New space for private economy in the reform era

This is not only a continuation of the spirit of innovation, but also a strong message about an era of institutional reform, business environment and national governance. In the context that the whole country is promoting the arrangement of administrative units, streamlining the payroll, and reforming administrative procedures, Resolution 68-NQ/TW promises to open up a new space for the private sector to develop sustainably and substantially.

Hanoi Moi Newspaper had an interview with Dr. Le Xuan Sang - Deputy Director of the Vietnam Economic Institute, about the new points, expected impacts and conditions for the Resolution to be effectively implemented.

Automatic machine production at Tan Phat Equipment Technology Joint Stock Company (Thanh Tri, Hanoi ). Photo: Quang Thai

6 institutional breakthroughs create turning point for private economy

- Doctor, Resolution No. 68-NQ/TW (Resolution 68) recently issued by the Politburo has affirmed the role of the “most important driving force” of the private economy. How do you view this change in strategic thinking compared to previous resolutions?

- Resolution 68 affirms that the private economy is the "most important driving force" demonstrating a breakthrough in thinking and "courage" in recognizing the role of this economic sector.

Private enterprises, which were not allowed to exist, were officially recognized in the Documents of the 6th Party Congress (1986) – the starting point of the Doi Moi process. Since then, the role and position of this sector have always been affirmed in many policies and resolutions of the Party.

However, until the 13th Party Congress, this sector was considered an important driving force of the national economy; while the state economy was long identified as playing a leading role in developing a socialist-oriented market economy.

It should be noted that by the end of 2024, the private economic sector and individual businesses contributed about 51% of GDP, so the basis for affirming the role of "the most important driving force" of this economy has become more solid.

This change in thinking is of great significance to economic development in general and to the private economy in particular; in particular, removing barriers to development and creating momentum, increasing incentives for private economic development in the new context, when the domestic and international business and investment environment is changing very rapidly.

- What institutional and policy breakthroughs in Resolution 68 do you think will create a real turning point for the development of the private economic sector in Vietnam in the coming period?

- First of all, it is necessary to complete the legal framework for new economic models, business based on technology and digital platforms, especially financial technology, artificial intelligence, virtual assets, virtual currencies, crypto assets, crypto currencies, e-commerce...

There is a testing mechanism for new industries and fields based on post-audit, in line with international practices. These are new ways to effectively support businesses, suitable for promoting the development of this area in the digital economy era, helping businesses improve their competitiveness, dynamism and management capacity.

Second, promote and diversify capital sources for the private economy. The breakthrough here is that instead of lending to businesses, especially small and medium-sized enterprises, in the form of asset mortgages, the Resolution encourages financial and credit institutions to lend based on the assessment of production and business methods, plans to expand output markets, lending based on data, cash flow, value chains, considering collateral assets including real estate, intangible assets, future assets and unsecured loans. The strong expansion of lending conditions helps remove barriers to capital access - a reality that has existed for decades.

Third, expand the forms of guarantees for small and medium-sized enterprises at both central and local levels through perfecting the model of credit guarantee funds; encourage the participation of financial institutions and large enterprises, and loosen the conditions for granting guarantees compared to the conditions for bank loans;...

The breakthrough here is that the State accepts risks due to objective and force majeure conditions in guarantee activities; while having a mechanism to supplement resources and reasonable insurance policies to ensure system safety. This is also a way to help businesses have easier access to capital sources.

Fourth, through promoting connections and information sharing among stakeholders, improving the efficiency of credit assessment and credit scoring of enterprises by credit institutions, financial funds and third-party credit rating organizations to increase lending to small and medium-sized enterprises and business households.

The lack of a corporate credit rating system is a “chronic” bottleneck that hinders lending and investment in businesses, especially focusing on mobilizing capital from issuing corporate bonds and stocks. This is also a new solution to help businesses access cheaper capital more easily.

Fifth, create all favorable conditions for businessmen to participate in national governance. This is also a progressive regulation, helping to increase the rights of businesses in building a suitable business and investment environment, more favorable for the activities of this sector; demonstrating progress in building a government by businesses, for businesses.

Private enterprises themselves also feel more excited because their views, voices and aspirations are respected, listened to and understood.

Sixth, there is an adjustment in support policies for groups of enterprises according to scale. The resolution introduces policies to substantially and effectively support small, micro and household businesses, separating medium and large enterprises.

