VietNamNet Bridge – Nguyen Dinh Cung, director general of the Central Institute for Economic Management, spoke to the Sai gon Economics Time about the next State reform.
What will be the focus for the State Reform this time?
This reform will be totally different from the 1986 reform. The focus of the previous reform was to encourage the development of the private sector. But this time, the focus will switch to the State. It will focus on redefining State functions; position and overall organisational structure – including the executive, legislative, judiciary sectors. It will also address government agencies' internal reforms.
In other words, the reform this time will be comprehensive.
What changes you would like to see?
The Ministry of Culture, Sports and Tourism builds museums, theatres, statues and others. We all know, Viet Nam is short on capital investment, yet we spend VND 10,000 billion to build a museum or build a series of theatres, football pitches in many localities around Ha Noi.
In my opinion, such construction investment was questionable.
If such a tendency keeps going on, overspending will become a heavy burden on tax payers. If there is an imbalance between the State revenue and spending, no doubt, we have to mobilise capital from other sources to fill the gap. So in my opinion, there is no other way to fix this, than to completely reform the functions of state agencies.
Please elaborate on the content of the reform, both in the State and in the marketplace?
Of course, the reform must be conducted in both the State apparatus and the market. But it should start with the State apparatus first.
Though we have a Law on Government Organisation, we seldom hear discussions about what structural changes are needed in the State. There are many overlapping positions that currently bridge different government agencies or functions, this should change. One rule we must follow- the executive branch should be separated from legislative bodies. But in Viet Nam it is not so. Last but not least, we have to reform our administrative tools.
It is important that the State be able to establish a free market ruled by law and based on fairness. At present, there are quite a few contradictions in how the Government intervenes in market prices.
For example, when the price of petrol dropped, taxi companies refused to lower their fares, the government then formed an inspection team and ordered taxi companies to reduce their taxi fares. Why did the government have to interfere in cutting down the taxi fare?
Or why does a delegation from the State Bank of Viet Nam get sent to provinces to promise to give them credit support? These things are against the principle of a market economy.
To further promote the market economy what should be changed?
First of all, there must be a change in our thinking. Secondly, what principles we choose to follow will serve as the foundation for our law making.
For example, if Viet Nam continues to prioritise the State-economy over the market economy, we won't be able to successfully reform or narrow down State owned enterprises.
If we continue to follow the principle of "owned by the people," I don't think that markets, particularly the property market, will see true reform. In a truly market economy, private ownership is essential.
In Viet Nam, at present, both collective ownership and private ownership are still widely practised. I would describe the situation as hindrance on both the State and the private market.
You have said that State should not intervene in market operations, in a recent poll conducted by the Viet Nam Chamber of Commerce and Industry and the World Bank, up to 70 per cent of the respondents expressed their wish to have the government intervention in commodity price control. What's your position on this?
The idea of having a stabilising fund to intervene in the market is wrong. A stabilising fund should be used to control inflation, not the price of a single commodity.
Regrettably, in our present society, whenever the price of an essential commodity goes up, for example, dairy products, people immediately ask for government intervention to lower the price. Such a demand goes against the idea of a market economy.