Restructuring decisive to economic growth

Thien Thanh Sanitaryware joint company

Restructuring decisive to economic growth

Restructuring is decisive to the quality of economic growth and the level of economic development amid new challenges posed by international integration, economists said at a seminar in Ha Noi yesterday.

The function was held by the Central Institute for Economic Management (CIEM) to review outcomes of economic restructuring between 2011 and 2015 and prepare for the design of a blueprint for the work in the next five years.

Since 2011, the Government has focused economic restructuring on ensuring the safety of the financial-banking system, and improving the effectiveness of capital mobilisation and allocation through measures to stabilise the macro-economy, monetary and fiscal policies, and interest rates.

As a result, inflation has been strictly controlled and kept at low levels, facilitating business growth and people's livelihoods.

The Government has also conducted public investment restructuring to renovate mechanisms for and methods of mobilising, managing and using the State capital. It has issued Resolution No.11 and related directions and increased bidding in order to ease the burden on the State budget.

The divestment of the State capital at State-owned enterprises (SOEs) and SOEs equitisation have been widely implemented with the aim to improve the firms' transparency and competitiveness. SOEs have divested more than 25 per cent of the State capital from non-core business so far.

Economists highlighted significant outcomes over the last five years, including a stabilised macro-economy, a continuously improved business climate, low inflation, and accelerating GDP growth.

However, they also pointed out certain shortcomings such as the modest progress in public investment restructuring, the prolonged settlement of bad debt, and the lingered preference for SOEs.

After years of being managed under the old-fashioned mindset, Viet Nam's economy is facing the risk of lagging behind, especially in comparison with neighbouring countries, said Director of the CIEM's Research Department on Macro-economic Policies Nguyen Tu Anh.

If Viet Nam's average growth rate is at 5 per cent annually, its per capita GDP will be only 75 per cent of China's and 83 per cent of Thailand's by 2035, he added, forecasting that the conundrum will get tougher as the State's resources are increasingly limited, causing a more severe budget deficit and public debt.

Many other experts voiced concerns over the acceleration of debt expansion and backward infrastructure which has failed to meet social demand. SOEs' ineffective operations, outdated management models and low labour productivity are also negatively impacting modernisation efforts. — VNS