Overcoming institutional ceiling

Mr. Buoi is a symbol of entrepreneurial spirit, a symbol of promoting national spirit as a strength. He is one of the first businessmen in Vietnam to affirm: "Making wealth is a great morality, not to be underestimated".

The movement of "Reviving the market and promoting industry" that he and other businessmen at that time launched still has its full value, motivating us to make efforts to improve the business environment, enhance competitiveness and develop businesses today.

I recall the example of Mr. Bach Thai Buoi to say that, right from the beginning of the 20th century, in a context of many difficulties, the entrepreneurial spirit of him and the businessmen of that time shone, competing with the French and the Chinese, bringing business confidence to society and the nation.

Returning to the story of Vietnam's current business environment, we have witnessed remarkable progress, especially in the past two years.

In particular, the Government has set goals of no overlapping inspections and examinations; no criminalization of civil economic relations; implementation of e-Government; reduction of at least 50% of administrative conditions and procedures...

The Government also set an important reform goal of making Vietnam one of the top 3 or 4 economies with the best institutional quality and favorable business environment in ASEAN and moving towards OECD standards.

Those resolutions are a great source of encouragement for the business community.

However, despite positive changes and the heat of reform gradually spreading, Vietnamese enterprises are still facing many difficulties and the path to reforming the business environment is still very arduous.

Nearly 60% of businesses are still operating unprofitably, with more than 78,000 businesses forced to dissolve or temporarily suspend operations in the first 10 months of 2018. Domestic private businesses are still inferior to state-owned enterprises and FDI in terms of scale, but suffer many disadvantages in accessing land, credit and reasonable interest rates.

58% of businesses still require conditional business licenses, and 42% of them said they had difficulty obtaining licenses. More than 40% of businesses were inspected two or more times in 2017 and 49% in 2016.

The World Bank's Doing Business survey shows that the cost of doing business in Vietnam is generally higher than in other countries in the region. Taxation costs in Vietnam amount to more than 39% of profits, the highest among ASEAN 4; the cost of complying with export documents is also the highest, nearly 4 times higher than in Singapore and more than 3 times higher than in the Philippines.

These are really worrying issues because they reduce the competitiveness of Vietnamese enterprises.

In addition, logistics costs still account for a high proportion of the business cost structure of enterprises in Vietnam. For example, the cost of transporting a container of goods from Hai Phong port to Hanoi or vice versa (about 100km) is three times more expensive than the cost of transporting a container of goods from China and Korea to Vietnam.

That is not to mention other costs such as loans, business premises rental, labor and especially unofficial costs that are creating burdens that are not easy to remove on the thin shoulders of Vietnamese enterprises.

Tearful jokes, only in Vietnam, such as "1 chocolate bar carries 13 licenses" or "the time it takes to raise chickens is shorter than the time it takes to get a license to sell chickens" still exist in many places.

Some ministries and sectors have only implemented administrative procedure reduction in areas under great pressure from the Government and public opinion in a perfunctory, unsystematic, and reactive manner.

A comprehensive reform plan to address the root cause of the problem, which is the request-grant mechanism, has yet to be outlined. As long as the laws are still designed in the style of “pipe laws, framework laws” and still need to have decrees and circulars from ministries and branches to guide, the situation of subsidiary licenses and cumbersome administrative procedures will be at risk of being transformed, restored, transferred from one form to another and still burdening businesses.

Therefore, reducing costs, both formal and informal, for people and businesses will still be difficult to implement thoroughly.

The Party Resolution requires that by 2020 we must fundamentally perfect the market economic institution according to the common standards of modern and integrated economies. The Prime Minister also often emphasizes: “Institution, institution and institution” is the key to development.

During many years of working with the business community, I have witnessed their strong and vibrant development after each institutional reform towards freedom, empowering people and businesses. The transition from a single-sector economy to a multi-sector economy has helped the economy to sprout, flourish and flourish, which is an example.

According to the assessment of the World Bank and the World Economic Forum, overall, the institutional quality in our country is still only average while the easy-to-pick "sweet fruits" of Doi Moi have run out, growth has reached its limit. If we are not determined to reform, we will forever be a low-middle income country, with nothing to be proud of. Average institutional quality will not help us escape the middle-income trap.

To develop rapidly and become a developed country, institutional quality must be outstanding and the government must be elite.

At present, the "ceiling" of institutions is still hindering the creative efforts of localities and establishments; causing difficulties for people and businesses in doing business.

In my opinion, to focus on the task of institutional reform, government agencies need to be freed from the things that society, the market and subordinates can do. The government must focus on core functions, it cannot be spread out and take on too many things.

In this direction, it is necessary to accelerate the equitization process, quickly remove the state-owned enterprise management function of ministries and branches, promote socialization and transfer of public services, including trade promotion activities, investment for society and the market, and promote decentralization to localities and grassroots in accordance with the spirit of the resolutions of the Party and the National Assembly.

To achieve even greater achievements in socio-economic development, ministries and branches must truly be the "chief architects" in institutional reform in each field, not just act as "foremen".

Government agencies need to pay more attention to deep, systematic and long-term institutional reforms to liberate people's strength and promote strong development of the domestic private economic sector - the foundation and main driving force for the country's sustainable and autonomous development.

Vietnam used to have businessmen like Mr. Bach Thai Buoi. Recently, we have witnessed the emergence of a group of billionaire businessmen. Not everyone who does business becomes a billionaire, but let’s make it so that everyone can do business in the most convenient and safest way with a business spirit that deserves respect: “Making wealth is a great principle that cannot be ignored.”