Forum springboards a raft of institutional reforms

Minister of Planning and Investment Bui Quang Vinh

Why was the forum focused on the economic institutional reform and enhancing the competitiveness of Vietnam’s economy?

The Vietnam Development Partnership Forum (VDPF) was focused on two main issues: the economic institutional reform and the private sector development, which are both vital to the economy now. At present, all people, businesses, state management bodies and Vietnam’s development partners are aware that all driving forces that have helped Vietnam strongly develop over the past 30 years like natural resources and investment capital increases have reached their limits. Therefore the need to conduct the economic institutional reform has been triggered by not only the global economic crisis, but also by the economy’s current structural weaknesses.

Such a reform is expected to create a new propellant for the economy. This should maximise the country’s potential and advantages so that we can avoid falling into a middle-income trap, while developing faster and catching up with other nations.

What does “enhancing competitiveness of Vietnam’s economy” mean to the country at the current time?

It refers to the development of the private sector in Vietnam. Any nation hoping to develop quickly must rely on the strength of its local enterprises, not just the foreign direct investment sector. Over the past many years, the government has attracted many foreign investors to set up businesses in the country. However, if local enterprises fail to develop, the government’s target to develop its strong local business base will not be reached. Vietnam would need to have such a strong local business community in order to receive high-technology and capital from abroad. Currently, the global economic crisis has forced many local firms to either curtail production or go bankrupt. Therefore the economic institutional reform will help create a more transparent investment and business climate, helping reduce business costs and access bigger resources for stronger development.

The Vietnamese government and development partners discussed effective solutions to facilitate the development of private enterprises at the forum. Such development needs to kill two birds with one stone as it will generate more employment, improve the economy’s production capacity and develop more made-in-Vietnam products. Also, such development will contribute to building a self-reliant economy.

When Vietnam’s enterprises develop strongly and source their materials locally, Vietnam will no longer be a base for processing imported raw materials and assembling products, and then Vietnam will become an industrially self-reliant economy.

The National Assembly in late November ratified the amended laws on investment and enterprises. How important are the new laws to the economic institutional reform and the development of private enterprises in Vietnam?

The adoption of the new laws mirrors the country’s economic institutional reform, which means the creation of an advanced legal system used to tap Vietnam’s potential and advantages. The reasons for amending these laws are that impetuses created by the laws have gradually waned. The amendments are also in line with the new Constitution enacted last year which extended the right to do business in the country. I do hope that the new laws will create a new wave in investments and business start-ups in the country in the future.

The VDPF has replaced the Consultative Group Meeting (CG) since it was first organised last year . How effective has the VDPF been so far?

The VDPF is focused on policy dialogue, instead of on mobilising official development assistance funds as it did at CGs in the previous years. This is a very necessary shift, when Vietnam has become a middle-income nation and is developing its own strength. At the VPDF 2014, topics for discussions covered updates on socio-economic development and future orientations; market institutional reforms to improve the competitiveness of the economy; and private sector development for a sustainable and autonomous economy.

The event has been a great success as it has helped create concerted actions between the Vietnamese government and development partners. I strongly believe that this approach should be continued during the next VDPFs.