The efficient circulation of resources plays a pivotal role in both economic prosperity and business success.
Progress and Challenges
Vietnam, like the rest of the world, is currently navigating a historic transition marked by rapid, unprecedented transformations. The domestic economic landscape has shown signs of gradual improvement, seemingly emerging from the most challenging period. While the economic outlook is increasingly positive, numerous formidable challenges lie ahead. Meeting annual and long-term targets has become even more challenging.
The World Bank's prediction of a "lost decade" until 2030 is no mere coincidence. Short-term challenges loom for 2023 and 2024. These forecasts serve as warnings about an enduring trend of significant difficulties, and surmounting these challenges will prove no easy feat. Though conditions may have improved, they do not guarantee the same favorable circumstances seen during the initial planning stages.
Examining the broader picture, Vietnam faces significant hurdles. First, growth and growth momentum have experienced a prolonged, continuous decline. Over the course of more than 30 years of reforms, while the average growth rate remains respectable, each successive ten-year period has seen a nearly 1.0% drop in GDP growth compared to the average rate. Second, Vietnamese businesses exhibit resilience and remarkable survival abilities, but their growth is slow and maturation challenging. Third, resources are congested, and the economy yearns for capital but struggles to absorb it.
Vietnam managed to overcome the COVID-19 pandemic, unlike many other nations worldwide. The Vietnamese economy stands strong, fostering momentum and a position of growth and development. In a global economic downturn with diminishing investment flows, Vietnam's achievements in attracting foreign investment, sustaining economic growth, and maintaining macroeconomic stability are highly commendable. However, the question arises: why, despite their exceptional resilience and survival instincts, do most Vietnamese businesses remain small and fragile, with some even dwindling in size?
In reality, Vietnamese enterprises constitute one of the most critical elements determining the country's economic development. Yet, the number of new businesses being established has decelerated and become increasingly challenging, reflecting an unprecedented situation in Vietnam's more than 30 years of innovation. Are Vietnamese businesses genuinely hindered by numerous barriers and conditions, making growth difficult or even seemingly unattainable?
Unlocking Resources
We currently face a "developmental adversity." Despite the government's tireless efforts to introduce robust policies and solutions supporting the economy and businesses during tough times, and despite the banking sector lowering interest rates four times while implementing various measures to ease access to capital, credit growth remains sluggish. It is evident that the economy thirsts for capital yet struggles to absorb it. Many businesses also thirst for capital but find themselves unable to borrow, hesitant to do so, or not in need of borrowing. Congestion in resource circulation stands as the root cause preventing these resources from being transformed into drivers of development. Consequently, the economy remains fragile, vulnerable, and perpetually at risk of instability.
Capital must always remain in motion. Capital that lies dormant is dead capital, no longer serving its intended purpose. As such, it is imperative that resources do not remain immobile. Activating these resources and harnessing their potential must consistently rank as top priorities in our economic activities. Vietnam's most pressing economic issue today revolves around "unlocking resources" to liberate them and generate a robust, fresh impetus for growth and development.
To facilitate resource circulation, we must first curtail the allocation of resources through administrative mechanisms. We must promote market development, particularly in input markets, laying the foundation for resource distribution to occur in accordance with market principles and competition. Simultaneously, we should encourage market development that adheres to smart, market-based principles, while fostering responsible administrative and management apparatuses for development.
The reality of Vietnam's innovation and market-based economic development process provides a unique lesson in harnessing internal resources. By embracing the private economy and markets and officially recognizing and permitting the operation of a multi-sector economy, the economy promptly rebounded and experienced remarkable growth.
Consider, for example, electricity and rice, both vital commodities but perennially susceptible to shortages despite their indispensability. While rice was still subject to subsidies, it remained in short supply. However, once food prices shifted to a market mechanism, Vietnam swiftly emerged as a rice-exporting powerhouse. Electricity prices, on the other hand, are still regulated by the state and maintained at low levels. The electricity price mechanism has not evolved, trapping us in a cycle of electricity shortages that deter investment and encourage wasteful consumption. This reality underscores that Vietnam's comparative advantage must be promoted and transformed into a competitive advantage. Failure to do so will result in economic stagnation.
Unlocking resources and harnessing our internal strength will enable the economy to recover, break through current constraints, and flourish. Our abilities and potential must translate into genuine strength and serve as drivers of progress.
Linh Chi (transcribed)
