Wednesday, October 5, 2022

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PM Dũng’s New Year message

IMPROVING THE INSTITUTION OF SOCIALIST-ORIENTED MARKET ECONOMY, ACCELERATING THE RESTRUCTURING OF THE NATIONAL ECONOMY AND GROWTH MODEL RENOVATION

The core economic ideology spreading throughout the documents of the 11th National Party Congress is restructuring the national economy, renovating the growth model, and securing a fast and sustainable development. The premise for successfully realizing the aforesaid orientation is the effective implementation of the three breakthroughs we had adopted, of which perfecting the institution of the socialist-oriented market economy constitutes, one the one hand, a key move that would directly affect the process of economic restructuring and growth model renovation, and, on the other hand, a task that doest not require huge financial resources. The task can be fulfilled within a relatively short period of time once we have right understanding and single-minded determination.

After 20-year implementation of the renewal guidelines, our country has gained important achievements in building institutions of the socialist-oriented market economy. As a result, we have mobilized various resources for national development, attained high growth rates, created lots of jobs and improved people’s living conditions.

However, institutions for the market economy have yet been fitting and elements of the market economy have yet been taken shape fully. The land market remains imperfect. The financial market has been developing in an imbalanced manner, the bond market has just been born, and the securities market is operating one-dimensionally, yet turning into an important capital mobilization channel for the national economy, so all burdens are being shouldered only by the credit market, making it vulnerable. The science and technology market has developed slowly. The labor market, though formed relatively perfect, is featured with low human resource quality and the irrationality in salary among sectors has posed a big barrier for labor movement to the key sectors of State management and the areas providing public services. Prices of a number of commodities and services are not enough to compensate for costs, and yet regulated by market rules, thus hindering the attraction of resources and high technology for development.

The institutions of the market economy are a perfect whole consisting of various markets operating synchronously within it. A single market of which that fails to fully develop will hold back the evolvement of other markets and impede the overall movement of the market economy. In that context, administrative interference in economic phases will probably be taken. Such interference may help remove immediate difficulties but its cost will be much more than opportunities it generates and the development process will consequently been derailed. As a result, basic issues are yet solved. This can be seen as a paradox in the way of thinking that those involved in management works must gain a thorough understanding for taking actions in a right and consistent manner.

This reality, therefore, show us that in 2012, all-out efforts should be focused on making the institutions of the market economy complete as defined by the 11th National Party Congress.

In the time of globalization and fierce competition, what we should do for our country to speed up growth and narrow the development gap with other countries in the region is to build modern institutions for the market economy that will facilitate the movement of resources within sectors and to different zones across Việt Nam towards signals sent by the market with respect to the average profit axis, thus ensuring the economy grows in a harmonious and balanced way. This will stimulate businesses to develop their human resources, apply and create new production and management technologies, create dynamic competition advantages to earn them profits that are far greater than that of other business entities, thereby pushing up the relatively continuous movement of investment structure and production, to create an economy with a high degree of creativity and many new products and ensure the efficiency and competitiveness of the economy. This is dialectical understanding of development.

We should take features of institutions of a modern market economy as standards for our process of perfecting institutions. Below are basic features:

First, all types of markets develop synchronously with elements of the market economy being shaped comprehensively, operating harmoniously, supporting each other, and interacting in a perfect whole. This is the premise to allow the market to operate smoothly and all resources to move freely and to be allocated properly and effectively.

In 2012 and the following years, the Land Law must be amended to create conditions for the establishment of the land market, beef up the healthy development of the real estate market; develop the bond market, expand the insurance market; strongly develop the science and technology market. Speed up the training of human resources, particularly high-quality workforce in combination with reforming salary mechanisms to facilitate the smooth operation of the labor market. To be consistent with the roadmap to let market rules decide the prices of State-controlled commodities, etc.

