PM Nguyen Tan Dung has sent a New Year message
emphasizing the central tasks of 2012, which include economic restructuring,
growth model renovation, fast and sustainable development.
IMPROVING THE INSTITUTION OF
SOCIALIST-ORIENTED MARKET ECONOMY, ACCELERATING THE RESTRUCTURING OF THE
NATIONAL ECONOMY AND GROWTH MODEL RENOVATION
The core economic ideology
spreading throughout the documents of the 11th National Party Congress is
restructuring the national economy, renovating the growth model, and securing
fast and sustainable development. The premise for successfully realizing the aforesaid
orientation is the effective implementation of the three breakthroughs we had
adopted, of which perfecting the institution of the socialist-oriented market
economy constitutes, on the one hand, a key move that would directly affect the
process of economic restructuring and growth model renovation, and, on the
other hand, a task that does not require huge financial resources. The task can
be fulfilled within a relatively short period of time once we have right
understanding and single-minded determination.
I
After 20-year implementation of
the renewal guidelines, our country has gained important achievements in
building institutions of the socialist-oriented market economy. As a result, we
have mobilized various resources for national development, attained high growth
rates, created lots of jobs and improved people’s living conditions.
However, the institutions of
the market economy have yet been fitted and elements of the market economy have
yet taken shape fully. The land market remains imperfect. The financial market
has been developing in an imbalanced manner, the bond market has just been
born, and the securities market is operating one-dimensionally, yet turning
into an important capital mobilization channel for the national economy, so all
burdens are being shouldered only by the credit market, making it vulnerable.
The science and technology market has developed slowly. The labor market,
though formed relatively perfect, is featured with low human resource quality
and the irrationality in salary among sectors has created a big barrier for
labor movement to the key sectors of State management and the areas providing
public services. Prices of a number of commodities and services are not enough
to compensate for costs, and yet regulated by market rules, thus hindering the
attraction of resources and high technology for development.
The institutions of the market
economy are a perfect whole consisting of various markets operating
synchronously within it. A single market of which that fails to fully develop
will hold back the evolvement of other markets and impede the overall movement
of the market economy. In that context, administrative interference in economic
phases will probably be taken. Such interference may help remove immediate
difficulties but its cost will be much more than opportunities it generates and
the development process will consequently be derailed. As a result, basic
issues are yet solved. This can be seen as a paradox in the way of thinking
that those involved in management work must gain a thorough understanding for
taking actions in a right and consistent manner.
This reality, therefore,
indicates that in 2012, all-out efforts should be focused on making the
institutions of the market economy complete as defined by the 11th National
Party Congress.
In the time of globalization
and fierce competition, what we should do for our country to speed up growth
and narrow the development gap with other regional countries is to build modern
institutions for the market economy that will facilitate the movement of
resources within sectors and to different zones across Vietnam towards signals
sent by the market with respect to the average profit axis, thus ensuring the
economy grows in a harmonious and balanced way. This will stimulate businesses
to develop their human resources, apply and create new production and
management technologies, create dynamic competition advantages to earn them
profits that are far greater than that of other business entities, thereby
pushing up the relatively continuous movement of investment structure and
production, to create an economy with a high degree of creativity and many new
products and ensure the efficiency and competitiveness of the economy. This is
dialectical understanding of development.
We should take features of
institutions of a modern market economy as standards for our process of
perfecting institutions. Below are basic features:
First, all types of markets
develop synchronously with elements of the market economy being shaped
comprehensively, operating harmoniously, supporting each other, and interacting
in a perfect whole. This is the premise to allow the market to operate smoothly
and all resources to move freely and to be allocated properly and effectively.
In 2012 and the following
years, the Land Law must be amended to create conditions for the establishment
of the land market, beef up the healthy development of the real estate market;
develop the bond market, expand the insurance market; strongly develop the
science and technology market. Speed up the training of human resources,
particularly high-quality workforce in combination with reforming salary
mechanisms to facilitate the smooth operation of the labor market. To be
consistent with the roadmap to let market rules decide the prices of State-controlled
commodities, etc.
Second, institutions of a
modern market economy requires the establishment of an equal competition
environment for participating entities. Competition is part of the market
economy and constitutes as one of the criteria measuring the marketableness of
the economy. A highly competitive market will help control prices better than
the State does. The important thing is that competition forces businesses to
reduce production costs, raise productivity, and ensure efficiency. The
Government will review and evaluate the level of competition in each area of
production and service, abolish discriminatory treatment that still existed in
reality between businesses of different economic sectors. Improve legal
legislations on competition and natural monopoly; enhance the capacity of
intellectual property and competition management agencies in addressing
unhealthy competition cases and cases that take the advantage of their dominant
position in the market to deter competition.
