Vietnam’s growth motivation is no longer

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24% of target of economic restructuring is expected to be completed, 32% of targets can be completed and up to 41% of targets are difficult to be completed.

41% of targets are difficult to be completed

It is stated by Mr. Nguyen Dinh Cung, the President of Central Institute for Economic Management (CIEM) at the Mid-term Review Conference on Economic Restructuring for the 2016-2020 period held on 5th September 2018.

According to Mr. Cung, Resolution 27ND/CP on the Government’s action plan for the implementation of the task of economic restructuring and growth model renovation includes 16 major directives and policies, and 120 task groups implemented at ministries and sectors. Currently, 25.8% of the tasks have been implemented with specific results; 57.5% of the tasks have been implemented but have no specific results; and 16.7% of tasks have been implemented but do not have results yet.

According to the general assessment, 24% of the target of economic restructuring is expected to be completed, 32% of targets can be completed and up to 41% of targets are difficult to be completed.

For the economic growth, Mr. Cung said that, “Over the past time, Vietnam’s economic growth has significantly increased but in 2018, it is the first time the growth rate in the following quarter is lower than the previous quarter. This poses a question, whether Vietnam’s economic growth is on the downward trend or not?”

Regarding economic growth, the CIEM’s leader added that now the labor productivity has been improved, according to economic sector, industry and construction continue to be the mainstay of high economic growth, and the contribution of the mining sector to the economic growth has significantly declined compared to the previous time. Besides, the economic growth is no longer based on credit growth at the scale as in previous times.

"The results of economic restructuring in the first half of the 2016-2020 period show that macroeconomic is stable, growth is recovered with a quite high rate, the growth quality is improved and the mode of growth has positively changed compared to the previous time,” the CIEM’s leader said.

However, CIEM representatives said that the mode of allocating resources has been not changed. Resources have not been reallocated in the direction of improving efficiency. The big shift from agriculture to industry, service; from rural to urban; from State to private is still slow.

"The current growth motivation is no longer, and showing signs of decline in internal energy. If there is no different change of thinking, institutional reform, effective management and allocation of state resources, the remaining high and stable growth will be a big challenge,” Mr. Cung said.

Compliance cost significantly increase

According to statistics from the National Administrative Center, lawyer Le Van Ha said that Vietnam has more than 7,200 administrative procedures. Compliance cost of administrative procedures is high and expected to increase. Especially, fees related to business.

For example, the fee for registration of industrial property under Circular 263/2016/BTC-TT increased by 150-200% on average of the fees for announcement of standard conformity for industrial food, Food Fortification with Micronutrients increased 3 times (VND 1.5 million).

The time for implementation and completion of administrative procedures is prolonged, impacting the enterprises’ operation. For example, the registration procedure for Trademark monopoly is often prolonged beyond the time limit stipulated by the Intellectual Property Law.

For the bottleneck of business registration and procedures for announcement of standard conformity, Lawyer Le Van Ha said that, in terms of business conditions, most of the decrees regulating business conditions stipulate that State competent agencies shall grant certificate for eligibility for business, although the registration conditions “are certificate- qualification certificate, certificate of eligibility for food safety and certificate of firefighter standards.

“In order to legalize, regulations are enclosed with unspecific conditions such as having appropriate equipment, business plans, and business area diagrams," Mr. Ha said.

Regarding the procedures for announcement of standard conformity, Article 45, 48 of the law on Standards and Technical regulations 2006 stipulate that enterprises must register for announcement of standard conformity with the competent authority but these procedures are stipulated towards verification and granting rather than “registry”.

From this reality, Lawyer Le Van Ha proposed to abolish the procedure of certification of eligibility for business and transfer the inspection of business procedures to post-inspection, socialization procedures for registration of standard conformity.

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Proposing solutions for economic growth, CIEM’s leaders stressed that it is necessary to continue implementing current solutions in Resolution 19, Resolution 35, for handling bad debts, but must increase scale, speed and ensure accuracy. There must be an independent expert group to evaluate the draft decree on business conditions, specialized inspection before submitting to the Government and the Prime Minister.

In addition, the allocation of resources should be implemented by drastic solutions such as development of private enterprises and support "winners”, specifically, the collection of large-scale private investment projects in the country in industrial production, agriculture and tourism. Choosing and directing the concerned localities and ministries to immediately settle with issues related to land and business environment for the assigned land to be put into use, these projects can be deployed as soon as possible.

At the same time, proposing to implement incentives such as incentive for FDI enterprises, solve shortcomings on taxes, fees, import, export and support enterprises to expand export markets.