Vietnam needs VND10,000 trillion for economic restructuring

The government estimates that the restructuring would cost VND10,500 trillion, or US$480 billion. Of this amount, VND3,570 trillion, or US$180 billion, would be from the ministries’, branches’ and localities’ budgets, while VND1,400 trillion, or US$68 billion, would be from foreign direct investment (FDI).

The government is also considering mobilizing capital from ODA (official development assistance) and preferential loans. This amount is estimated at US$39.5 billion from 2016 to 2020.

The state’s divestment from state-owned enterprises is believed to bring US$15-US$20 billion in the 2016-2020 period. 

In principle, the state’s resources will be mobilized in some cases to implement the economic restructuring task, especially the restructuring of credit institutions and settling bad debts.

I wonder how the government will get such a big sum of money to carry out the restructuring,” said Pham Chi Lan, a renowned economist.

She warned that it would be difficult to implement the restructuring based on state capital as mentioned in the Ministry of Planning and Investment’s plan, especially in the context of the tight state budget and reduced ODA capital.

Truong Van Phuoc, deputy chair of the Vietnam Finance Supervision Council, estimates that Vietnam will need US$25 billion to settle bad debts and need VND180 trillion to deal with the assets at credit institutions in the next five years. 

This is because, even if the national economy grows well, there will still be VND60-VND70 trillion worth of new debts.

Meanwhile, Nguyen Dinh Cung, head of the Central Institute of Economic Management (CIEM), thinks that the problem does not lie in the mobilization of resources, but in efficient resource re-allocation.

Believing that Vietnam has been mobilizing resources at a high level (there is US$400 billion in the state economic sector, but it has not been used effectively), Cung said if Vietnam still concentrates on mobilization, the economy would “descend into a pit’ and not take off.

He said that the most important thing is the reallocation of resources and efficient use of resources.

Meanwhile, Huynh The Du from the Fulbright Economic Teaching Program emphasized fairness when regulating the economy.

“Fairness means that the best flute player needs to be given the best flute,” he said. “But in Vietnam now, the worst player is given the best musical instrument’. 

State-owned enterprises perform ineffectively and always receive preferences, while private enterprises have to struggle to survive.