Third, explanatory
responsibility for management policies, development projects as well as
operations of business entities must be publicized and taken in a transparent
manner. Market economy institutions, impacts stemming from the open door and
integration process in combination with the formation of a multi-ownership
architecture and a multiple economic entity structure will lead to the shaping
of “interest groups”. Objectively, these “interest groups” may affect the
decision making process. Transparency and overtness not only create equal
opportunities for all to gain access to information, but more importantly,
encourage transparency and overtness and highlight explanatory responsibilities
and create conditions for people to supervise decisions made by management
agencies. It is a fundamental measure to prevent corruption and influences of
“interest groups” in the decision making process to ensure that decisions are
made under “common values”, for the sake of the country. Transparency and
overtness will also reduce speculation and business costs while improving
market effectiveness.
Over the past few years, thanks
to the enforcement of the Law on issuing legal documents as well as Q&A
sessions of the National Assembly and the People’s Councils at all levels, we
have made great strides in implementing transparency and overtness, and
carrying out explanatory responsibility of State agencies. However, the above
results have yet met the requirement.
From the Party and State’s
political stance of ensuring people’s rights of accessing information and
participating in social debates, the Government will study and perfect
regulations on the publicizing of information and the right of information
accession, while enhancing dialogues on policies and development projects
between State agencies and independent experts and people, not only in the
post-decision making phase as we do at present but more importantly in the
pre-decision making stage. The quality of Q&A sessions continues to be
renovated and improved, focusing on development policies and their impacts on different
walks of life.
Fourth, modern market economy
institutions in the context of increasing and deepening globalization and
economic integration require the redefinition of relations between the State
and the market. Accordingly, the State will shift from directly interfering
into economic processes to creating opportunities for development: ensuring
macro-economic stability, creating a favorable environment for business and
investment; creating development mechanisms and bettering the quality of public
services.
A challenge emerged for State
management agencies in the context of globalization is that each change on the
global market will quickly and strongly affect domestic market. Thus, it is
necessary for the State to improve its forecast capacity and policy response in
order to mitigate negative impacts on the national economy. The market economy
and globalization also put certain groups of people at risk, deepening the gap
between the rich and the poor. The State needs to issue right policies and use
regulatory tools to overcome the negative sides of the market economy and
globalization so as to ensure economic growth and social progress and equality.
It is affirmable that market operates on its rules, firstly the rules on
competition and the rules on profit. The socialist-oriented development is a
function of the State. The State, on the one hand, needs to promote the
“self-regulating power” of the market and, on the other hand, “neutralize”
negative impacts of the market to secure development orientations to go on a
right track. Whereby, the role of the State will not shrink but be boosted on
the grounds of new influential methods and new contents.
We should base on basic stances
on building the law-governed socialist State defined by the 11th National Party
Congress to perfect the State apparatus at all levels in terms of its function
and organizational structure, and regulations on decentralization, and handle
correctly relations between the State and market.
Fifth, a modern market economy
institution must serve consumers as its subject. It is necessary to
continuously perfect legal regulations to protect consumers’ interests, set up
centers for consumers protection. The Government will focus on improving
technical, hygiene and food safety standards; expand inspection of imports and
commodities circulating in the domestic market; introduce more sanctions to
strictly punish offenders; review and finalize legal documents on detailed
implementation of the Law on consumers protection; build a legal basis for
encouraging the development of non-governmental organizations specializing in
consumers protection.
A modern market economy
institution with the above features will help the country make full use of
opportunities and overcome challenges in the world where globalization is
broadening and competition is fierce.
II
When we say strategic
breakthroughs provide premises for economic restructuring and growth model
renovation, it does not totally mean that the breakthroughs must be all
achieved before conducting the restructuring process. Premises have all taken
shape and will be perfected during the development process. Economic
restructuring is undertaking in a relatively continuous manner under the light
of the science and technology revolution and the movement of competitive
advantages among nations as well as within each business. From that perspective
and based on the vision of the 2011-2020 socio-economic development strategy,
the 3rd meeting of the 11thParty Central Committee had set the target of restructuring
the economy and renovating growth model right in the first five year
development plan for 2011-2015.
The objective of economic
restructuring and growth model renovation is to speed up the transformation of
economic and sectoral structures in order to increase productivity, quality,
efficiency and competitiveness on both domestic and international markets to
enable local producers to join in certain stages of the regional and global
production network and value chain. With this objective, the process of
economic restructuring will be proceeded as follows:
First, restructuring the
manufacturing and service sectors. In the industrial sector, the assembly and
outsourcing industries with a low degree of scientific and technological
application and low added value will be turned into value-added manufacturing
and processing industries, and the focus will be placed on developing auxiliary
industries and some high-tech products to tap our country’s potentials and
advantages.
Raise the quality of service
sectors, particularly the “blood vessels” of the economy like financial
services, improving governance skills and providing risks protection and
security for the entire service system. Develop highly valued-added services,
business support services, renovate mechanisms to encourage the development of
and improvement in the quality of public services.
In agriculture, mass production
agriculture will be developed with high productivity, quality and efficiency;
combining agricultural development with the building of new rural areas and
improvement of people’s living standards. Apply scientific and technological
advances in all stages of agricultural production, from cultivation, harvest,
preservation, processing to distribution. Combine the application of scientific
and technological advances with the organization of production, development of
mega production models, and gradual establishment of high-tech
agricultural-industrial complexes; linking various stages of reproduction
process in the same value chain in order to ensure harmonious distribution of
interests between stages. This is the basic road for agriculture to achieve
sustainable development.
