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[Podcast] Restoring aggregate demand to promote growth in 2024 – Viewpoint from the perspective of building a socialist-oriented market economy in Vietnam (Part 2)

23 September, 2024

Keywords: Market economy, aggregate demand, growth promotion in 2024

The socialist-oriented market economy is one breakthrough in the thinking and the practice of leading the innovation cause of the Communist Party of Vietnam. In the upcoming time, Vietnam needs to develop counter-cyclical fiscal policies to stimulate demand during a period of declining global growth; reversing the decline in public investment, increasing efficiency and concentration through national monitoring and regional development plans; modernizing the social security system suitable for middle-income, industrialized countries; making fiscal policy transparent. This proposal by the author group from University of Economics Ho Chi Minh City (UEH) is to be presented in the research topic titled “Restoring aggregate demand to promote growth in 2024 – Viewpoint from the perspective of a socialist-oriented market economy in Vietnam”.

In accordance with the current state of the domestic and international context analyzed in Part 1, the author group has put forward opinions and proposals for developing a socialist-oriented market economy in Vietnam in the new context in the following Part 2.

Perspectives on developing a socialist-oriented market economy in Vietnam in the new context

Firstly, the goal of the socialist-oriented market economy in our country is to realize “rich people, strong country, fair, democratic and civilized society”, improving the quality and the efficiency of productive forces creating outstanding labor productivity and constantly improving people’s lives; to promote hunger eradication and poverty reduction, to encourage people to become rich legitimately, to help others escape poverty and gradually become better off. This goal represents one difference from the all-for-profit goal of serving the interests of capitalists, protecting and developing capitalism.

Secondly, to consistently implement a multi-sector economic development policy, considering all legal business economic sectors as important components of a socialist-oriented market economy in the long-term development, cooperation and healthy competition. The State economy must promote its leading role in the national economy, be a factor paving the way for economic development, be an important material force and a tool for the State to orient socialism and regulate the economy at the macro level. The Collective economy includes the diverse forms of cooperation, including building cooperatives according to a new approach associated with international practices. The State helps Cooperatives train staff, apply science and technology, information, expand markets, and build funds to support cooperative development. The private economy is encouraged to develop widely in production and business sectors that are not prohibited by law. It is to create a favorable business environment in terms of policies and laws for the private economy to develop on the priority directions of the State, including abroad investment; transformation into a joint stock enterprise, share selling to employees; joint ventures, linkages with each other, with the market economy and the State economy. It is also to build mutual relationships between business owners and employees.

Thirdly, to implement progress and social justice right in every step and every development policy; strengthening the economy closely and synchronously with social development, culture, education and training, solving social problems for the purpose of human development. Limiting the negative impacts of the economy market economy. In terms of distribution, the socialist orientation is expressed through a distribution regime mainly based on labor results, economic efficiency, and social welfare; concurrently, so as to mobilize all economic resources for development, distribution can be conducted in accordance with the level of capital contribution and other resources.

Fourthly, synchronously to create market factors; to innovate and to improve the effectiveness of the State’s economic management. In general, the socialist-oriented market economy in Vietnam has just initiated, the level is being limited, many markets are being primitive and have not been synchronized yet. Therefore, it is necessary to promote the formation of various types of markets. Pay special attention to important markets that are currently not completed according to international practices listed as: labor market, stock market, real estate market, science and technology market. On the other hand, the State’s role in macro management and regulation must be strengthened so as to effectively fight against acts of corruption and waste and so on. The State creates a favorable and equal legal environment for businesses to compete and to cooperate for development.

Fifthly, to be fully aware, to respect and to apply properly the objective rules of the market economy, international practices, in accordance with Vietnam’s conditions, ensuring socialist orientation. Selectively inheriting humanity’s achievements in developing the market economy and experience summarized from innovation practices in our country. Improving the Party’s leadership capacity, effectiveness and efficiency of State management, promoting the strength of the entire political system in the process of developing Vietnam’s socialist-oriented market economy in the new context.

Sixthly, properly solving social problems and implementing social justice is a very important content of the socialist orientation of Vietnam’s market economy, ensuring the superiority of the new social regime. This not only creates a strong driving force to develop production and to increase labor productivity but also implements equality in social relations, encouraging people to get rich justly and legally, and regulates social relationships. 

Orientations and solutions for developing a socialist-oriented market economy in Vietnam in this new context

Firstly, it is to continue to improve institutions, to promote development and to improve business performance. For SOEs, the key task is to accelerate the handling of bad debts, to divest capital, to equitize and to restructure businesses, to promote innovation, to improve technology levels and to apply modern corporate governance regimes. Concurrently, closely inspect and supervise to prevent loss or waste of State capital and assets. The State supports and encourages the development of cooperative economic models, cooperatives, small and medium-sized enterprises, and farm household economics in agriculture. Complete policy mechanisms to promote private economic development, considering the private economy as one of the important driving forces of the economy. Develop strong Vietnamese private enterprises, improve technology levels, develop human resources, expand markets, improve income and working conditions of workers, and participate in social activities, protecting the environment, fulfilling social responsibilities.

