SOEs that operate for profit need to be sold as soon as possible
Both the government and economists have agreed that it is necessary to begin restructuring the national economy, but a question has been raised that where the process should be started. The public investment, SOEs and the banking sector all have been defined as the key points for the economic restructuring.
Tran Xuan Gia, a well known economist, former Ministry of Planning and Investment, said that the biggest worry for now is the rapid increase of the public debts, warning that if the sovereign debt increases to 70 percent of GPD, Vietnam may fall into the insolvency.
Sharing the same view with Gia, Dr Nguyen Xuan Thang, Chair of the Vietnam Institute for Social Sciences, said that local authorities try to draw up as many projects as possible and try to get the projects approved, even though they are not sure about the feasibility of the projects and about the sources of capital.
“It is clear that we are facing a problem that the public debt is very high. Therefore, it is necessary to keep strict supervision over every project and say “no” to the ineffective ones,” Thang said.
Gia believes that there are two things that need to be done. It should sell definitely or sell at a loss all the half-done projects where the State does not have to control. It should also sell the SOEs which operate purely for profit, to get money and use the money for more important purposes.
“We should not let more SOEs to be born and then restructure SOEs later. It would be foolish if we drop litter and then we have to clean up,” Gia said.
Meanwhile, the World Bank’s Vietnam Country Director Victoria Kwakwa, said that it is necessary to have thorough consideration over the projects to choose the ones for sale, because the projects which have much significance to the socio-economic development should not be put on sale.
Dominic Scriven from Dragon Capital, an investment fund management company, also said that it is necessary to keep cautious when selling SOEs, because the companies operating for public interests should be held by the State. Therefore, it is necessary to clarify SOEs and sell the enterprises which operate for purely commercial purposes, so that they would not hinder the national economy.
Restructuring national economy – where to start?
Dr Le Xuan Ba, Head of the Central Institute for Economic Management (CIEM), stressed that the national economy restructuring needs to start from changing the existing viewpoint.
“It is necessary to point out what role the State should hold in a market economy. The only thing the State needs to do is to set up a legal framework in order to create favorable conditions for businesses to operate, while it should not get involved in business and intervene businesses’ operation,” Ba said.
Ba emphasized that in other countries, the state economic sector’s contribution to GDP is 4-5 percent only.
Deepak Mishra, Chief Economists of the World Bank in Vietnam, said that Vietnam’s predicted GDP growth rate of six percent is really an optimistic scenario. The average GDP growth rate of 6 percent has been predicted for developing economies, while in worse scenario, the growth rate is 4 percent.
Pham Huyen
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