Shifting from administrative commands to policy-driven mechanisms is vital for Vietnam's economic modernization, experts highlight.
VietnamNet presents Part 2 of the online roundtable titled: "Vietnam steps into the new era – an era of national empowerment".
Editor-in-Chief Nguyen Van Ba: We are delighted to introduce Ms. Pham Chi Lan, former Secretary General and Vice President of the Vietnam Chamber of Commerce and Industry. She is a member of the Prime Minister’s advisory group and the Business Law Implementation Task Force. With her extensive experience in policy advisory, especially in economic policy, Ms. Pham has made significant contributions in this field.
Also joining us is Mr. Nguyen Van Phuc, former Deputy Chairman of the National Assembly’s Economic Committee. With nearly 40 years in the National Assembly spanning both legal and economic sectors, he contributed to drafting three Constitutions: 1980, 1992, and 2013.
We are also honored to welcome Mr. Truong Thanh Duc, Director of ANVI Law Firm and a member of the Business Law Implementation Task Force and the Vietnam International Arbitration Center. Mr. Duc has actively contributed to economic policy advisory and legislative reform.
Recently, General Secretary To Lam delivered an important speech on combating waste, emphasizing that wastefulness dilutes national resources. How can we better allocate resources for development, given that resource distribution in many sectors remains driven by administrative orders rather than market signals?
Ms. Pham Chi Lan: This is a real issue in our country. After nearly 40 years of Doi Moi (Renewal), administrative-command methods seem to have increased and are out of sync with market signals and societal development.
This misalignment causes significant waste in resource utilization, with resources being inefficiently or excessively used. Even our most valuable resource - human capital - has not been adequately developed or invested in.
Editor-in-Chief Nguyen Van Ba: In your view, what perpetuates this mechanism?
Ms. Pham Chi Lan: This situation, in my opinion, arises from several factors.
First, we frequently discuss institutional reform, which is the foremost priority in the current period. It is essential to clearly define the roles and relationships among the three pillars: the State, the market, and society.
The State serves as the overall manager of the national economy. Even in the freest market economies, the State still plays a significant role by enacting policies, legal frameworks, and regulatory documents to govern and operate society. To promote or restrict certain sectors, the State primarily uses regulatory tools, such as tax policies or incentives, rather than prioritizing specific economic sectors for the common benefit of the nation, not for the advantage of any particular industry.
However, there remains ambiguity about what institutional reform should entail. In my view, the first step is a shift in mindset and awareness, leading to a clear delineation of the roles of the State, the market, and society. The interaction and mutual oversight among these three pillars are crucial.
We lack such a mechanism, resulting in resource allocation - entirely controlled by the State - becoming distorted.
Most of our country's resources, particularly vital ones such as land, minerals, and forests, are under the control of the State, owned by the State, or subject to allocation by the State.
Pham Chi Lan: Our country still maintains a habit of administrative command management. Photo by Le Anh Dung
In addition, the State holds vast financial resources through state-owned enterprises and state-owned commercial banks.
The State retains control over resource allocation, and the governmental apparatus is overly extensive, with hundreds of units at the central and local levels exercising this power.
With such a large apparatus, combined with a lack of clear delegation of authority and responsibilities at different levels, there is a tendency for abuse of power, often leading to the formation of interest groups to control resource distribution.
The second factor is that these agencies allocate substantial resources to their own sectors or monopolize excessive resources, leaving other sectors underfunded and unable to develop. This is an example of inefficient resource allocation.
The third factor is the ingrained habits within the state apparatus, which also calls for institutional reform.
Vietnam has transitioned to a market economy for nearly 40 years and has joined numerous free trade agreements (FTAs), including next-generation agreements like the CPTPP and EVFTA. These FTAs demand institutional reforms in alignment with the market economy structures of other member countries.
However, our country continues to rely on administrative command management. Governance remains primarily administrative rather than market-based, as commonly practiced in other nations. This habit is detrimental.
The State often skips crucial steps, such as conducting research, investigations, and impact assessments before deciding where and to whom resources should be allocated. Additionally, the State overlooks consultation with market stakeholders, social organizations, and citizens.
We have mechanisms like grassroots democracy, citizen oversight, and the voice of the press. If implemented effectively, these mechanisms can monitor both the State and the market, preventing the wasteful allocation and use of resources.
The market can also contribute to wastefulness when enterprises overinvest in sectors with little potential, leading to inefficiencies.
As lawyer Truong Thanh Duc pointed out, institutional reform is primarily in the hands of the State, as government officials are entrusted with the authority and responsibility to allocate resources.
