The government is implementing the first steps of the Economic Restructuring Plan for 2021-2025, setting out the requirements for a more effective and substantive implementation based on strengthening and maintaining macroeconomic stability, in line with the vital tasks according to the resolution of the 13th Party Congress.

The Economic Restructuring Plan (ERP) is a continuation and concretisation associated with specific conditions of the next period. In the previous five years, the implementation achieved many important results, completing targets and increasing growth and labour productivity.

As an advisory body to the government and the Ministry of Planning and Investment’s Central Institute for Economic Management (CIEM) emphasised that Vietnam needs to develop an economy and competitiveness based on science, technology, and innovation.

CIEM director Tran Thi Hong Minh said, “This is a completely new point compared to previous documents, contributing to the recovery and development of the economy in the next period.”

As the pandemic continues to depress the global economy and disrupt supply chains, Vietnam’s business community has been particularly interested in the government’s current approach.

Vu Tien Loc, former chairman of the Vietnam Chamber of Commerce and Industry, said, “The operation of some markets remains limited and underdeveloped, which could affect the recovery of production and business.”

Loc stated that the restructuring in the 2016-2021 period remained limited, especially since the ability to mobilise and absorb capital was not high.

“The connection between supply and demand in the labour market and the quality of human resources has not yet met the requirements. The market for land use rights, especially agricultural land, is still inadequate. The science and technology market develops slowly, not representing a driving force to improve productivity and competitiveness,” Loc said.

In the new ERP for the 2021-2025 period, for the first time, the task of corporate development is placed centrally, with the requirement to promote the connection between businesses of all sectors and foster innovation.

In that direction, the proportion of the private sector’s contribution to GDP during this period was raised to about 55 per cent. The role of foreign direct investment is also promoted through investment attraction mechanisms that also encourage the transfer of advanced technologies and modern governance.

The ERP sets the target, that by 2025, the country will have 1.5 million enterprises, of which there are up to 70,000 medium- and large-sized ones.

“This goal is a huge challenge, as every year there must be about 180,000 businesses added,” Loc commented.

Last year, the whole country had about 116,800 newly-established enterprises, but 119.8 businesses suspended operations or left the market.

Restructuring the economy now can still create new achievements, according to many domestic economists, thanks to breakthrough solutions of the government and the country’s long-term development potential.

Part of these solutions will be to launch short-term monetary and fiscal packages, promulgate specific mechanisms for several localities, and pilot the application of shortened administrative procedures to promote public investment activities.

Dr. Nguyen Dinh Cung, a member of the Prime Minister’s Advisory Group for the previous and upcoming five years, commented, “The ERP to 2025 has five ongoing key tasks in most areas of the economy, including restructuring public investment, state budget, finance and banking, and strengthening regional links.”

Cung also explained, “Institutional reforms should be the focus of economic restructuring. New institutional reforms must continue to expand the freedom to do business of people and companies by removing all barriers, not only by allowing them to choose what they do but also how they do it.”

Vietnam has set the target to become a developing country with modern industry and high middle income by 2030 and, by 2045, to become a developed country with high income.

“The internal strength of the Vietnamese economy still has great potential for development, with the current foundation, the economy can grow up to 10 per cent a year. The important issue is to improve the efficiency use of the country’s resources,” said Cung.

“The total social investment accounts for 34 per cent of budget expenditure. If the capital efficiency index is lowered, GDP can increase to over 8 per cent per year. Resources are waiting to be restructured such as inefficient state-owned enterprises, abandoned land, and private enterprises. If investment efficiency is increased, Vietnam can have 10 years of high-speed growth,” he added.