Experts pinpoint Vietnam’s hurdles to market economy
They raised the point at the seminar held to review a report on Vietnam’s market economy development progress. The report was prepared by a research team from several agencies such as the Central Institute for Economic Management, the Vietnam Institute for Economic and Policy Research (VEPR), the Vietnam Institute of Economics (VIE), the Vietnam Chamber of Commerce and Industry (VCCI) and Friedrich-Naumann Vietnam.
VEPR director Nguyen Duc Thanh said Vietnam’s economic freedom score is 50.8, making its economy the 147th freest in the 2014 Index of the Heritage Foundation.
Quoting the 2014 Index of Economic Freedom report of the foundation, Thanh said the score is 0.2 point worse than last year, reflecting declines in freedom from corruption, monetary freedom, and business freedom that outweigh improvements in labor freedom and fiscal freedom.
Vietnam is ranked 33rd out of 42 countries in the Asia-Pacific region, and its overall score is lower than the global and regional averages.
Between 1997 and 2006, Vietnam made steady improvements in economic freedom. Yet, the index just oscillated around 50 points from 1997 to 2014 and even saw signs of decline in 2011.
“Over the past years, Vietnam has put much effort to win market economy recognition through diplomatic and political channels,” Thanh said and added that the team wished to make a report to evaluate Vietnam’s current status toward a full market economy.
Thanh pointed out many factors that have gone against the progress such as State budget overspending, rising public debts, the fast expansion of State-run commercial banks and high expenditure, among others. Moreover, Vietnam has lagged behind regional countries such as Singapore in terms of inflation control.
Economic expert Pham Chi Lan questioned the status of Vietnam’s economy in the market economy development progress.
She said Vietnam’s legal system is relatively complete but law enforcement is poor. Investigations show that enterprises have detected many faults in the legal system for a market economy.
Huynh The Du, a lecturer of the Fulbright Economics Teaching Program, said Vietnam has sped up international integration with an aim to boost internal reform. However, it has brought about some reverse impacts.
Equitization of State-owned enterprises (SOEs) is on a tough path and it seems that SOE leaders have been granted more power while State-run banks are taking the upper hand of the sector, Du said.
To help Vietnam develop a market economy, the report suggested interest groups should not intervene in the development progress while enterprises and citizens must raise their voice in law making.
In addition, the Government needs to protect legitimate properties of citizens and businesses, issue reasonable land management policies and streamline administrative apparatus to reduce regular spending and public investments.
