Authorities are rushing to finalize a proposal for developing the state economy with a focus on enhancing its efficiency. The plan must align with the constitutional provision that the state economy plays a “leading role” while also reflecting Resolution 68, which recognizes the private sector as “a most important driver” of the economy.

The Ministry of Finance defines the state economy as encompassing state-owned enterprises and credit institutions, public service units, the state budget, state reserves, off-budget state financial funds, land and natural resources, and other public assets, including infrastructure and public buildings.

Two options have been proposed:

Option 1 includes:
(1) State-owned enterprises and state-owned credit institutions;
(2) Public service units providing competitively priced, market-accessible services;
(3) Off-budget state financial funds with credit functions.

Option 2 expands to include:
(1) State-owned enterprises and credit institutions;
(2) Public service units;
(3) Off-budget state financial funds;
(4) The state budget and reserves;
(5) Land and natural resources;
(6) Other public assets such as infrastructure and public buildings.

At the August 6 meeting of the Steering Committee for the proposal, Deputy Prime Minister Nguyen Chi Dung supported Option 1, with possible selective elements from Option 2, but maintaining Option 1 as the core. This marks a notable shift in economic governance thinking, potentially addressing decades-long inconsistencies in defining the state economy and creating a level playing field among market participants.

Currently, the concept of the private sector or foreign-invested sector is clearly tied to specific enterprises competing in the market. By contrast, the state economy’s definition has been overly broad - mixing market participants with resources like the state budget, public land, and infrastructure, thus blurring the line between “player” and “referee” in the economy.

In 2017, citing World Bank data, the Ministry of Finance noted that globally, public asset value averages about four times a country’s GDP. In Vietnam, public assets far exceed GDP, with the state budget alone accounting for about 17-18% of GDP. Such massive resources, combined with institutional privileges, create structural imbalances between economic sectors.

The 2013 Constitution affirms the state economy’s leading role, but in a modern market economy, this means guiding with fair and transparent rules while using resources efficiently - just like any other sector.

Option 1 narrows the definition to measurable, market-participating entities: state-owned enterprises, state-owned credit institutions, competitive public service units, and off-budget financial funds with credit functions. Public resources like the budget, land, and infrastructure would be reclassified as national assets managed for the benefit of all economic actors.

This separation clarifies the state’s dual role as both manager and investor, avoiding the “playing and refereeing” conflict and fostering a fairer market environment. The aim is not to shrink the state’s role, but to position it as an equal market force alongside the private and foreign-invested sectors, accountable for efficiency, productivity, and value creation.

In a socialist-oriented market economy, the key question is not how much the state owns, but how it leads - what tools it uses and under what mechanisms. Defining the state economy in market terms sets the stage for further reforms, from public service unit restructuring to public asset management.

Vietnam faces significant productivity and competitiveness challenges. A strong economy must be transparent in roles, clear in responsibilities, and efficient in resource use. While Option 1 may not be the final solution, it opens the door to a new governance mindset - one where the state leads through transparent rules rather than market power.

Tu Giang