Second, institutions of a modern market economy requires the establishment of an equal competition environment for participating entities. Competition is part of the market economy and constitutes as one of the criteria measuring the marketableness of the economy. A highly competitive market will help control prices better than the State does. The important thing is that competition forces businesses to reduce production costs, raise productivity, and ensure efficiency. The Government will review and evaluate the level of competition in each area of production and service, abolish discriminatory treatment that still existed in reality between businesses of different economic sectors. Improve legal legislations on competition and natural monopoly; enhance the capacity of intellectual property and competition management agencies in addressing unhealthy competition cases and cases that take the advantage of their dominant position in the market to deter competition.

Third, explanatory responsibility for management policies, development projects as well as operations of business entities must be publicized and taken in a transparent manner. Market economy institutions, impacts stemming from the open door and integration process in combination with the formation of a multi-ownership architecture and a multiple economic entity structure will lead to the shaping of “interest groups”. Objectively, these “interest groups” may affect the decision making process. Transparency and overtness not only create equal opportunities for all to gain access to information, but more importantly, encourage transparency and overtness and highlight explanatory responsibilities and create conditions for people to supervise decisions made by management agencies. It is a fundamental measure to prevent corruption and influences of “interest groups” in the decision making process to ensure that decisions are made under “common values”, for the sake of the country. Transparency and overtness will also reduce speculation and business costs while improving market effectiveness.

Over the past few years, thanks to the enforcement of the Law on issuing legal documents as well as Q&A sessions of the National Assembly and the People’s Councils at all levels, we have made great strides in implementing transparency and overtness, and carrying out explanatory responsibility of State agencies. However, the above results have yet met the requirement.

From the Party and State’s political stance of ensuring people’s rights of accessing information and participating in social debates, the Government will study and perfect regulations on the publicizing of information and the right of information accession, while enhancing dialogues on policies and development projects between State agencies and independent experts and people, not only in the post-decision making phase as we do at present but more importantly in the pre-decision making stage. The quality of Q&A sessions continues to be renovated and improved, focusing on development policies and their impacts on different walks of life.

Fourth, modern market economy institutions in the context of increasing and deepening globalization and economic integration require the redefinition of relations between the State and the market. Accordingly, the State will shift from directly interfering into economic processes to creating opportunities for development: ensuring macro-economic stability, creating a favorable environment for business and investment; creating development mechanisms and bettering the quality of public services.

A challenge emerged for State management agencies in the context of globalization is that each change on the global market will quickly and strongly affect domestic market. Thus, it is necessary for the State to improve its forecast capacity and policy response in order to mitigate negative impacts on the national economy. The market economy and globalization also put certain groups of people at risk, deepening the gap between the rich and the poor. The State needs to issue right policies and use regulatory tools to overcome the negative sides of the market economy and globalization so as to ensure economic growth and social progress and equality. It is affirmable that market operates on its rules, firstly the rules on competition and the rules on profit. The socialist-oriented development is a function of the State. The State, on the one hand, needs to promote the “self-regulating power” of the market and, on the other hand, “neutralize” negative impacts of the market to secure development orientations to go on a right track. Whereby, the role of the State will not shrink but be boosted on the grounds of new influential methods and new contents.

We should base on basic stances on building the law-governed socialist State defined by the 11th National Party Congress to perfect the State apparatus at all levels in terms of its function and organizational structure, and regulations on decentralization, and handle correctly relations between the State and market.

Fifth, a modern market economy institution must serve consumers as its subject. It is necessary to continuously perfect legal regulations to protect consumers’ interests, set up centers for consumers protection. The Government will focus on improving technical, hygiene and food safety standards; expand inspection of imports and commodities circulating in the domestic market; introduce more sanctions to strictly punish offenders; review and finalize legal documents on detailed implementation of the Law on consumers protection; build a legal basis for encouraging the development of non-governmental organizations specializing in consumers protection.

A modern market economy institution with the above features will help the country make full use of opportunities and overcome challenges in the world where globalization is broadening and competition is fierce.
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