NA Deputy Nguyen Ngoc Hoa comments on the proposed comprehensive economic
restructuring plan during a group discussion of NA deputies from HCMC at the
ongoing session of the legislature in Hanoi.
This is given in a report that the committee delivered to NA deputies on Thursday. The report, reflecting the opinions of scholars and economists at a recent economic conference in Central Vietnam, stressed that the private sector should be considered as the main driver or important driver for economic growth.
Such a change will create breakthroughs in economic development, consistent with the trend of a market-driven economy, according to the report.
Innovative thinking about the role of the private sector has an important meaning for changing the mindset of the Government agencies on macroeconomic policy design and development.
Meanwhile, the State economic sector, currently defined as playing the leading role in the economy, is operating inefficiently. Every year, some 12% of the State-owned enterprises incur losses, while the percentage is 25% for the business sector in general.
The average loss of a State firm is 12 times higher than businesses in other sectors. The return-on-asset ratio of the State-run groups and corporations averages out at 20.8%, much lower than the foreign-invested sector.
The average ratio of pre-tax profit to equity only reaches 13.1%, much lower than the lending rates of commercial banks. Notably, up to 80% of the total pre-tax profits come from the four conglomerates, PVN, Viettel, VNPT and VRG, meaning the profit-to-equity ratios of the remaining State firms must be far lower than the average level.
State-owned enterprises depend on capital to grow, use a lot of natural resources, enjoy many preferential polices, yet make inefficient investments.
Therefore, the report stressed it is necessary and urgent to change the mindset on the leading role of the State economic sector and clearly identify the role of the State sector in general and State-owned enterprises in particular so as to successfully restructure the economy.
The leading role of the State economic sector should not be interpreted as the leading role of State-owned enterprises, especially the thought that State conglomerates must play a dominant role in the economy and hold monopoly in several sectors, said the report.
In addition, the report stressed using State-owned enterprises as a tool to regulate and stabilize the economy is groundless.
The report deemed it necessary to redefine the role of the State in the market-driven economy with the bold presence of the private sector and the FDI sector.
The report said the State needs to redefine its role as a representative of the entire population and as a manager of all economic sectors. Moreover, the role of the State and that of the market should be distinguished as the market changes in accordance with objective economic rules, not subject to the control of the State.
With such strong recommendations, the report remarked the Vietnam economy has completely changed after 25 years of reform. The economy is now very open, and the economic structure and the ownership structure have basically changed.