Bottlenecks in Vietnam: the diagnosis
VietNamNet Bridge - "Besides infrastructure bottlenecks or bottlenecks in access to finance and land, I think that people are the decisive factor in the success of policies," said Ms. Nguyen Thi Cuc, former Vice Chief of the General Department of Taxation.

On December 13, the Central Economic Committee and the United States Agency for International Development (UAID) jointly held a workshop to consult experts on the research report "Diagnose the bottlenecks for growth and the production capacity map of Vietnam". 

VietNamNet would like to introduce some notable comments.

Những điểm nghẽn đáng sợ đeo bám Việt Nam

Ms. Nguyen Thi Cuc, former deputy director of the General Department of Taxation: The biggest bottleneck is the human factor. 

1. This morning I had to take more than 1 hour from Trung Hoa-Nhan Chinh Street to this seminar (held at Hanoi Melia Hotel, 44 Ly Thuong Kiet Street). I intentionally left my home very early but finally I still got here late. Just do a simple calculation: with millions of people in Hanoi, who has to spend 1 hour each day to pass such a short distance. How big are our losses and waste?

In Trung Hoa - Nhan Chinh area alone, there are dozens of completed high-rise apartments and many others are under construction. Who licensed the construction of these works with such a high density? Or the fact that people encroached upon public space and were fined but kept repeating that violation and then paid the fine again… These are also bottlenecks because for years, these problems have not been solved.

This year the government is determined to ban public servants from receiving Tet (lunar New Year) gifts. This decision is good. But we have to wait to see whether or not it is implemented well. 

2. In addition to the infrastructure bottlenecks as I have mentioned, or bottlenecks in access to finance, access to land as being pointed out in the report, in my opinion the bottlenecks that decide the success of all policies is the human resources. The human resources that I emphasize are from people who hold high positions to those who do the most basic work.

Let’s take the state governance capacity building project that we are deploying as an example we will immediately see the localities, the ministers, and the provincial chairs who have the idea of reform, are interested in reforms.

In the civil service group, about 30% of civil servants have been keeping to take their umbrellas to the office in the morning and take the umbrellas back home in the afternoon for years but this situation has not been solved.

There are also a lot of problems associated with the group of manual workers. Investors in industrial zones and export processing zones have been complaining about the unprofessionalism, lack of discipline, and poor skills of Vietnamese labor.

Dr. Le Xuan Nghia, banking and financial expert: The most frightening bottleneck of Vietnam is financial institutions

Những điểm nghẽn đáng sợ đeo bám Việt Nam

Since 2011, inflation in Vietnam has been relatively stable, only from 1.8% to 2%. This shows that the country’s monetary policy has made progress.

But the biggest bottleneck of Vietnam is financial institutions. In many countries they also adjust the budget structure, but they do not use budget money to invest in infrastructure. Budget money is used for regular expenditure and paying debt.

5 years ago we had forecast about public debt. Currently, our bad debt is still high, and the mechanism to handle debt remains problematic. Many workshops were held to discuss the framework and seek solution, but until now we have not found any viable exit. For the restructuring plans as discussed, I’m afraid that banks may need at least ten years to settle the bad debt problem.

Pham Chi Lan, independent economist: We're still stuck in the bottleneck of resource allocation

1. Recently, Vietnam has been praised for rapid growth, and high growth levels. But actually growth in Vietnam has not served well the long-term development. Because in that growth process, although the growth rates are high but income remains low and we have yet created the foundation for the future.

The things that scholars pointed out are: the need to strengthen the complexity of the economic model and the diversification must create the foundation for the future. It is not enough to focus only on achieving high growth. For example, to increase the complexity, we need technology, the people with better skills, with the right connections and a reasonable division in the economy. But overall Vietnam still lacks sustainable foundations.

The World Bank’s Vietnam research recommendations in 2035 emphasized the need of institutional reform, the requirements for enhancing education and training in a more substantive way, with higher quality to strengthen science and technology development while still focusing on strengthening the role of the private sector, creating conditions for the private sector to play a bigger role in investment decisions, development decisions, an in allocating resources efficiently.

What Vietnam needs the most today is developing in depth, not just the development in width. We can achieve growth, but to develop in depth it is much harder. Thus, Vietnam needs to avoid diversification in the way of spreading investment. Diversification should be understood as dealing with each specific product. For example, Vietnam is a big rice and coffee exporting country, but these are the raw products. Vietnam needs to develop products made from rice and coffee for export.

2. Regarding the administrative structure, Vietnam has a small economic scale, and the population is not too large, but the country has up to 63 provinces and cities. We need to develop regionally rather than provincially, because the resources of provinces are also limited, while resources are still allocated equally. All provinces have their own universities and airports ... so resources are dispersed and all such investments will not be effective. So economic development should be planned by region rather than by province. 

3. Vietnam has three main business forces: state-owned enterprises, private enterprises and foreign-invested enterprises. Economic development in Vietnam has been led by the foreign-invested sector in the export sector and a number of industrial sectors. The state-owned sector has been always allocated with more resources.

The private sector in Vietnam is still week. Even the labor productivity of the private sector is also very low. This sector should have had higher labor productivity than the state-owed sector.

In my opinion, to go into the complex level of development of the economy, the role of subjects need to be increased and clarified clearly in the economy . This is the fulcrum to help the process of economic reform in a diversified way, including institutional reform. Institutional reform is still one of the most important things in Vietnam’s long-term development journey.

Lan Anh

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