On the morning of March 1, 2023, National Economics University, in collaboration with the Fraser Institute (Canada), organized a Policy Dialogue: " Economic Institutional Renovation in Vietnam targets to become an upper-middle-income country by 2030" to detect bottlenecks in market economy institutions and propose policies to help Vietnam maintain its growth momentum as it becomes an upper-middle-income country.
Overview of the dialogue
Attending the dialogue, on the side of the guest speakers, there were Dr. Fred McMahon - Head of the Research Group on Economic Freedom at the Fraser Institute (Canada); Mr. Dinh Tuan Minh - Research Director of Market Solutions Research Center for Social and Economic Issues (MASSEI); Dr. Can Van Luc - Head of BIDV Training and Research Institute. On the side of the delegates outside the university were Mr. Phan Duc Hieu - Standing member of the Economic Committee of the National Assembly; Ms. Pham Chi Lan - Economic expert; Dr. Le Dang Doanh - former President of the Central Institute for Economic Management; Prof. Dr. Nguyen Quang Thai - Chairman of Vietnam Economic Science Association; Assoc. Prof. Dr. Le Xuan Ba - former President of the Central Institute for Economic Management; Dr. Vo Tri Thanh - former Vice President of the Central Institute for Economic Management
On the side of National Economics University, there were Prof. Dr. Pham Hong Chuong – President of the university; Assoc. Prof. Dr. Bui Duc Tho - Secretary of the Party Committee, Chairman of the School Council; Assoc. Prof. Dr. Bui Huy Nhuong - Vice President; Assoc. Prof. Dr. Nguyen Thanh Hieu - Vice President; Dr. Nguyen Huu Dong - Deputy Secretary of the Party Committee, Chairman of the University's Trade Union; Prof. Dr. To Trung Thanh - Head of Research Management Department, together with members of the Advisory Council, Science and Training Council, representatives of leaders of units, departments, scientists inside and outside the university.
Prof. Dr. Pham Hong Chuong - President of National Economics University, gave a speech
Speaking at the opening of the dialogue, Prof. Dr. Pham Hong Chuong - President of National Economics University, said, after more than 30 years of renovation, up to now, Vietnam has been a social market economy deeply integrated into the global economy. Vietnam has continuously developed and adjusted its legal system to be consistent with the free trade agreements that Vietnam has signed.
Efforts to build a market economic institution during the past have made an important contribution to bringing Vietnam from a country with a per capita income of only about 200 USD in the early 1990s to 3590 USD in the year 1990-2021 (according to World Bank data). With the current level of per capita income, Vietnam is likely to join the group of upper-middle-income countries before 2030 if it is not entangled in the lower-middle-income trap. However, the current operation of Vietnam's market economy is revealing some limitations. The state still intervenes heavily in the market price mechanism, such as gasoline, electricity, airfares, and medical prices. These interventions have revealed many shortcomings in recent times, such as shortage of petrol and oil, national airlines and power corporations suffering heavy losses, public hospitals falling into a state of insufficient revenue…
Ownership protection is still not good. Specifically, land in many places is still being recovered for economic purposes by private real estate corporations; the protection of minority investors in enterprises has not been given due attention; institutional framework to protect new asset classes such as digital currency has not yet been established... Many modern markets have not yet been formed or have limited participation of the people, such as foreign exchange markets, derivative gold markets, derivative commodity markets...
The state-owned enterprise (SOE) sector is still large, while the progress of equitization of SOEs in recent years has slowed down. The system of legal documents is still overlapping, making business difficult; State officials themselves are also at risk of breaking the law if they misinterpret the regulations, leading to delays in handling administrative procedures. "The recent case of real estate businesses is an example. Many projects cannot be implemented because of legal procedures, suspended for many years, not resolved" - Prof. Pham Hong Chuong gives an example. From this fact, Prof. Dr. Pham Hong Chuong emphasized, in the context that Vietnam is about to join the group of upper-middle-income countries and with the goal of becoming a developed and high-income country by 2045, the need to continue reforming economic institutions becomes more urgent than ever.
Vietnam's experience shows that in the period from 2011 to now, the Government has persisted in reforming the market economy institutions in the direction of prioritizing macroeconomic stability, improving the business investment environment, enhanced international integration has brought Vietnam a healthier economy than ever, such as high foreign exchange reserves, low public debt-to-GDP ratio, foreign investment, turnover Continuous import and export next year is higher than the previous year.
