Việt Nam has underwent the toughest five-year restructuring period since it embarked on the Đổi Mới (Reform) process three decades ago, with overhauls of public investment, banking and State-owned enterprises (SOEs). However, the results were below expectation as with rising public debts, high bad debts and uncompetitive businesses, said Trần Đình Thiên, Director of the Việt Nam Institute of Economics.

 

“Little improvement is seen in the renovation of the growth model,” Thiên said, adding that 30 years was enough for the Republic of Korea to become a developed industrialised nation while Việt Nam only become a low-middle income country despite huge economic growth from 1990-2015, second only to China’s globally.

 

“The problem lies in resource allocation which has proved inefficient,” Thiên said.

 

He said that resources had been poured into inefficient SOEs and labour-intensive and capital-consumed industries, which undermined national competitiveness and discouraged the private sector.

 

“As Việt Nam is entering the next phase of restructuring, the country needs to find a thorough and radical way to renovate the growth model towards efficiency.”

 

“Economic restructuring should now shift to the efficiency of resource allocation from the goal of simply raising resources.”

 

According to Nguyễn Đình Cung, Director of the Central Institute for Economic Management, Việt Nam was close to the limit of raising resources. “The important issue now is not how to raise resources but how to use resources with efficiency,” Cung said.

 

Breakthroughs in mechanisms and in the restructuring of the financial sector are critical to economic overhaul, experts said, urging bad debts to be tackled.

 

Cung also said that a committee specialised in economic restructuring should be established.

 

Opportunity in integration

 

The difference of 2016-20 restructuring to the previous periods was that Việt Nam was rapidly integrating globally with several free trade deals with demanding requirements.

 

“Take advantage of the integration process,” Cung said. Although this remained tough, this was a must for the Vietnamese economy to avoid being left behind, he said.

 

According to Thiên, restructuring processes often made economies more fragile to outside influences, so Việt Nam should pay attention to the Chinese economy.

 

The project of restructuring the economy in 2016-20 period was proposed to the National Assembly for consideration.