Reforms must be key focus to revive economy

Reform thinking needs to be the key focus, in order to revive, restore and develop the economy under the current prevailing circumstances. 

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Effective policies on institutional reform and improvement of the investment and business environment needs to be changed consistently, for reforms to show across all levels.

Realistic implementation

Resolution 02/NQ-CP of the Government has been considered as the key to economic recovery and development. The Government now has a strong commitment from 2022 to improve the quality of reforms as well as improve the ranking of business environment indicators, in sync with the improvement of national credit ratings of Moody's, S&P, and Fitch.

The Government is currently determined to improve Competitiveness in 4.0 ranking according to the ranking of the World Economic Forum (WEF). This calls for the raising of ranking of the Corruption Control Index to ten levels, the Land Administration Quality Index by at least one level, and raising the Index of Access to capital for small and medium enterprises (SMEs) by atleast two to three steps. There is also need to improve in Innovation Capacity according to the ranking of the World Intellectual Property Organization (WIPO), in which the rankings of the Information Technology Infrastructure Index and the Knowledge Intensive Labor Recruitment Index and the Higher Education Index be raised by atleast five places.

However, the results of the business environment in general have been slowed by the negative impact of the Covid-19 pandemic. In this situation, the whole country has had to share resources, time, and effort to combat the disease. In order to counter the slowing of the economy, along with the requirement to issue quick and timely decisions for pandemic prevention and control measures, we must accelerate institutional reform both in magnitude and speed.

Compared with other regions in the world, although many areas have shown improvement, Vietnam's ranking in some aspects is still low or has not shown much improvement, or even decreased in 2021 compared to 2020. For instance, the Innovation Index has dropped two places from 42nd position to now at 44th position. Property rights also have dropped from 78th place to 84th place along with Perception of Corruption decreasing from 96th position to 104th position currently.

It is true that the pace of reform has slowed down in recent years, especially during the outbreak of the Covid-19 pandemic. However, one of the reasons reform is slowing down is that we have not focused on actual quality. We have been reforming for a long time, so the current reform issues are not limited to one ministry, but require the coordination of many ministries and sectors. For instance, specialized inspection is an area that requires not only the Ministry of Industry and Trade, or the Ministry of Health, but also inter-ministerial coordination. In international competition, Resolution 02 states that improving the business environment must be internationally competitive, so it is also what makes the implementation of our reforms more difficult. The requirements of reality and investors force us to reform more strongly to meet the requirements of today's new competitive environment.

However, besides some setbacks, we also have some advantages. The first is the strong commitment of the Government, and central and local agencies. Next, the National Assembly is now very active, and in the last extraordinary session of the National Assembly the discussion was on resolving only one problem, which is to remove institutional barriers related to the authority of the National Assembly. This move shows the willingness of agencies, and even the highest legislative body, to reform institutions and improve the business environment.

Consistent effort

Currently, instability is increasing along with concerns of the Russia-Ukraine ongoing war situation. In the immediate future, it can be seen that tourism businesses will continue to suffer under extreme negative impacts, as international tourists may have to reschedule their plans. Input costs of almost all production activities tend to increase when gasoline prices increase. At the beginning of the year, when talking about economic recovery and development plans, we didn't anticipate these things. Even the data on business registration in the first two months of 2022 had a higher rate of enterprises withdrawing than newly established enterprises, but did not show all the difficulties enterprises are still facing.

Therefore, Resolution 02 has made it very clear that in the coming time, the Ministry of Planning and Investment will be the leading unit, which will focus on reforming more evenly. The current state of unequal reform will greatly limit the overall results, and such results will reduce benefits. I really hope that enterprises play a role in monitoring the process and promptly report to the Government on difficult issues and problems that need to be immediately resolved.

It is therefore evident that reform will be more difficult, and more comprehensive in terms of both requirements for investors and businesses and there will be a race with other countries to attract high-quality investment flow. Hence, we need to see what all has to be done, and do it better and more effectively. In my opinion, the answer to all problems lies in clear regulations, strategic thinking and consistent actions. The opportunity to create stronger policy and reforms is very open when the National Assembly is ready to step in soon, together with the Government in reviewing and evaluating the legal system. At this time, a project that takes two to three years to complete because of multiple procedures, will not draw much interest by any business enterprise.

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