VietNamNet Bridge – Institutional reform is now an urgent need for Vietnam to overcome the current critical situation, said economists and corporate leaders at a conference held in Hanoi last Thursday.

“The greatest challenge for Vietnam is not the economic issue, but the institutional issue.

Institutional reform… is the key issue,” said Vo Tri Thanh, vice president of the Central Institute for Economic Management (CIEM), at the conference “Vietnam: retaining stability, enhancing the competitive edge, and reaping the growth potential.” The event was organized by the State Bank of Vietnam and the International Monetary Fund (IMF).

He remarked Vietnam had become more open-minded, but the decision-making process remained lengthy. “Therefore, institutional reform in order to enhance transparency and accountability is the most important issue,” he stated.

Dominic Scriven, managing director of Dragon Capital Fund, said Vietnam should make good use of the Constitution amendment to address the institutional issue. He observed that it is very brave of Vietnam to amend the Constitution. This is no easy task, but it is a very good chance for Vietnam to resolve the institutional issue.

In the future, Vietnam will have troubles with the lack of infrastructure, human resource, agriculture, immigration, social security and climate change, which have been pinpointed by the Asian Development Bank, the World Bank and the Government, said Thanh.

Meanwhile, Alfred Schipke, chief of the Asia-Pacific Division under IMF, was quite optimistic about Vietnam in the context of global uncertainty.

He noted that Vietnam does not fall into a tragic situation as some other countries do with zero growth and high public debt.

Moreover, with still great potentials and demographic diversity, Vietnam would have opportunities to grow well again, if the country managed to achieve macroeconomic stability and successfully restructure the State economic sector.

Scriven complained that he himself and other businessmen had difficulties investing in Vietnam lately. “We, the businessmen, are really confused ... The recent 3-4 years is the worst and the hardest time in my 20 years in Vietnam.”

He revealed Dragon Capital was considering shifting investment to Myanmar or Qingdao, China.
Thanh described Vietnam as the world’s most ambitious country when striving for a variety of goals such as macroeconomic stability, higher growth, institutional reform and negotiations over international trade agreements at the same time.

He wondered: “How can we harmonize economic reform at home with the integration process in the context of limited resources?” No one at the conference was able to answer his question.

In related news, at a business forum themed “Reform to survive and grow” held by Sai Gon Tiep Thi newspaper in HCMC last Thursday, experts said the economic restructuring program had not got into the root of the matter.

Nguyen Dinh Cung, vice president of CIEM, said a number of policies were issued for the sake of a certain group rather than the entire economy. Resources are being allocated unreasonably, making the business environment increasingly unhealthy.

“It seems an invisible force is trying to restore and maintain the status quo of resource allocation,” said Cung. “I personally do not believe the measures for helping enterprises are successfully implemented,” he added.

Tran Dinh Thien, director of the Vietnam Institute of Economics, stated the economic growth model of Vietnam had proved inappropriate decades ago, but this fact was overshadowed by the prolonged, yet sustainable, economic growth. In recent years, the economic growth model has shown uncertainties such as reduced growth rate, large trade deficit and high inflation.

To successfully restructure the economy, Thien said Vietnam should adopt a new growth model. Changing the mindset of growth and taking more drastic actions, Vietnam will be able to avoid and escape middle-income trap.

The primary motivation is to promote development of the private sector with three pillars: application of high technology in production based on human resources with professional skills and promotion of international links.

Source: SGT