Secondly, focus on reviewing, amending and supplementing laws, mechanisms and institutionalizing policies. First of all, fully institutionalize ownership rights, property rights, and business freedom, improve a favorable, attractive, public, transparent, and open business investment environment to attract investment. Provide favorableness for production and business activities of enterprises, especially creating a favorable environment for the formation and the development of startup ecosystems, promoting startups and business innovation; Support and encourage the birth and the operation of new fields, production and business models, new technologies, and new products based on the achievements of the 4.0 Industrial Revolution; Support and promote growth model transformation; Restructuring the economy to improve productivity, quality, efficiency, and competitiveness of the economy, gradually implementing digital transformation for industries and fields, developing the digital economy and circular economy, sharing economy in line with the general development trend of the world.

Thirdly, raise awareness of the state management apparatus towards changing the thinking and awareness of the society and each subject in the economy regarding regional development linkages and linkage effectiveness. Think about the linking localities in the region that needs to be in the direction of the central agency playing a central role, leading and coordinating regional links through building necessary institutions; Local governments need to aim for regional development and regional linkage thinking, avoiding the mindset of “maintaining a closed production structure” or “closed economic development”. It is necessary, as soon as posible, to build and to develop a system of information, data, and exchange of socio-economic information, with updates on guidelines, policies, institutions, cooperation programs, and multilateral, bilateral intra-regional and inter-regional cooperation activities, market and employment forecasts, at each level from central, regional to local.

Fourthly, harmoniously resolve the relationship between State, market and society in developing Vietnam’s socialist-oriented market economy. Fully promote the role of the market in allocating production resources, regulating production and circulation of goods, regulating enterprise operations and purifying weak enterprises. Concurrently, continue to innovate and to improve the efficiency of the State’s economic management; focus on improving the quality of construction and implementation of laws, policies, strategies, planning and plans; promote administrative reform; maintain macroeconomic stability and create development. Create conditions and promote the role of socio-political organizations to protect the members’ rights and interests, criticize and comment on laws and State policies, supervise businesses, State agencies and staff, civil servants and public employees in law enforcement.

Fifthly, build and perfect institutions to promote the digital transformation process. Accelerate the development of policy and legal frameworks for building E-government towards digital government. Build and perfect the legal framework for new business models applying high technology, sharing economic models, transactions, digital asset management, venture capital, new accounting payment methods, authentication and electronic identification systems. Complete the construction as soon as posible and put into operation and use of important databases and national connection and sharing platforms.

Sixthly, synchronously implement solutions to develop human resources, especially high-quality human resources to meet the requirements of socialist-oriented market economic development. Focus on improving the quality of human resources associated with rapid transformation of labor structure, especially in rural areas. Effectively deploy the new national education system in accordance with the goals of fundamental and comprehensive innovation in education and training. Diversify training methods in accordance with the open education model, national qualifications framework linked to the market and meet the requirements of the 4.0 Industrial Revolution. Be ready for human resources in terms of digital transformation, digital economic development, and digital society.

Seventhly, build and concretize a system of criteria to determine the characteristics of Vietnam’s socialist-oriented market economy. Regarding ownership structure and economic components, it is a multi-ownership, multi-sector economy; Enterprises of all economic sectors are autonomous, cooperative, and compete fairly according to the law. Regarding operating mechanism, the economy operates according to the market mechanism with the management of the socialist law-governed State led by the Communist Party of Vietnam. Regarding the level of development, there is an increasingly modern production force with reasonable structure; growth in depth; have high productivity, quality, efficiency and competitiveness; be an independent, self-reliant and proactive economy, active international integration.

Last but not least, improve the quality and the effectiveness of international integration, review and make additional adjustments to the legal system and related mechanisms to meet the requirements of implementing international commitments. Build and perfect the coordination mechanism between Ministries, Branches and Localities in implementing integration and market access commitments. Innovate trade and investment promotion, provide information to support businesses, and develop markets, especially export markets. Improve capacity to prevent and to resolve international trade and investment disputes.

Please refer to the full research titled “Restoring aggregate demand to promote growth in 2024 – Viewpoint from the perspective of building a socialist-oriented market economy in Vietnam” HERE.

Author group: Assoc. Prof. Dr. Pham Thi Kien, Dr. Bui Xuan Dung – Universsity of Economics Ho Chi Minh City (UEH).

This is an article in a series of articles spreading research and applied knowledge from UEH with the message “Research Contribution For All – Research For The Community”, UEH respectfully invites dear readers to look forward to upcoming newsletter UEH Research Insights.

News and photos: Author, UEH Marketing and Communications Department

Voice: Thanh Kieu