Our mechanisms also grant authority to numerous entities and individuals, but the responsibility remains ambiguous. The lack of accountability is one of the significant weaknesses of our policy system. Inevitably, this system results in wastefulness.
Editor-in-Chief Nguyen Van Ba: Mr. Nguyen Van Phuc, how do you assess mechanisms and policies aimed at realizing the goal of a socialist-oriented market economy to better allocate resources?
Mr. Nguyen Van Phuc: I would like to revisit the evaluations and remarks made by General Secretary To Lam. First, General Secretary To Lam emphasized that the current level of wastefulness is enormous, unacceptable, and poses risks comparable to corruption, possibly even more damaging than corruption. The General Secretary has written a dedicated article on this topic.
I believe the General Secretary has correctly diagnosed the issue.
In recent times, how have we implemented mechanisms, policies, and laws to prevent wastefulness and promote thrift?
To address this, we have the Law on Practicing Thrift and Combating Wastefulness. According to this law, the government must submit annual reports, accompanied by verification reports from the National Assembly's Finance Committee, on the results of thrift practices and anti-wastefulness efforts to the National Assembly.
Our Party and State have always recognized this as a significant threat, causing substantial damage to the economy and the nation. Based on assessments by leadership and practical observation, we can see countless projects, structures, and hectares of land being misused or left unused. Wastefulness and losses are evident everywhere.
Nguyen Van Phuc: We must name specific projects and constructions because they represent tangible, not abstract, forms of wastefulness. Photo: Le Anh Dung
During my time as a National Assembly delegate, I was deeply concerned about losses and wastefulness. Many of my speeches and inquiries directed at ministry leaders focused on this issue.
Before one National Assembly session, I sent 19 pre-session letters to ministers and government agencies. I asked them to provide results on how their ministries or agencies were preventing losses and wastefulness, so I could use this as a foundation for my questioning during the session.
I received responses from all the ministers, but none were satisfactory. They all provided vague answers, discussing risks and principles but failing to identify any specific projects or major cases of wastefulness within their respective ministries or sectors.
During the session, I raised my questions but could not question all ministers and heads of agencies simultaneously. Instead, I chose to question the Minister of Planning and Investment and the Minister of Finance.
My question was simple: Does our statistics system calculate the proportion of losses and wastefulness relative to GDP? We keep discussing losses and wastefulness, but we need quantitative data and statistics, not just qualitative or anecdotal observations. Only agencies like the General Statistics Office, the Ministry of Planning and Investment, or the Ministry of Finance have access to such data.
Before responding, Minister Bui Quang Vinh whispered to me: "You're asking a tough question! How can I answer something this challenging?"
In his official response to the National Assembly, the Minister said: "That’s a difficult question. Calculating the national rate of losses and wastefulness relative to GDP is very challenging. However, difficult as it is, it must be done."
Unfortunately, subsequent ministers forgot my question and Minister Bui Quang Vinh's answer. To this day, I have not seen any official data on the proportion of losses and wastefulness to GDP in reports on the annual implementation of socio-economic indicators.
In addition to receiving annual reports from the government and the Finance and Budget Committee’s review reports on thrift and anti-wastefulness practices, the National Assembly also conducts supreme oversight on these issues.
When I served as Deputy Chairman of the National Assembly’s Economic Committee, the National Assembly conducted supreme oversight of losses and wastefulness in basic construction investment.
Those oversight sessions were groundbreaking. I believe Ms. Chi Lan still remembers how, at the time, data revealed that in some places, sectors, or levels of government, losses and wastefulness reached up to 30%, or even 50%.
During investigations, we questioned whether the figure was truly 50%, or something else. We insisted on specific, verified figures rather than estimates or assumptions like “maybe” or “approximately.”
Later, the oversight delegation confirmed that the 30% figure was accurate, and in some cases, it was even higher - possibly up to 50%. However, we only referred to "certain projects," "specific sectors," or "localities" without naming exact entities. Our oversight reports included appendices listing projects or constructions associated with losses and wastefulness.
Now, General Secretary To Lam has pointed out these issues explicitly, which I believe is entirely appropriate. General Secretary To Lam directly highlighted the 10 trillion VND anti-flooding project in Ho Chi Minh City, which has spanned several terms without progress, leading to immense wastefulness. He also mentioned two hospitals in Ha Nam that have been left unfinished for years, another example of excessive waste.
We must now clearly identify and name specific projects and constructions because they represent visible, tangible wastefulness, not just abstract concepts.
