Tuesday, August 13, 2019, 10:02 (GMT+7)

Key role of the state economic sector in Vietnam’s socialist-oriented market economy undeniable

Promoting the state economic sector’s key role in the socialist-oriented market economy is of importance to maintaining the society’s stability and facilitating the national economy’s development. Our country’s 30-year-plus reform has proved that viewpoint and negated all distortions of this economic sector’s role.

On the state economic sector of Vietnam’s socialist-oriented market economy

The model of socialist-oriented market economy, which consists of many forms of ownership and various economic sectors, is the application of the market economy’s pre-eminent achievements to Vietnam’s specific conditions. The motivation for the development of this economic model is the harmonious combination of individual, collective, and social benefits. In the construction and development of our socialist-oriented market economy, the elements, means, and tools of market economy have been exploited and used flexibly in accordance with socialism’ goals. Socialist features of the market economy have been more clearly formed in the transition to socialism. The state economic sector is one of the most important tools in order that the State could regulate the national economy in the economic, political, and social terms. Economically, the state economic sector is based on the state ownership of means of production in accordance with the progressive socialization of the productive forces. It includes not only state-owned enterprises, but also the whole economic strength behind the State’s economic policies and management as well as its policy-making capacity, being the proper integration of state-owned enterprises, state finance, state law, and state management efficiency. With its combined strength, the state economic sector is able to provide facilities and socio-economic prerequisites for developing other sectors of the national economy. The state economic sector plays a key role as the backbone of the economy; therefore, it is capable of dominating the operation of other economic sectors and ensuring the economic development under the strategies. Politically, the state economic sector acts as a yardstick for measuring the socialist orientation in the economic development process as ours is a socialist State of labourers. To maintain the socialist orientation, it is vital to uphold the key role of the state economic sector so that it could be developed into the solid foundation of the national economy. Socially, due to its nature of ownership and its purpose of operation, the state economic sector plays a role of utmost importance in the society. As for non-enterprise components (budget and national financial and material reserve, etc.), in addition to their economic and political functions, they are assigned to perform the social function. Meanwhile, state-owned enterprises, which operate under the market’s rules, also have a significant role in the society. More specifically, those enterprises are responsible for sectors and fields in the difficult areas where private enterprises do not want to make investments, ensuring the balance of development between the regions, taking charge of the production of essential public goods.

In the process of development of our socialist-oriented market economy, our Party and State have determined to develop a multi-sector economy under the market’s mechanism together with the State’s management and the socialist orientation. As a result, resources from the economic sectors have been mobilized to fulfil the economic development targets and increase the rate of saving and investment in the GDP rapidly. The economic sectors under the law are all important components of the socialist-oriented market economy; they are all equal before the law, cooperate and compete with one another in a healthy manner for the sake of durable development. Among those sectors, the state economic sector plays a key role and acts as an important material force so that the State could orientate and regulate the economy and facilitate other economic sectors’ development. In spite of a decrease in the number and operating field of state-owned enterprises due to the restructuring, reform, and equatization process, they have made impressive progress in property, turnover, benefit, and tax revenue, played a core role in stabilizing and boosting socio-economic development, contributed to maintaining national defence-security, food security, and energy security, and served as the main force in international integration and FDI promotion. In reality, state-owned enterprises, such as Viettel Military Industry and Telecoms Group, Vietnam Posts and Telecommunications Group, Vietnam National Chemical Group, Vietnam Aviation Corporation, and Saigon Newport Corporation made great contributions to the GDP growth of 7.08% in 2018 (highest since 2008), (about 5.5 trillion); the per capita income reached 2,587 USD per year; agriculture grew by 3.76% (highest since 2012), industry and construction grew by 8.85%; manufacturing industry grew by 12.98% and became the driving force of the economy; services grew by 7.03%. Those achievements have proved that the model of socialist-oriented market economy is totally objective and in accordance with Vietnam’s condition. At the same time, Vietnam’s economic achievements provide convincing evidence for denying the hostile forces’ distortions of this economic model, which consolidates our absolute faith in the Party’s leadership over the country’s renewal and our model of socialist-oriented market economy.

It is impossible to deny the state economic sector’s key role in Vietnam’s socialist-oriented market economy

The hostile forces have been making tireless efforts to sabotage our state economic sector, with a focus on several state-owned enterprises’ weaknesses in management and business in recent years. In fact, some state-owned enterprises’ productivity and business effectiveness have been low; their competitiveness has been limited; some even have made heavy business losses. The equitization process among state-owned enterprises has been slow and created many loopholes that had led to the loss of the State’s budget and property. Privileges and exclusiveness for state-owned states have damaged the market relations, caused customers losses, and reduced the economy’s competitiveness and development. Those weaknesses have made negative impacts on the society’s assessment and perception of the state economic sector’s key role. More seriously, grounded on those weaknesses caused by several state-owned enterprises only, some people think that the state economic sector is not capable of playing the key role in the economy, and that setting the state economic sector as the core of the economy, Vietnam pays a bitter price. They demand to remove this sector’s key role and privatize all state-owned enterprises, while “advising” us to erase “the state economic sector’s key role” in documents and resolutions or “reconsider the state’s economic sector’s key role”. They argue that “the reason for the shortcomings of Vietnam’s economy is the inefficiency of state-owned enterprises and corporations. They advise Vietnam to equatize or dissolve state-owned enterprises. They deliberately ignore the fact that Vietnam’s economy now consists of various sectors and many forms of ownership, but the state ownership and the state economic sector are the feature and play the key role, which has stipulated in Clause 1, Article 51 of Vietnam’s 2013 Constitution.

Those are one-sided, unscientific arguments. It should be noted that weaknesses and shortcomings of a section of state-owned enterprises were caused by their business leaders and managers; there is nothing to do with the guidelines on the state economic sector’ key role. Moreover, all economic sectors, including the state economic one depend on the low-level productive forces while the market economy and international integration are new to Vietnam; therefore, weaknesses and shortcomings of our enterprises in general, our state-owned enterprises in particular are unavoidable. There is a fact that in Vietnam, not any private or foreign-invested enterprise remains productive. We have ever noticed many “tycoons” from the private sector suffering business losses or going bankrupt or engaging in criminal activities. It is clear to see that the efficiency of business and production is not decided by forms of ownership.

The undeniable achievements in our country’s 30-year-plus reform under the guidelines on developing a socialist-oriented market economy have proved that the state economic sector’s key role is in accordance with our people’s cause of socialist construction. Vietnam has integrated increasingly widely and deeply into the world’s economy and transformed from an underdeveloped country into a middle income nation with the rather high economic growth rate for many years. Vietnam’s GDP in 1989 was just 6.3 billion USD, but in 2018 it stood at 240 billion USD. Assessing Vietnam’s economic development, Peter Vanham, Media Lead, World Economic Forum, said: “When the 20-year War ended in 1975, Vietnam’s economy was one of the poorest in the world… Today, Vietnam is one of the stars of the emerging markets universe”. Vietnam has risen from a poor country which had to import food to one of the largest exporters of food, textiles, footwear, wooden furniture, and electronic components. So far, Vietnam has established trade relations with 230 countries and territories, being a member of the World Trade Organizations. 71 countries have recognized Vietnam’s market economy. Our country has also signed 14 new-generation free trade agreements with other countries, 11 of them have been effective. Practice is the criterion of truth. And all distortions of our Party’s guidelines on developing the socialist-oriented market economy and all arguments that encourage privatization of our economy could not change the achievements effectuated by our socialist-oriented market economy.

Associate Prof. Luong Minh Cu, PhD

Rector of Cuu Long University