construction should be prioritised among key economic zones of the country, he said.

“The sixth task is to strengthen the efficiency of State-owned enterprises (SOEs) by enhancing their restructuring process to increase in-depth power, corporate governance and transparency.”

“It must also come along with shaking up financial institutions, reducing non-performing loan ratio, and boosting the capital market so that we reach a balance between the monetary and capital markets,” he added.

The annual credit growth rate is forecast at 14-16 per cent a year in 2020, which would be “suitable” with the growth of Viet Nam’s domestic gross product (GDP).

The last two tasks were to enhance the restructuring of the state budget, in which the Government aimed to spend below 64 per cent of the state budget each year, and implement solutions to improve the economy in the context of Industry 4.0, he said.

The National Assembly’s Economic Committee Chairman Vu Hong Thanh suggested the Government should review and speed up the release of policy instructions and prepare to exploit the benefits of free trade agreements to which Viet Nam is a member.

The Government should prevent tax losses in the private sector, especially from firms that make money by exploiting natural resources, and tighten its control over lending to risky businesses, Thanh said.

“Cuts to administrative procedures and production costs are needed to improve the business-investment environment,” he said, adding that violations committed by government agencies when inspecting businesses must be handled strictly.

Challenges ahead and three-year achievements

NA Economic Committee Chairman Thanh said there would be big challenges for the Vietnamese economy next year, including internal issues, oil prices, US rate increases and the US-China trade tension, despite the positive forecast for the country.

There were also concerns about the annual growth rate of the consumer price index (CPI), which is forecast at 4 per cent at the end of this year and 3 per cent by the end of 2020.

It would also be difficult for Viet Nam to reach one million businesses in 2020, the figure predicted to account for 50 per cent of the economic growth, as there were still obstacles for local firms to develop and the number of shut-down businesses increased in the first nine months of the year, Thanh said.

The Government had accomplished nine of 22 targets addressed by the Resolution 24/2016/QH14 dated November 2016 by the National Assembly on renewing growth model and the quality and competitiveness of the economy, Dung said in a report to the NA on Monday afternoon.

Eight of the 22 targets were in progress and five others needed drastic measures to complete, Dung said.

“There were big changes in both the ideology and actions of the Government in shaking up the economy with a focus on policies and private companies, restructuring economic sectors, and reduction of administrative procedures,” he said.

SOEs’ big debt

The total assets of 526 SOEs at the end of 2017 rose 3 per cent year on year to more than VND3 quadrillion (US$133.3 billion), according to a report sent by the Minister of Finance Dinh Tien Dung to the National Assembly.

The report said total payables of State-owned groups and corporations increased by 1.3 per cent yearly to VND1.53 quadrillion, more than half of the firms’ total assets.

The payable-owner equity ratio in some SOEs had reached more than three times, Dung said. Those firms included Van Xuan Import-Export Corporation (45.56), Vietnam Express Corporation (8.07), Military Petroleum Corporation (7.88) and Vietnam Television Cable Corporation (3.3).

A number of SOEs were recording big loans from local banks, such as the national oil and gas group PetroVietnam (VND146.58 trillion), the Electricity of Vietnam (VND132 trillion) and military telecommunications Viettel (VND43.5 trillion), according to the report.

Those companies also recorded VND616 trillion worth of loans taken from foreign financial institutions.

Receivables of those SOEs gained 13 per cent to VND409 trillion from 2016 figure. Among the firms with biggest receivables were PetroVietnam, the Vietnam Rubber Group, the Southern Food Corporation, and Vietnam Coffee Corporation.

The report also discussed 10 firms that are in bad financial conditions with combined cumulative losses of VND12 trillion, led by the Vietnam National Chemical Group, Vietnam Coffee Corporation and Ha Noi Trade Joint Stock Corporation.

“The performance and budget contributions of some SOEs are still lower than expectations and inefficient compared to the State’s invested capital, not to mention their losses in some large-scale projects,” Dung said in the report.

The reasons for the slow processing of loss-suffering projects came from both the Government and the SOEs, economist Le Dang Doanh told Tien Phong (Vanguard) newspaper.

“It is clearly the issue of group interest. As long as the issue remains unsolved, then those firms’ performances cannot improve,” he said.

The Government should hold someone or some organisations accountable for the problems that SOEs had been encountering, Doanh said.

According to economist Pham Chi Lan, SOEs have forgotten the action of risk management in their business operation, which should be the priority among private companies, because the State owns those SOEs, so it is the State who suffers, not them.

In addition, the co-ordination among government agencies and authorities is sometimes overlapping and causes mismanagement of those firms. – VNS