From 2011 to 2015 Vietnam restructured its economy, focusing on investment, enterprises, and the banking and finance system. But the result has fallen short of the goals.

From 2016 to 2020 the economic restructuring plan seeks an economic structure which is more dynamic and results in higher productivity and stronger competitiveness while ensuring sustainable, green growth.

Scenarios for economic restructuring

The economic restructuring plan from 2016 to 2020 has two scenarios. The first would drastically restructure the economy to obtain breakthroughs. The second would enhance the current economic structure.

Both could be expected to have a positive impact on the economy and growth model, increasing GDP growth, curbing inflation, reducing state budget inflation, improving investment efficiency, and shifting the economic model. The first scenario is expected to generate more visible results in the middle and long term. The government’s current goals are mostly in line with the second scenario although some things might possibly be pushed ahead drastically as in the first scenario.

Tran Hoang Ngan, a National Assembly deputy for Ho Chi Minh City, says: “The government has introduced several solutions and scenarios, which means we have predicted challenges. Vietnam’s economy has deeply integrated into the global economy. It is now sensitive to global socio-economic developments. The plan mentions leverages, capital mobilization measures, the state budget, and other impacts on the economy.”

Effectively implementing 5 key restructuring elements

The plan consists of 5 elements, covering the major tasks of economic restructuring and the responsibilities of localities. Two of the elements are new: restructuring revenue collection and restructuring expenditures and public debt to ensure budget stability. Deputy Prime Minister Vuong Dinh Hue, a National Assembly deputy for Ha Tinh province, says the ultimate issue is to spend and borrow within the economy’s ability to pay. It’s also important to increase revenues. Mr. Hue said the government will not increase taxes. The government encourages individual traders to establish start-ups which will be subjected to tax management under the law.

Phung Van Hung, a National Assembly deputy for Cao Bang province, said: “The 2016-2020 restructuring plan should include oversight of the restructuring process. I hope the NA will issue a resolution on restructuring. One important thing is personnel. Voters expect the party and state to be tougher in combating corruption and special interests to ensure the plan’s success.”

Pham Phu Quoc, a NA deputy for Ho Chi Minh City, says the restructuring plan should mention the role of the business community: “To promote the private economic sector, the government should support start-ups as well as the establishment of private corporations. I suggest the government form an agency in charge of managing state capital and assets during the privatization of state enterprises to avoid losses. Capital from privatization should be used for development investment. I also propose 4 momentums for restructuring private economy, state economy, foreign investment, and farmers at a moment.”

Vietnam has introduced an economic restructuring plan for 2016-2020 at a moment when the quality of growth, labor productivity, and competition remain low. Implementation of the 2016-2020 restructuring plan will consolidate Vietnam’s internal strength for resilient development.