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Financial reform key to restructuring economy

Update: April, 10/2012 - 11:42

DA NANG — Rationalising State-owned enterprises and the financial sector were key to restructuring the country's economy, according to leading Vietnamese economists.

During the two-day Spring Economics Forum, which took place in the central Da Nang City from Sunday, top economists expressed their views about the long-term targets for national economic stability.

State-owned enterprises, investments and financial and monetary systems were key areas that needed to be addressed, they said.

One consensus arrived at after the two-day meeting was that the key factors for economic restructuring – the main task for this year – should be State-run groups and corporations and public investments along with commercial banks and credit institutions.

"Key areas of business should co-ordinate to facilitate a smooth development of the economy," said Cao Sy Kiem, chairman of the Viet Nam Association of SMEs.

Tran Dinh Thien, director of Viet Nam's Institute of Economics, said that this year's growth would be unlikely to match that of previous years.

While experts affirmed that controlling inflation and the general stabilisation of the economy were still priorities for the strategy through to 2015, though they might play a lesser role than what was previously thought.

Previously, he said, growth was the priority in economic plans. But now, restructuring shouldn't stop with cutting back on public investments and equitising State-run enterprises, but should actively respond to demand in international markets as well as the nation's natural resources.

He stressed the necessity to reform wages and budget systems in the State-run sector, as well as to speed up revision of the Land Law, which, he said, lagged behind current practices.

"We can't avoid ineffective investments without focus if we continue to allocate the State budget and devolve investment management like we do at present," said Tran Du Lich, deputy head of the National Assembly member delegation from HCM City.

Nguyen Dinh Cung from the Central Institute for Economic Management agreed, saying that changes should be made in both the business environment and firms' internal management systems in order to improve resource utilisation as well as operating efficiency in State-owned enterprises.

National Assembly Economics Committee vice chairman Nguyen Duc Kien said that in order to generate breakthroughs in socio-economic development, an important issue was to mobilise the strength and resources of all economic sectors.

Meanwhile, Thien said economic difficulties, particularly the slowdown in production and prolonged high inflation and interest rates, had had a considerable negative effect on the business environment.

He quoted a recent Ministry of Planning and Investment report which pointed out that, from the beginning of this year to March 21 around 2,200 companies dissolved and over 9,700 others had not paid taxes or ceased operations altogether.

The combined number of businesses that had to stop operations was up 6 per cent from last year, he said, adding that this trend would be likely to continue as long as interest rates remained high.

"We believe that much more can be done to help the situation. The key now is to find a way to lower interest to rates that will make it possible for businesses to recover. This should be our ultimate aim," he said.

Thien also suggested that the development of key coastal economic zones, including Quang Ninh, Da Nang-Chan May, Phu Quoc and Vung Tau, should be prioritised.

The forum was co-organised by the National Assembly's Economics Committee, the Viet Nam Academy of Social Science and the Viet Nam Chamber of Commerce and Industry.

The Government is scheduled to submit a general economic restructuring scheme to the National Assembly at the 3rd parliament meeting session, slated for next month. — VNS

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