2012 a transitional year for Vietnam’s economic restructuring

This will be an important transitional year for Vietnam to implement its plan on restructuring the economy, with the main focus put on the state-owned enterprises, Deputy Minister Hoang Trung Hai said at a conference yesterday.
The other two major tasks are the investment and finance-banking restructurings, the deputy PM told delegates at the Economist Conferences’ Vietnam Summit in Hanoi yesterday, which gathered business leaders and academics to debate and discuss issues critical to Vietnam’s economy.

Hai said that while Vietnam does not underestimate the risks facing the economy at a time when the global economy is unpredictable and fluctuating, the country still has a bright outlook on its potential for economic growth.

Speaking with Charles Goddard, head of the Economist Intelligence Unit’s editorial team in Asia-Pacific, on the SOEs restructuring, Deputy PM Hai said that although the country’s economy is still in an unstable state, with high inflation and a wide trade deficit, it still can be said that the Vietnamese government has gradually stabilized the macro-economy.

“Businesses want to see immediate results from the government measures to curb inflation and stabilize the macro-economy, but it takes time to finalize this progress,” Hai was quoted by newswire Saigon Times Online as saying.

He said that although the full-year figure of inflation last year was more than 18 percent, figures recorded in the last six months of 2011 showed that inflation was on the decline.

Meanwhile, Vietnam enjoyed a balance of payment surplus of US$2.5-$3 billion, and foreign reserves increased against the narrowed trade gap, he added.

Hai said the government will create more effective measures to further narrow the trade deficit, while promising that the top priority is macro-economic stabilization, rather than economic growth.

Regarding the SOE restructuring, Hai said the number of state-run enterprises was reduced from 6000 to 1,069 companies last year, and the government is targeting to bring the figure down to 650 by 2015, and even lower by 2020.

The restructuring is aimed at increasing SOEs’ operational effectiveness and creating a more equal environment for their operation compared to their private counterparts, he said.

He said many factors have affected the process of restructuring the SOEs in the past, and the government has learned from these experiences.

For instance, in regards to the proposed plan to put certain SOEs up for sale under the process of restructuring, some insiders objected, saying the sales cannot be conducted with high prices.

“However, the SOE restructuring is not intended to gain high profits, but to create a more effective administrative system and healthier competition environment,” Hai said.

“Increasing SOEs’ competitiveness is the government’s final target in the restructuring.”

Hai also admitted that local businesses, both in the public and private economic sectors, have low competitiveness.

“This will hinder the country’s development in the future.”
Tuoi Tre

Tags: Vietnam economic, Vietnam economic growth, Vietnam economy, Vietnam economy 2012