Socialist Republic of Vietnam

Ha Noi, Mar. 6 (VNA) - Deputy Prime Minister Vu Khoan highlighted Viet Nam's renewal policy which, he said, is based on three buttresses: first, to develop a multi-sectoral economy; second, to utilise the mechanism of the market economy; and third, to integrate into regional and international economies.

Khoan was speaking at the current 13th Asian Corporate Conference in Ha Noi on Thursday.

He explained the first buttress, saying our phylosophy is that the resources of the whole society are the motive force for development.

He said: "In light of that phylosophy, we encourage all citizens to consider all legal fields for development of production and business operations. We have come a long way from having two economic sectors: the State and the cooperative, to six economic sectors, including the private and the foreign-invested sectors, all being encouraged to develop on a long-term basis."

Among the economic sectors in Viet Nam at present, the Deputy PM laid stress on two sectors that most concern world public opinion, i.e. the State and the private economic sectors. He stressed:

"Regarding the State economic sector, we do not follow the way of massive privatization because such a way only leads to loss of national property, drives working people to destitution, and brings about social disorders.

"Moreover, in the context that the world economy has been facing numerous troubles, especially in recent times, our State needs instruments that can ensure stability for the macro-economy. What’s important is not the form of ownership but efficiency of business operations. Some State-owned enterprises can fare well; private businesses may run at a loss, even giant firms in other coutries.

"Recognizing this issue, we take the way to restructure businesses under the direction that the State holds part of the stakes and raise efficiency of those businesses that have impacts on the whole economy and society. Regarding other businesses, equitisation, transfer, sale or lease is applied and even declaring bankruptcy is acceptable in cases of businesses running at a long term loss.

"In this line, State-owned enterprises have been dwindled from 12,000 to 5,000 in 2002 and is likely to drop to 3,000 by 2005. Therefore, this policy will continue to be progressive in the years to come.

"Parallel with reforming the State-owned enterprises, we have encouraged the development of other economic sectors, which now contribute nearly 48 percent to the GDP. Two years after the Law on Enterprises came into effect, 53,000 private businesses were set up, not to mention 3,700 foreign-invested businesses, including wholly-foreign invested ones, which make up 14 percent of the GDP and constitute a component of Viet Nam's economy.

"We advocate to building a legal framework applicable to various businesses, then creating an equal and liberal playing field."

Speaking on the second buttress, Deputy PM Khoan said:

"Our philosophy of the market economy is that this is an initiative which incorporates not only positive points that should be used for national development but also negative ones which should be averted in order to ensure equality and make socio-political life healthier. In this direction, businesses should be prepared for changes on both domestic and world markets. Prices, foreign exchange rates and interest rates thus should be formed in reference to market changes. The State only exercises macro-management over the economy through the issuance of laws and policies. I am surprised when people refuse to acknowledge Viet Nam's economy as a market economy. In many countries, market mechanism has taken shape for hundreds of years now, while we have just been into it for no more than 20 years. Not surprisingly, there remains much for us to do in order to build and complete those markets that are non-existent or still fledging, such as securities, property, human resources and the science and technology markets, so as to improve operations of the finance-banking system.

"One of the unavoidable affects of the market mechanism is the polarization of the rich and the poor among people of different socio-economic bankground and regions. This is unacceptable in our view. Therefore, we are placing high priority on poverty reduction programmes, thus providing equal opportunities to all people and all regions for development."

Deputy PM Vu Khoan affirmed that no country can develop in isolation from the rest of the world, and that no nation can take advantage of global economy if that nation is not strong enough.

He added:

"We, on one hand, are bringing into full play our nation's internal strength in terms of capital, labour, natural resources, and market, while on the other hand, intensifying international cooperation and integration into the world and regional economy. This is a major, long-term policy. The question is the tempo of integration which should suit the economy without causing any upset in socio-economic life.

"To this trend, we are on the way to put an end to non-tariff measures and differences between local and foreign owned businesses, thus gradually reducing and then waiving protection barriers and opening the market along a proper itinerary. We would like to draw attention from representatives of local and foreign businesses to the fact that the Vietnamese State can give protection to foreign partners in a specific period of time and to some extent because your Governments, while negotiating withViet Nam, have asked us to eliminate protection barriers as soon as possible.

"Immediately, we should build and complete the legal system in line with demands of the market mechanism and the process of integration. The laws to be amended are on Value Added Tax, Special Consumption Tax, Individual and Corporate Income Tax, Banks and Credit Organizations, State-owned Enterprises, Land, Bankruptcy, and the Labour Law. We also intend to issue the Law on Competition and Anti-Monopolising."

The Vietnamese Government leader also spoke of the country's top priority to raise the competitiveness of the State, businesses, trades and services.

"We therefore are striving to perfect our legal system in order to ensure transparency and consistency, to accelerate administrative reform, and to fight corruption and unnecessary bureaucracy."-