Of course, intangible wastefulness is also immense. For example, poor planning or unreasonable legal regulations can harm businesses, creating invisible factors that waste time, effort, and financial resources for enterprises.
Editor-in-Chief Nguyen Van Ba: So, what needs to be done now? How can we clearly distinguish the roles of the market and the State to allocate resources more effectively and prevent losses and wastefulness?
Mr. Nguyen Van Phuc: Perhaps this question shouldn’t be directed at me. Instead, ask the market, businesses, and the public because they can provide very precise answers. The market, businesses, and citizens know best how to implement thrift practices and combat wastefulness effectively.
From a market perspective, Ms. Chi Lan has already addressed this. Globally, as well as in Vietnam, it is affirmed that the market is the most effective mechanism for resource allocation, not the State. This has been proven—market mechanisms allocate resources most efficiently. Allocation must rely on market criteria, principles, and laws.
However, the market alone is insufficient because it has inherent flaws and cannot address all issues on its own.
We speak of a socialist-oriented market economy, but the market itself does not inherently possess a socialist orientation. In my understanding, the market is a platform for transactions and trade governed by objective forces. How can the market inherently have a socialist orientation?
It is the institutions, the policies of the Party, and the laws of the State that guide the market toward socialist goals.
The phrase "socialist orientation" is ensured through institutions, mechanisms, policies, and laws of the State. This perspective is accurate. Therefore, the correct terminology is "a socialist-oriented market economy institution," not simply "a socialist-oriented market economy."
The Party’s directive is to "perfect the socialist-oriented market economy institution," not to "perfect the socialist-oriented market economy."
In my view, the market is effective at resource allocation, but whether it aligns with the "orientation" or meets the "socialist goals" depends on the legal framework and mechanisms.
Editor-in-Chief Nguyen Van Ba: In many sectors, whenever the State steps back from the market, the market develops very quickly and robustly. There are numerous examples, such as the Khoan 10 initiative or the commodity market. These markets, when allowed to develop freely, grow healthily, and goods are never in short supply. In your opinion, should we fear the market?
Mr. Truong Thanh Duc: Even if we fear the market, we must still follow and live with it. In reality, the market is unparalleled; it is the universal key to adjusting everything. Of course, everything has its downsides, but the State only needs to handle a very small part of those downsides. The core principles of the market are flawless. If the market fails, it’s often because we ourselves have distorted it.
Truong Thanh Duc: Institutional reform means minimizing administrative intervention in the market. Photo: Le Anh Dung
Pursuing a "market economy" signifies that we have reformed institutions, allowing our nation to transform and rise like a phoenix. This complete change astonished the world, paving the way for us to stand on the threshold of a new era. By resolving institutional bottlenecks and breaking free from constraints, the nation will naturally and confidently step into a period of national resurgence.
Clearly, a market economy ensures the most abundant supply of goods, the quickest response to demand, and the most efficient and cost-effective operations. It lowers both costs and prices. If prices are excessively high, it’s no longer a true market. For instance, the high price of gold does not reflect market principles.
Another example is the shortage of face masks during the COVID-19 pandemic. While shortages were expected, they were exacerbated by incorrect policies. Face masks are not a commodity the State needs to regulate, price, or distribute. To prevent shortages, production and exchanges should have been ramped up, even bypassing certain regulations to ensure availability.
The market today objectively, swiftly, and accurately reflects the policies and institutions we establish. As Nguyen Van Phuc pointed out: “Success or failure is determined by the institution.” Incorrect or unreasonable intervention will result in adverse effects. As Chi Lan observed, we have often acted counter to, or improperly implemented, market principles, leading to a "non-market" approach.
The market has its own principles and laws, naturally achieving optimal balance. However, excessive intervention distorts the market, inevitably provoking negative reactions.
Institutional reform now requires ending or significantly reducing direct administrative intervention in the market. Instead, intervention should be conducted through mechanisms, policies, and economic tools.
Ms. Chi Lan emphasized that intervention should be through laws, not administrative tools. Unfortunately, we have used laws to create administrative tools for intervening in the market.
The State should intervene only to address market failures. In the most advanced and long-standing market economies, the State still intervenes but minimizes negative intervention while maximizing positive intervention.
For example, my daughter once tried to buy a tael of gold but couldn’t. Market intervention should mean adjusting the market, not opposing its principles. Respect and align with market laws, as they are not inherently wrong. By accepting and adapting to market laws, a functioning market is ensured.
In my view, no great genius, no powerful force, and no superpower state can replace the role of the market. However, the State is an extraordinarily vital factor.
