Restructuring of Vietnam’s economy: vital for investment growth

The restructuring of Vietnam’s economy “will not be an easy task,” since it will affect many group and individual interests, concluded leaders, economists and businessmen at a seminar held in Hanoi on Dec 16.
Attending the seminar co-sponsored by Nhan Dan Newspaper, Ministry of Planning and Investment, the Ministry of Finance and the Central Bank of Vietnam were government officials, leading economists and businessmen of Vietnam.

The seminar also emphasized that in the case of a socialist-oriented economy of Vietnam it is vital to reduce state subsidizes and focus on greater investment growth.

According to Le Dinh Yen, former director of Centre for National Information and Socio-economic Forecasts, the restructuring of state-owned enterprises (SOEs), expected to start next year should be done methodically and in stages.

SOEs will be divided into three groups, with the government holding 65 to 75 percent stake in one group with no controlling stake in others.

The reform measures have not been officially approved but are expected to boost SOEs’ competitiveness which is extremely low compared with their FDI counterparts, he said

“The restructuring will be conducted at both macro and micro levels, and through long-term and medium-term plans”, said Nguyen Dinh Cung, vice Chairman of Central Institute for Economic Research and Study.

The government should concentrate on developing the SOEs operating in key industries like power, traffic, telecom, oil and gas, mineral extraction, fuel and construction, he said.

The restructuring of state-owned enterprises (SOEs) will require a total capital of 55 – 65 trillion dong (US$2.64-3.12 billion) for debt restructuring, handling of losses, and workforce rearrangement, Minister of Finance Vuong Dinh Hue told at the seminar.

“Though such a huge amount of capital can increase public debt and burden the national economy if reforms are not conducted effectively, the sum is essential to revitalize the economy,” Minister Hue added.

On the macro scale, the government will revise its policies, workforce and management of SOEs, while at the micro level SOEs’ operation mechanisms will be revised, stated Central Bank Governor Nguyen Van Binh.

He said that in 2012, banks working ineffectively will be stopped on track to avoid bankruptcy and ensure depositors rights.

The Government calculated that after restructuring of commercial banks, there will be 12-15 giant banks that will still control 80 percent of all financial activities.

The Government targets to have at least 1 to 2 state-run companies and banks at the East Asian level, and 10 to 15 state-run groups and corporations to lead the country’s economy during the period 2014-2015.
Saigon Giai Phong

Tags: Vietnam economic, Vietnam economic growth, Vietnam economy, Vietnam economy 2011