VietNamNet Bridge – Chairman of the National Assembly's Financial and Budgetary Commission Phung Quoc Hien talked with Vietnam Economic Times about the State's role in the market-oriented economy.

Illustrative image. – File photo

The revised Constitution took effect on January 1 but there remain concerns over whether the State economic sector should continue playing the key role. What is your opinion?

While a number of countries are reviewing their development theory, we (Viet Nam) are on track for building and operating an effective market-oriented economy, which can serve as a base for the country's development. I support the fact that the revised Constitution says the State economic sector must play the key role. This would enable the State-run sector to guide and push forward the nation's economic development and help fix its downsides such as overly favouring benefits, unfair competition, not favouring essential goods, fraudulent trading, tax dodging, unemployment and negative impacts on the environment. No other economic sector could replace the State sector in doing those jobs.

So it seems the State still wants to take charge of managing the economy. Is that right?

We shouldn't worry about this as the revised Constitution says all economic sectors, including the State sector, will have to operate under market mechanisms. This means all participating sectors will have an equal playing field.

For the State to manage the market economy means that it will introduce a system of policies and regulations to serve as a base for the market to run on. The State's involvement in the market will be completely transparent. The State will only give administrative orders for the national benefit and to businesses that violate the laws, and will limit giving such orders to State-run enterprises. Management by mechanism, policies and laws should be upheld.

Does the State economic sector maintaining its key role mean State-owned enterprises (SOEs) will continue to be "favoured"?

We considered the SOEs' role while discussing the revision of the Constitution. From my perspective, the role of the State sector in the market-oriented economy is very significant. In fact, there is a lot of concern over the role of SOEs, as their performance has been poor and ineffective in past years. Quite a number experienced revenue losses and committed bad debts, causing the public to worry.

Poor management, whether at State-run, private or foreign-invested businesses, will definitely result in ineffective operation and revenue losses. There are SOEs that experienced revenue losses –but so did thousands of non-State businesses. The weaknesses and poor performance of the State economic sector, in my view, were not the result of its own nature, but loopholes in our policies and ineffective law enforcement. The selection of leaders and managers in the State sector has not been good, which led to abuse of power and corruption.

So in your view, the key role of SOEs should not be affected by the mistakes they have made?

We should go deeper into the role of SOEs. We should also admit that many are performing poorly and take responsibility to fix them, rather than denying their problems.

However, look at what the SOEs did during the economic downturn in recent years. Without them, would there be investment in developing remote and mountainous areas? Would private businesses invest in projects in poor and distant areas that have no potential to make revenue? SOEs did.

One more thing, if the SOEs operated only for their own benefit like other companies, then this would not fulfill the goal of leading the nation's economy under the State's orientation.

Source: VNS