This is a suitable step for supporting businesses according to scale, when the development level, competitiveness and support needs of these two groups of businesses are different. Previously, there was no clear support policy for large businesses, while support was often uniform for medium, small and micro enterprises. This different approach is expected to help accelerate the development of the medium-sized enterprise sector - which has been "sluggish" for many years.

Connecting Resolution 68 and administrative reform policies

- In your opinion, how will Resolution 68 positively impact the removal of administrative barriers, especially in the context that the whole country is implementing the policy of merging administrative units, streamlining staff and strongly reforming administrative procedures?

- In the context of the current major administrative reform, the downsizing of the administrative apparatus, including the civil service apparatus; at the same time, the streamlining and rationalization of administrative regulations in business and investment procedures can help reduce costs (time and money) in business and investment registration and practice; reduce harassment, corruption and compliance costs.

However, in the early stages of reform, when the administrative apparatus, especially civil servants, are not yet stable in their job positions, the new working environment, and the place of residence change, this can lead to unstable spirit, motivation, and work attitude.

- One of the new points of the Resolution is the requirement to create a transparent and internationally standardized business environment. In your opinion, what specific actions should Vietnam take, especially at the local level?

- In fact, the above requirements have been gradually implemented in Vietnam according to WTO commitments and subsequent FTA agreements, especially new-generation FTAs. Specific results of action can be recognized according to a number of related indicators in the 4 indexes published annually, specifically: (1) Administrative Reform Index (English name: PAR INDEX); (2) Provincial Governance and Public Administration Performance Index (PAPI) (a tool reflecting the voice of the people on the level of effectiveness of state management, administration, policy implementation and public service provision of governments at all levels); (3) Index of satisfaction of people and organizations with the services of state administrative agencies (SIPAS); and (4) Provincial Competitiveness Index (PCI).

These are meaningful indicators in comparing and evaluating results and efforts in administrative reform, governance and public administration efficiency, as well as the quality of the business environment and public administration of localities.

The publicity and transparency of these indicators help local authorities make more efforts and reform themselves, especially creating healthy competition in improving the ranking of administrative - business - investment institutional reform to improve prestige and image with the people (first 3 indicators), contributing to attracting investment and business to the area (4th indicator).

Thus, to meet the requirements of transparency according to international standards and serve the practical reform and development, administrative reform measures need to continue to be strengthened in the following directions: First, publicly, fully and promptly announce the direction and administration of administrative reform; the results of developing and organizing the implementation of legal documents in the province; and the results of reforming the organizational apparatus; in particular, it is necessary to strengthen the public assessment of the impact of administrative reform on people, organizations and socio-economic development indicators of the province.

Second, increase publicity and transparency in information access; list of poor households; revenue/expenditure of commune/ward budget; land use planning/planning, compensation price framework, etc.

Third, promote transparency and accountability to the people regarding the effectiveness of interactions with authorities at all levels; respond to complaints, denunciations, and concerns of the people; and access to judicial services.

Fourth, evaluate the service quality of civil servants in terms of communication attitude, spirit, attitude of paying attention to the opinions of people/organization representatives; the level of completeness in answering and resolving opinions of people/organization representatives; in guiding the declaration of documents and compliance with regulations in handling work.

Finally, no less important is to promote the publicity and transparency of the results of improving the business and investment environment such as: Market entry costs, land access; transparency and publicity of the business environment, time for inspection, examination and implementation of regulations and administrative procedures quickly; dynamism and creativity of provincial authorities in solving problems for businesses;...

- What recommendations do you have to connect the implementation of Resolution 68 and current administrative reform policies to improve the effectiveness of supporting private enterprises?

- To effectively promote support for private enterprises, the implementation of Resolution 68 needs to be linked with current administrative reform policies.

First of all, it is necessary to take advantage of surplus resources from streamlining the apparatus. Surplus headquarters and facilities need to be transferred to re-leasing at truly preferential prices, even free of charge, to small, medium and micro enterprises as offices, transaction offices, especially allowing the conversion of functions into shared offices, technology incubation centers, innovation centers, testing rooms, etc.

Second, take advantage of the redundant civil servants, especially those with experience, deep expertise, idle capital, work/business relationships, and good health and enthusiasm, and transfer work to the private enterprise sector to increase the overall efficiency of the reform process, develop private enterprises and the overall efficiency of the whole society and the country.

Thank you very much!

Source: https://hanoimoi.vn/khong-gian-moi-cho-kinh-te-tu-nhan-trong-ky-nguyen-cai-cach-701965.html