Market-based reforms imperative, says minister

Market-based reforms imperative, says minister

Minister of Planning and Investment Bui Quang Vinh, in a year-end exclusive interview with the Daily, said market-based reforms must be introduced in 2014 to spur growth, and there is still much room for such transformation.

“There is still much room for us to exercise reforms to bolster growth. We can pursue what the world has done,” Vinh told the Daily.

“What concerns me the most is how to launch institutional reforms. That must be the market-based institutional reforms. The market-oriented economy creates objective principles to allocate resources to the most effective sectors,” he said.

Vinh said that the market economy is among the top values ever conceived by the humankind, so those areas in the local economy that have yet been driven by the market forces must be realigned, such as pricing for certain commodities, so as to nurture market competition.

“What is important is to expand the playground for private enterprises, and for all,” he stressed.

Vinh explained that in the current context of scarcer capital sources, a key measure is to attract investment from the local private sector and foreign direct investment for development.

“What I desire the most for 2014 and 2015 is to have radical reforms. Without reforms, Vietnam will face difficulties; we can control inflation, but we won’t be able to create strong growth,” he said.

Several other high-profile economists second Minister Vinh’s viewpoint.

Nguyen Dinh Cung, director of the Central Institute for Economic Management, said there must be institutional breakthroughs for development.

Institutional reforms must be conducted in such a way that widens the business scope for enterprises, enhance the market economy and facilitate international integration, Cung said.

He explained that such reforms should encourage the development of those profit-generating sectors, create added values via management reforms and technological renovations.

The leader of the think-tank asserted that there is still much room for such reforms in both policy making and action programs to create a business environment ever seen during the 2000-2004 period when entrepreneurship was boosted.

While advocating the market-based principles, Cung stressed the need to engage State-owned enterprises (SOEs) in such reforms. For instance, he said, the State must demand a profit ratio at SOEs at least equal to the capital cost on the market.

“When SOEs face difficulties and fail to maintain equities, or when they fail to pay debts upon maturity, then the management must be dismissed. There must not be State intervention to freeze such debts or to underwrite bond issuance schemes by SOEs,” Cung said.

“Let the harsh market rules punish any enterprises who do wrong in business management and governance,” he said.

Tran Dinh Thien, head of the Vietnam Economy Institute, pinpoints four essential commodities whose pricing is not based on market rules. These are energy prices (electricity, petrol, and coal), land prices, interest rate and foreign exchange rate, and wages, which all do not observe market principles.

Thien said that no one dare make changes to these four types whose pricing is all governed by the State via administrative measures. “As long as these four are not changed according to market rules, the economic restructuring program cannot be realized,” he said.

Thien seconded the view by the Minister of Planning and Investment, saying the market must be further opened to pave the way for genuine competition, besides “marketizing all prices.” Otherwise, the country will have to pay a dear price, he said.

vietnamnet