The lesson from decades of reform is that when the State took a single step, such as implementing the Khoan 10 initiative, allowing farmers to freely cultivate and trade, our country achieved a surplus of rice.
Uncle Ho’s principle of “Three Builds, Three Fights”: Fighting bureaucracy, wastefulness, and embezzlement. Photo: Hoang Ha
Ms. Pham Chi Lan: It is true that the market, by itself, does not inherently align with a “socialist orientation.” The State provides a legal framework to adjust and address the market’s deficiencies.
What I want to emphasize is that, as the civilized world continues to evolve, the market itself develops its own rules alongside the common legal frameworks established by the State.
For example, corporate social responsibility (CSR) standards have been widely adopted by businesses. Companies failing to meet these requirements cannot export to advanced countries.
When Vietnam first signed the Bilateral Trade Agreement with the United States, Vietnamese enterprises in export sectors such as textiles, footwear, and seafood had to adopt CSR standards to prove their commitment to customers, thereby boosting their exports.
Later, realizing that CSR alone was insufficient, businesses and business organizations began implementing new standards like ESG (Environment, Social, and Governance). These standards demand transparency, integrity, the absence of corruption or bribery, and adherence to ethical and cultural principles within corporate governance.
This forces businesses to continually enhance the quality of their operations, meeting market expectations that prioritize environmental protection, social responsibility, robust governance systems, transparency, accountability, and integrity.
Uncle Ho’s principle of “Three Builds, Three Fights” remains highly relevant today. The Three Fights include:
Fighting bureaucracy: The State is inherently bureaucratic, often detached from the needs of society and the market. This can lead to errors in the utilization and allocation of resources.
Fighting wastefulness: This addresses the mismanagement of the nation’s resources. Despite Vietnam’s historical description as a land of “golden forests and silver seas,” wastefulness has long been a critical issue.
Fighting embezzlement: Bureaucratic systems that lack proper oversight foster wastefulness and pave the way for embezzlement. These principles, established by Uncle Ho, remain entirely valid in addressing today’s challenges.
Fighting bureaucracy is essential because the State, by nature, is prone to bureaucratic tendencies. As a bureaucratic system, it often fails to fully understand societal demands or the dynamics of the market, leading to potential errors in resource utilization and allocation.
Fighting wastefulness addresses the critical issue of mismanaging the nation's resources. Even in the past, when Vietnam was often described as a land of “golden forests and silver seas,” wastefulness was already a pressing concern.
Fighting embezzlement targets the lack of oversight inherent in bureaucratic systems, which not only results in wastefulness but also fosters corruption and embezzlement.
These principles remain entirely valid and critical to addressing contemporary challenges in governance and resource management.
Today's market objectively and accurately reflects our policies and institutions. Photo: Hoang Ha
Mr. Nguyen Van Phuc: I suggest distinguishing between combating wastefulness in the public sector and in the private sector, as the degree and approach differ significantly.
We have the Law on Practicing Thrift and Combating Wastefulness, which is mandatory for the public sector. In contrast, for the private sector, it is only advisory. Yet, the private sector has often been more successful in combating wastefulness than the public sector.
In the private sector, combating wastefulness is directly tied to production costs and pricing. This is why the public sector should learn from private-sector management models to develop effective solutions and approaches to practicing thrift and combating wastefulness.
Public-sector wastefulness stems from issues such as poor awareness, bureaucratic inefficiency, and, as Ms. Chi Lan pointed out, shortcomings in both the legal framework and its enforcement.
In the private sector, wastefulness is more often a result of financial or technological constraints rather than a lack of awareness. Private entities are constantly calculating how to minimize costs to the greatest extent possible.
In households, parents remind their children, and children remind their parents, to turn off lights and fans when leaving the house. These simple behaviors should also be adopted in public-sector management. The State and public sector must begin with reforms in institutions, laws, planning, and project implementation. Currently, regular expenditures account for 70% of the total budget - a figure that is excessively high.
General Secretary To Lam has raised critical societal concerns and demands. Public assets belong to the people, and the misuse or wastefulness of these assets causes widespread frustration and sorrow among citizens.
Recently, during a meeting of the Vietnam Fatherland Front, where I am a member of the Central Committee, I addressed the issue of combating wastefulness: "One of the most significant responsibilities of this term's Fatherland Front is to oversee and provide social feedback on the development and implementation of institutions to combat wastefulness. The Front must scrutinize and provide feedback on each specific project and construction. Combating wastefulness must begin with the concrete actions of every individual in every organization."
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