VietNamNet Bridge - “Vietnam has 64 independent economies, including 63 local economies and one central economy,” commented Tran Dinh Thien, head of the Vietnam Economics Institute.

Thien’s comment showed the separation and lack of cooperation of different regions in the national economy.

The economist emphasized that the ‘local economy’ mechanism has installed obstacles that hinder the economic development.

The economic system based on provinces’ boundaries has been causing a big waste of resources for development. This is the germ of the unhealthy competition among cities and provinces, encouraging them to ‘compete to die’.

It is an unreasonable scheme which encourages cities and provinces to run the ‘industrial park race’ and ‘seaport race’ to attreact investors. 

“Vietnam has 64 independent economies, including 63 local economies and one central economy,” Tran Dinh Thien, head of the Vietnam Economics Institute.

They accept to offer high investment incentives, which, in many cases, go beyond the incentive framework set up by the government, just to get the investors’ nod to set up factories in their localities.

The unhealthy competition could spoil the nation’s rules and distort foreign direct investment.

An expert commented that by offering high investment incentives to foreign investors, local authorities seem to ‘devalue’ themselves, while they place big difficulties on other provinces.

The expert went on to say that the ‘localization’ in economic development has damaged the rules of the market economy and spoiled the principles of healthy competition.

He said that some months ago, the local authorities of a province in the central region released a document requesting local agencies’ officials and people to drink locally made beer instead of using the products made by the breweries in other provinces. 

Meanwhile, local people in another province were ‘encouraged’ to use cement products made by local plants.

Head of CIEM Nguyen Dinh Cung also commented that the mechanism on allocating resources to 63 local economies is unreasonable.

“We need a market with healthy competition, not a distorted market like now,” Cung said.

However, economists, while strongly recommending to adjust the mechanism, admitted that this would be difficult.

Vo Dai Luoc, general director of the Asia-Pacific Economic Center, noted that provincial authorities now have big power.  It would be not simple to create a policy on regional links under which the provincial benefit is put second to regional benefit. 

“The Central Economic Committee would have to confront inertia when dealing with the problem,” he warned, suggesting that it would be better to build up the law on regional links. 

PL TPHCM