Workshop examines economic transition

The role of State management in a market economy is to provide regulations for all economic sectors to develop instead of controlling and deciding production, distribution and prices, according to a workshop in Ha Noi on Tuesday.

The workshop, which was held by the Swedish Embassy and the Vietnamese Ministry of Planning and Investment’s Central Institute for Economic Management (CIEM) was part of a programme funded by Sweden on reviewing the role of state management in a transforming market economy.

Speaking at the event, head of CIEM Le Xuan Ba said the renewal of State management has seen positive changes, significantly contributing to the country’s socio-economic development.

However, he added that the country should strive to improve the State management’s efficiency for sustainable development during the global economic integration process.

“The Government should legislate to guarantee the rule of law concerning private ownership and contracts and primarily prescribe policy guidelines that foster economic growth.”

Ba said State management must also help deal with market failures such as asymmetric market information.

PhD Soren Haggroth, a senior advisor to the Swedish government from the Professional Management AB consulting company said the doi moi (renewal) programme launched in Viet Nam in 1986 had achieved impressive results after gradually decentralising decision making and promoting the importance of markets and prices in guiding policy.

“The inflation level was brought down and nominal interest rates were reduced, creating more stable investment conditions,” Haggroth said.

He added that trade reforms resulted in a rapid increase of foreign trade and investment as well as improvements in the Vietnamese people’s living standards.

“The balance between the market price mechanism and public regulations varies from country to country and also over time,” he said, adding that in practice, almost all countries today are mixed economies.

He said globalisation of the economy was likely to require new instruments of macro-economic management.

“Liberalisation of financial markets should be combined with strong measures to increase transparency and supervision of banks and other financial institutions.”

Despite successes in controlling inflation, Haggroth said a new institutional environment was needed to maintain price stability.

He suggested considering a strategy for further developing the country’s private sector and its ongoing process of equitisation.

Arne Svensson, president of Professional Management AB, said the public sector had not adapted to the changes in the Vietnamese economy.

“Effective macro management must take into account the role of the private sector and civil society and the need to create level playing fields for all actors,” he said.

Viet Nam enjoys strong economic growth but is hindered by small financial markets. It is necessary to attract more foreign investment by providing a transparent business environment in order to make use of the large potential for further economic development, said Svensson.

Senior economic expert Pham Chi Lan said that to improve the role of State management in the market economy, the Government should reduce public ownership while developing an effective mechanism to manage the macro-economy.

“The important task is figuring out how to develop the economy without depending on the State while encouraging all economic sectors to develop,” Lan said. — VNS