Past lessons show that, in the current difficult context, Vietnam needs to continue to find important bottlenecks in economic institutions to remove, considering this as the key to bringing confidence to the businesses industry and investors both at home and abroad, especially in the context that it is necessary to prepare well for the process of joining the group of high-middle-income countries; In the context of the global economy is facing many difficulties and uncertainties...
Mr. Dinh Tuan Minh - Research Director of Market Solutions Research Center for Social and Economic Issues (MASSEI), presented "Some issues raised about economic institutions in the context of Vietnam about to join the upper-middle-income group"
According to Mr. Dinh Tuan Minh - Research Director of Market Solutions Research Center for Social and Economic Issues, Vietnam is now approaching the group of upper-middle-income countries in 3 sub-indexes. Specifically, including: government size; legal system and property rights; regulations governing credit, labor and business markets. However, our country is still far away in the core currency and international trade indicators. He said that Vietnam needs to prioritize the following components in economic institutional reform when becoming a middle-high country. Specifically, the factor of good money and free international trade need a breakthrough. At the same time, maintain reform of the legal system and property rights; government size; credit, labor and business market management.
Dr. Fred McMahon - Head of the Research Group on Economic Freedom at the Fraser Institute (Canada), presented "Enhancing economic freedom and prosperity for the Vietnamese people"
Agreeing, Dr. Fred McMahon - Head of the research group on economic freedom at the Fraser Institute, Canada - emphasized: "Economic freedom will create a driving force to overcome the middle-income trap. For Vietnam to maintain its rapid growth and become richer, economic policy will have to become more competitive."
Dr. Fred McMahon cited data Vietnam has recorded strong growth with an average of 6% over the past 10 years, while richer countries will grow slowly. In addition, other countries such as Indonesia, Malaysia, the Philippines and Thailand have caught up with Vietnam's growth but "fade" gradually when they cannot improve their economic freedom.
Dr. Can Van Luc – Head of BIDV Training & Research Institute presented "Improving Vietnam's financial market institutions: Current situation and recommendations"
In terms of institutional improvement for the financial market, Dr. Can Van Luc – Head of BIDV Training & Research Institute suggested that it is necessary to focus on legalizing the handling of bad debts; amendments to the Law on Securities (2019), the Law on the State Bank (2010), the Law on Credit Institutions (2010, 2017), the Law on Deposit Insurance (2012) and decrees and circulars are no longer relevant in the new context.
In addition, it is necessary to supplement models, mechanisms and regulations to manage and supervise financial groups, new business models based on technology (peer-to-peer lending, Fintech, crowdfunding, etc.). .); adopt policies to encourage and promote the management and development of the corporate bond market, new financial institutions such as voluntary pension funds, real estate investment funds, venture funds... Improve institutions to ensure effective and substantive separation of ownership and management functions for financial institutions and financial markets.
Another important issue is to focus on improving management capacity, supervision, safety and stability of the financial-monetary system. Accordingly, focusing on implementing Decision 986 (2018) of the Prime Minister on the banking industry development strategy, developing a plan towards an independent and modern central bank. The regulatory and supervisory agencies (the State Securities Commission, the Banking Inspection and Supervision Agency, the Insurance Supervision Administration, etc.) must be independent and given more authority. Building a management model - monitoring the system, controlling systemic risks, a model of financial-monetary stability and a crisis handling mechanism. "Improving the financial market institution to ensure healthy and sustainable development and improve the competitiveness of the financial system is a key factor in perfecting the market economy institution" - Dr. Can Van Luc stated.
The Presiding Delegation conducts the discussion at the dialogue
Prof. Dr. To Trung Thanh - Head of Research Management Department, gave a speech
According to Prof. Dr. To Trung Thanh - Head of the Department of Research Management, National Economics University, said that economic institutions need to ensure a degree of economic freedom for all economic sectors, such as competitive enterprise freedom on an equal footing, consumers have free, unfettered choices. Accordingly, economic freedom will promote prosperity. The role of the Government is to promote economic freedom by providing the necessary facilities for voluntary exchange. Along with that, the legal system is a bottleneck that needs to be resolved, in which it is necessary to focus on protecting property rights, fair and equal treatment among economic sectors and protection of property rights and their economic freedom.
Experts exchange and discuss at the dialogue
With such a question, the participants in the dialogue focused on identifying the institutional bottlenecks affecting the development of Vietnam in the coming period, reviewing Vietnam's macroeconomic institutions and institutions related to markets, especially capital markets, to find bottlenecks that may hinder Vietnam's development from joining the group of upper-middle-income countries; policy recommendations to promote the development of Vietnam's market economy in the coming period.