Creating institutional and development mindset reforms.

The goal of becoming a developed, high-income country by 2045 requires our economy to achieve rapid, stable, and sustainable double-digit growth for many consecutive years. This is not a wishy-washy ambition, but an objective requirement if we want to close the gap with the leading countries in the region. But how? Vietnam cannot continue to rely on the old model – resource-intensive, cheap labor, and state investment. These traditional drivers have reached their limits.

The state plays the role of arbitrator.

Over the past decade, despite the issuance of numerous programs and resolutions on economic restructuring and innovation of the growth model, the results have not met expectations. With the Resolutions of the 12th Central Committee (Resolution No. 05-NQ/TW on some major policies to further promote economic restructuring; Resolution No. 11-NQ/TW on perfecting the socialist-oriented market economy institution), we have clearly defined the path of "economic restructuring" and "transformation of the growth model".

The nature of this transformation is inevitable, following international practice: a shift from a resource-based growth model (stage 1) to a productivity and efficiency-based model (stage 2), before moving on to a science-technology and innovation-based model (stage 3). When the average income reaches $3,800-$4,000, the weight of stage 2 (productivity and efficiency) must become dominant to overcome the middle-income trap.

People and businesses visit the creative space and experience digital transformation in Ho Chi Minh City.

We have been thinking along those lines. Even in the context of the Fourth Industrial Revolution, we've set the slogan "catch up, keep pace, and potentially surpass." However, recent years have shown that the shift from extensive to intensive growth has not been successful. The economy is still not truly based on improving efficiency, productivity, and competitiveness, even in the most favorable locations.

We are aiming to break through to phase 3 (driven by science and technology, innovation, and digital transformation), while phase 2 (efficiency and productivity) is still incomplete. This is a core contradiction. It's impossible to shift to a science and technology-driven model if efficiency isn't the primary driving force.

It's not that we're unaware of the problem. The causes of this stagnation have been repeatedly pointed out by General Secretary To Lam. At the opening session of the 8th session of the 15th National Assembly, General Secretary and President To Lam stated that the three biggest bottlenecks currently are institutions, infrastructure, and human resources.

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Of those three bottlenecks, institutional issues were identified as the biggest, being constrained by outdated management thinking of "if you can't manage it, ban it" rather than "creating new opportunities for development." The state still focuses on "permitting" (pre-approval) instead of establishing clear rules and addressing violations (post-approval).

More dangerously, some legal regulations are created for the benefit of specific sectors rather than the overall good. As long as the "request-and-grant" mechanism exists, the markets for factors of production (land, capital, labor, science and technology) cannot develop, and resources cannot be allocated efficiently.

Digital transformation is inseparable from the real economy.

As General Secretary To Lam pointed out, institutional reform must be considered the breakthrough of all breakthroughs, because high growth is impossible when the legal environment remains restrictive, fragmented, and inconsistent. However, the current reform goal is not just to cut administrative procedures, but to fundamentally change legislative thinking.

A very clear example: The Investment Law has been comprehensively amended twice, but there are still more than 230 conditional business sectors, many of which are no longer relevant. The Party's 14th Congress document needs to clearly set the goal of abolishing all unnecessary business conditions, shifting from pre-approval to post-approval, and unifying the principle that specialized laws should not arbitrarily impose additional business conditions.

In this innovative legal system, the State plays the role of an arbitrator to ensure that all economic sectors develop fairly. This core principle must be clearly stated in the document.

In other words, the socialist-oriented market economy should be understood in a modern sense: all entities have the right to freedom of creation, business, and legitimate wealth creation within the framework of the law; the State only regulates to ensure order, safety, and development orientation. In this context, the new system is no longer a barrier, but becomes a driving force for growth.

In the context of the Fourth Industrial Revolution, we have the opportunity to accelerate with digital technology. However, digital transformation cannot be separated from the real economy, and digital technology itself cannot be the sole driving force. The real driving force lies in the capacity for innovation throughout society – when every business, organization, and individual is free to experiment and is protected in terms of property rights and creative rights.

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To successfully transform the growth model, three key factors must be emphasized. First, strongly develop the markets for factors of production – especially land, capital, labor, and science and technology. Second, the State should avoid administrative intervention and instead design an institutional framework to ensure transparent market operation. Third, comprehensively reform the administrative apparatus and build new capacities compatible with a modern market economy and deep integration.

Sustainable double-digit growth targets cannot be achieved with outdated thinking and practices. The document needs to shape a proactive state where laws are built to pave the way for development, an active government that constantly seeks to remove obstacles, unlock resources, stimulate innovation, and create truly dynamic zones to generate national momentum.

Dr. Nguyen Dinh Cung - Former Director of the Central Institute for Economic Management Research

Source: https://www.sggp.org.vn/kien-tao-cuoc-doi-moi-ve-the-che-va-tu-duy-phat-trien-post821564.html