Practical actions for change

At this juncture, there is a strong public expectation for a breakthrough, fueled by the emergence of General Secretary To Lam, who is known for his clear thinking and decisive actions in institutional reforms.

Vietnam is also preparing for its next Party Congress, where these innovative developmental ideas will be reflected in the Party's policies and directives within its 14th Congress documents. This congress marks the start of the second phase of Vietnam’s strategic socio-economic development period.

The General Secretary not only presents fresh, distinct ideas but also identifies and directly addresses key existing problems with a straightforward and practical approach - “looking directly at the truth and speaking the truth.”

There are numerous areas requiring reform, and the General Secretary has chosen streamlining the political apparatus as the initial breakthrough. He has pushed for a shift in mindset, knowing that such a change will drive actions and introduce better policies rooted in Vietnam’s current realities.

He emphasized that institutional constraints are the bottleneck of all bottlenecks. Imagine driving on a five-lane highway that suddenly narrows to two lanes, with multiple checkpoints forcing stops. Complex laws, regulations, and cumbersome procedures have created countless bottlenecks, deterring investors and stifling business opportunities.

Why has the legal system become a bottleneck? The General Secretary has firmly called for an end to the mindset of banning what cannot be managed.

The risk of falling behind

With an estimated economic growth rate of 7% this year and next, Vietnam’s average GDP growth for the 2021-2025 period will be only 5.9%, slightly lower than the 6% of the previous period.

At this growth rate, Vietnam will struggle to meet its goals of becoming a high-income, prosperous country by 2030 and 2045. Achieving these targets requires consistent annual growth of 7-7.5% over the next two decades.

Historically, Vietnam’s growth has shown a downward trend. Over the 40 years of Doi Moi (Renovation), the economy grew at 7.6% during the first decade, 6.6% in the next, 6.3% in the third, and dropped to 6% in the fourth decade. This decline is alarming and highlights the urgent need for significant reform.

To achieve prosperity, Vietnam must undertake substantial changes, address reform pressures, and demonstrate a high level of determination.

Breaking institutional bottlenecks

To resolve institutional constraints, the following mindset shifts are essential:

First, laws must move away from the mindset of prohibiting what cannot be controlled. Instead of restrictive legislation, the legal system must focus on encouraging growth, creating opportunities, and fostering development.

Second, legal frameworks should be designed with clear development goals, not merely to follow rigid procedures. Laws must be goal-oriented to support citizens and businesses effectively.

Third, decentralization must be clear and decisive: “Local governments decide, implement, and take responsibility.”

Additionally, private enterprises must become the primary drivers of economic growth, not just “important contributors.” Economic growth must rely on the people, as their potential remains largely untapped. Currently, the private sector contributes only 10% of GDP, a figure that must be increased.

A new way of thinking

To achieve effective institutional reform, a new way of thinking is required.

Alongside streamlining the political apparatus, the legal system must also be simplified. This includes repealing redundant laws, particularly intermediary legislation, rather than merely adjusting specific regulations.

Over the next 2-3 years, the focus should be on eliminating outdated laws rather than introducing new ones. Independent experts, separate from ministries, will play a key role in this process.

Addressing institutional bottlenecks is challenging, but success will drive growth by unleashing the resources, innovation, and strengths of the entire nation. This process will heal longstanding issues within the bureaucracy and business community, restoring public trust.

While streamlining the apparatus has broad support, two key factors must be considered:

Ensuring there is no shortage of research and policy advisory institutions, as success often depends on effective research, forecasting, and advice.

Avoiding bureaucratic inertia, where officials become passive. Appointing energetic and decisive leaders to key positions is crucial.

Entrepreneurs and scientists are critical

For Vietnam to rise, achieve high economic growth, and establish an independent, self-reliant economy, it must develop a strong contingent of entrepreneurs and scientists. These two groups are interdependent.

Without advanced technology, the ability to absorb and transfer technology, and a robust private sector, an independent and self-reliant economy is unattainable.

Unfortunately, Vietnam’s private sector is weakening in both numbers and momentum. In recent years, not only have many businesses exited the market, but the rate of new business formation has also declined. The ratio of market entries to exits is nearly 1:1, far from the goals of 1.5 million businesses by 2020 and 2 million businesses by 2025.

Institutional reforms must go hand in hand with strengthening domestic enterprises, particularly private ones. Attitudes and actions must change to rebuild trust in the private sector. For instance, regulations such as restricting travel for tax-delinquent entrepreneurs should be reconsidered.

Similarly, scientific research must become more flexible, free from rigid procedures. Scientists should not need formal approval for minor changes in research titles or methods.

To develop science and technology, an environment conducive to talent and innovation must be created — an environment only achievable through institutional reforms, as emphasized by General Secretary To Lam.

Performance-based management, rather than process-driven management, will attract capable individuals and eliminate opportunities for incompetence.

Tu Giang - Lan Anh