Second, for business
restructuring. Macro-economic policies pave the way for economic restructuring,
which, however, is implemented in each enterprise. Restructuring enterprises
provides a foundation to create a new facet for the national economy. To
restructure an enterprise, the latest scientific and technological advances
must be applied in production and management, corporate organizational
structure and management methods must be renovated in accordance with changes
in production technologies and the evolvement of the market so as to increase
the enterprise’s competitiveness.
Third, for adjusting market
strategies. Globalization and economic integration open up vast markets for
businesses and enhance their capacity of making the best use advantages brought
by the scope of their investment projects and product consumption power.
However, globalization also increases the inter-dependence of economies,
particularly those with wide openness like Vietnam. This may lead to unexpected
instability to occur, sometimes beyond men’s forecast. Thus, it is necessary to
diversify products and export markets, reduce the dependence on a few markets,
while attaching importance to the domestic market, particularly rural areas.
For export markets, the important thing is not only the expansion of export to
every country and territory but also the penetration into value chain in the
context that that global production network and global value chain are growing
intensively. So, it is essential to form a supply chain right in the domestic
market. This is the way for sustainable development of trade.
Coupled with the restructuring
of the aforesaid fields is the restructuring of investment for socio-economic
infrastructure development in line with a planning scheme and a
decentralization system that are closely controlled with long-term and
inter-regional vision. Scattered investment should be address to focus capital
on key projects to put them into service as soon as possible, thus facilitating
the smooth movements of production elements to zones with growth potential in
order to reduce transport costs and raise the economy’s competitiveness. Lower
public investment ratio; perfect mechanisms encouraging investment from the
private and foreign funded sectors, develop investment models, especially the
public-private partnership-PPP, and improve investment efficiency.
The content of economic restructuring
must be implemented throughout the industrialization cause. However, it should
begin from the most pressing fields, like investment structure (focusing on
public investment), the financial market (focusing on commercial banks), and
State-owned enterprises (focusing on economic corporations and groups). This
orientation is right and vital because these fields have low efficiency in
comparison with the resources they were allocated, and contain hidden risks
against the macro-economy. The restructuring of these sectors will help boost
the overall content of restructuring.
The Government is closely
instructing the building of restructuring plans for each sector. These plans
will be carried out drastically under an integrated process for each stage with
specific targets. Criteria for measurement and evaluation will be defined. It
requires that the restructuring of these sectors must be deployed synchronously
because of their inter-dependence, at the same time, supervisory work will also
be expanded in all ministries, sectors, localities and enterprises. The
macro-economy must be sustained without big disorders.
Economic restructuring requires
the renovation of growth model. On the contrary, growth model renovation is a
basic content of business restructuring, and a condition for raising the
productivity of capital use, and the efficiency and competitiveness of the
economy. Growth model renovation strongly affects the restructuring of
investment structure and financial market, contributing to the reduction of the
costs of restructuring process.
Growth should be shifted from
width, which was based on investment increase and exploitation of increasingly
exhausted natural resources, and low-quality human resources, to depth, which
is rested on scientific and technological advances, high-quality workforce, and
modern governance skills; maximize the contributions of all factors to growth.
Develop manufacturing and processing industries, especially high-tech fields
with high added value, reduce the labor-intensive proportion in the total
industrial production value.
The renovation of growth model
is both an urgent requirement and a long-term task, which has close relations
with human resource development and process of renovating production and
management technologies. To accelerate the renovation of growth model, in 2012,
beside the early adoption of the project on developing technology market, the
Government will promulgate policies to encourage technological renovation in
enterprises; define technical standards in the Law on Public Investment and
bidding projects; encourage projects applying new technologies or incorporating
the establishment of technology R&D centers; enhance public-private
partnership in setting up hedge-funds for technologies, etc. Issue legal documents
for the development of supporting industries.
Along with economic
restructuring and growth model renovation, in 2012, it is necessary to continue
grasping thoroughly the guiding stance of the Politburo’s Conclusion 02 and the
Government’s Resolution 11 to consolidate macro-economic stability, control
inflation, maintain reasonable growth, and ensure social welfare. They are hard
tasks, particularly in the face of complicated fluctuations of the global
economy, thus it requires gigiantic efforts by all sectors and levels. In this
case, the State takes the role of paving the way, issuing mechanisms and
policies, and organizing the implementation of such mechanisms and policies and
each business must play its decisive role in implementing those tools as the
overall final outcome will be reflected in their performance.
We have created a high
consensus among the political system and gained strong determination from State
agencies from central to local levels and business circle as well, which are
our basic advantages. Now, it is time for us to turn understanding and
determination into concrete actions. We need to act drastically to overcome
inertia of the warm-up stage, launching the country’s development process into
a new orbit - the Orbit of sustainable development.
VGP
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