From manager to growth maker

In an article that outlines his line-up goals for 2011-2016, Prime Minister Nguyen Tan Dung highlights the need for the Government to transform from economic manager into growth maker as part of a broader effort to change prevailing perceptions about the proper balance between the State and the market. Below is an analysis of how to achieve this ambitious target.

In his article, Dung defines a growth maker as a Government that hammers out judicious plans for industrialization and modernization, cultivates a truly competitive business environment where all market players can maximize their potential and deepen global integration, and eradicates imbalances that can aggravate systemic risks and threaten Vietnam’s macroeconomic stability. According to Dung, this is precisely why the 11th Party Congress has identified nurturing fair market competition and fostering administrative reforms as the focus of Vietnam’s institutional transformation.

An institutional overhaul that enables the Government to capitalize on market forces and enhance global integration is indisputably vital. Also worthy of consideration is how the Government can operate with optimal efficacy once its new, presumably better structure is in place. After all, what really matters is not so much the Government’s structure as the efficacy with which policies are formulated and enacted.

First, an effective Government should seek to steer the economy to the harbor of prosperity and stability instead of seizing the paddles. There is a need to reconsider the State’s proper role in view of reality as well as democratic principles, with government officials turning from rulers into servants. This transformation entails institutional reforms that adopt corporate tenets and separate policymaking from public service provision. Policymakers must develop an all-encompassing vision that harmonizes conflicting interests whereas policy enforcers need to ensure rigorous implementation of that vision.

Second, the Government should yearn for more power decentralization and empower communities to tackle their own challenges. Communities will arguably act with more responsibility and efficacy when endowed with more power and a sense of ownership than when forced to merely carry out prescribed solutions. In fact, as societal needs become increasingly diverse and prone to changes, the central Government will probably find it hard to offer timely, efficacious responses. It will be much better to transfer some duties to local governments, which are more and more capable, flexible and proactive and face intense scrutiny from the populace. This move can also reduce the burden on the State’s coffers. In the end, the populace can benefit immensely from high-quality, low-cost public services and have more faith in the Government.

Third, policy output should take precedence over input. The flawed approach of allocating funds according to input data, such as the number of households that stay below the poverty line before a social aid program, must be eradicated. Instead, more attention can be paid to policy outcomes — for example, how many fresh graduates manage to land a job and by how much crime rates have plunged after an intervention program. This, in turn, will prevent budget spending from ballooning and translate into improvements in such indicators as education quality, crime rates and the number of poor households.

Fourth, market forces should prevail, with the Government reliquishing some control on service supply and helping to provide the best environment in which enterprises can thrive and nascent sectors are able to take off. At present, some government officials tend to flesh out and, where necessary, adjust their own rules for a market. Many consider their jobs as managers, rather than market builders. This perception is erroneous because the best Government should rely on market forces to incentivize various players to provide the necessary health care, training and security services, to name just a few.

Notably, unlike an enterprise, most government agencies currently have only a tenous grasp of whom they really serve as their financial supply does not come directly from their clients. If this problem is effectively addressed, with taxpayers correctly identified as valued clients, red tape can be obliterated and rulers turned into servants.
Fifth, prevention is better than cure. So far, focus has arguably been placed on treating existing ailments (chasing after criminals, cleaning up environmental hazards and so on). In the new era of governance, emphasis should be shifted to preventing such problems from rearing their ugly heads in the first place (for example: expanding clean water supplies, mapping out the legal framework for construction safety and fire fighting, enhancing enforcement of food hygiene and safety regulations, developing more vaccines and raising public awareness of how to reduce crimes and protect the environment).

To formulate policies with foresight, the Government may want to consider the following framework:
• Analyzing national and global trends.
• Diagnosing and pinpointing key problems.
• Identifying possible scenarios.
• Implementing a strategy to realize a scenario and policy goals.
• Determining a time frame for this strategy.
• Assessing the outcomes.
Institutional reforms are the only path to effective governance and require clear goals and specific programs. When it comes to meeting current and future needs, both fresh perspectives and new approaches to taking action are of paramount importance.

Source: SGT

Tags: Vietnam 2011 inflation, Vietnam economic, Vietnam economy, Vietnam inflation