Phan Đức Hiếu, deputy director of the Central Institute for Economic Management talks to the Kinh tế & Đô thị (Economic & Urban Affairs) newspaper about private enterprises’ recent meeting with Prime Minister Nguyễn Xuân Phúc in Hà Nội

Do you have any comments on the Prime Minister and other cabinet members’ messages to enterprises at the May 17^th conference?

A key message delivered by the Prime Minister and other cabinet members was their determination to put the government’s commitments into practice.

In my opinion, those commitments have consolidated enterprises’ firm confidence in the government’s commitment to help them feel at ease in their investment and business development.

What do you think about the impact of the Government’s Instruction No 20 promising that from now on each enterprise will only be inspected once a year?

One of the costs that enterprises have to bear is the time they have spent receiving management agencies. So, under the Government’s instruction, each enterprise receiving just one inspection or audit from a government agency is a positive step. It will help enterprises have more time to focus on their business and think about plans to develop their production. I’m confident that the Prime Minister’s instruction will have positive impacts on the business community. At the same time it will consolidate their confidence in the government’s leadership.

The atmosphere of the conference was not as heated as in previous years. Was a reason for this the improvement of the business climate?

This is a strong indication of support for the government’s efforts in the ongoing reform process, particularly administrative reform.

Yet, frankly speaking, our business environment still needs to be reformed. The quality of our current business environment is just a medium level on the international scale. Equal footing among economic sectors, risk reduction and business safety all require urgent and strong reform.

Some people say that now private enterprises do not need special treatment from the Government, but what they need is fair treatment and an open business environment. What do you think?

I want to support this point of view.

What we should emphasis is that reforms must create a business environment with a basic idea; freedom for creativity. All ideas should be provided with conditions to be applied and invested, intellectual assets especially must be protected.

That’s why administrative reform must pay special attention to lifting all barriers to creativity or legal risks preventing business development. Reforms should offer a shield to protect business rights and a healthy competitive environment.

In addition, in my opinion it is time for Government agencies to strictly implement the Government’s administrative regulations. That’s why structural reform should be geared toward creating favourable conditions for the freedom of business, including lifting geographical restrictions on business registration procedures.

What should enterprises do to improve their business performance?

There are two main factors which will have direct impacts on the enterprises: national institutions and the market.

The State will try to reform its institutional factors by reducing negative impacts while increasing positive factors to help enterprises.

Enterprises should be pro-active against all economic factors; make innovations; and improve their competiveness.

Last but not least, enterprises must act in accordance with the law. This is one way to help them avoid legal risks, including paying fines for violating the law. — VNS

In box

++ Trần Đình Thiên, director of the Việt Nam Institute of Economics

Enterprises do not want to grow if they are given many preferential policies. What’s more important is that they need “healthy air to breathe and to develop”. To help the private sector develop, it is important for the State to conduct reforms in State enterprises or Foreign Direct Investment enterprises sectors.

++ Economist Bùi Kiến Thành

To develop the private sector, the government should do five things: Complete the legal system and lift all barriers preventing its development; step up the fight against corruption; reduce the lending rate; learn experiences from the US Small Business Administration in giving supports to small enterprises; and finally, offer training for entrepreneurs.

++ Economist Đào Ngọc Lâm

Low investment return has become one of the reasons making public debt surpass its ceiling. In 2015, the public debts/GDP increased from 50 per cent in 2011 to 62.2 per cent; the Government debt/GDP increased from 39.3 per cent to 50.3 per cent and the foreign debt increased from 37.9 per cent to 43.1 per cent.