Economist Dr. Le Dang Doanh says Vietnam needs to create an equal playing field for all economic sectors, instead of only emphasising the role of state-owned enterprises (SOEs).

Economist Le Dang Doanh

SOEs are given many incentives, but many of them have low productivity

According to Doanh, although SOEs are given higher priority than firms from other economic sectors, many of them have proven to operate ineffectively.

Doanh made his suggestions in a recent interview with reporters on the role of SOEs before contributing his ideas to the 11th Party Congress’s draft documents scheduled to be published for public review in mid-September of this year.

One of the major contents of the documents attracting economists’ attention is “Developing a socialist-oriented market economy” which defines an equal competition environment among economic sectors and the decisive role of SOEs.

“It is about time for the country to create an equal playing field for all economic sectors, instead of only emphasizing the role of SOEs,” said Doanh.

He said that it would be a contradiction to talk about the equal competition while exaggerating the role of the state-owned economic sector, adding that SOEs should be trained how to overcome “storms” to become stronger and more competitive for their better performances in global integration.

The economist said there are no scientific and economic foundations to say that SOEs can regulate macro-economic situations such as price management. Vietnam should control price fluctuations by the Law on Competition to have a clear punishment mechanism for violators, Doanh suggested.

“A comprehensive reform on the state management apparatus should be made. The State should not participate in business fields, but focus on the areas of education, health and infrastructure development. The reform will help limit the current overlap which allows a deputy minister to act as a chairman of the board of directors as well,” Doanh noted.

Doanh felt that SOEs are given many incentives, but many of them have low productivity, such as the example of Vietnam Shipbuilding Industry Group (Vinashin).

The nearly-bankrupt Vinashin faced debts totaling VND86 trillion ($4.41 billion) at the end of June this year, accounting for 4.8% of the nation’s GDP. The Vinashin case is a lesson for the lax management on the state economic sector.

Doanh warned however, comprehensive reform should be made gradually to form a healthy and equal competition environment for all firms in the Southeast Asian country.