Vice Chairman of the National Assembly’s Economic Committee NguyenDuc Kien spoke about economic restructuring in an interview with NhanDan (People) newspaper ahead of the 2014 Autumn Economic Forum.
*Inthe areas of economic restructuring, public investment, State-ownedenterprises and credit institutions, which do you think has made themost significant progress?
In my opinion, credit institutionrestructuring has recorded the most significant progress. The firstachievement is the establishment of a legal framework. The plan torestructure credit institutions during 2011-2015 was approved by thePrime Minister in March 2012 with Decision 254/QD-TTg, while the overalleconomic restructuring plan was not approved until February 2013. Thuscredit institution restructuring was implemented one year earlier thanthe overall economic structuring plan. Decision 254/QD-TTg is consideredthe earliest and most important legal effort to restructure the bankingsystem, opening an avenue to deal with weak banks and provide a roadmapuntil 2015, under which Vietnam needs to develop a system of largecredit institutions with better quality and performance.
Second,we promulgated the Law on Deposit Insurance, amended the Ordinance onForeign Exchange Control and issued the Decree on Gold TradingManagement. With these legal documents, the worst scenarios have beenconsidered. For example, the Law on Deposit Insurance affirmed that evenwhen credit institutions go bankrupt, the depositors’ interest will beensured by deposit insurance agencies. This helps calm the sentiment ofdepositors. The Ordinance on Foreign Exchange Control is a fundamentalstep to rule out foreign currency as a payment instrument for domestictransactions, while the Government’s Decree on Gold Trading Managementis a step towards streamlining management of the gold market, removinggold as a means of payment in the economy. Thanks to these measures,stability was re-established in the currency and gold markets, creating afavourable condition for the credit institution restructuring drive.Risks were reduced and credit institutions’ safety and liquidity wereimproved. So far, the most notable success of credit institutionrestructuring is preventing credit institutions from collapsing,ensuring the country’s monetary security.
*The result of credit institution restructuring is quite obvious. What about SOEs and public investment?
SOErestructuring also saw many successes. In terms of legal documents, wehave issued many decrees on enhancing SOE administration, streamliningmanagement of State capital in SOEs and financial management incompanies wholly owned by the State. Perfecting the legal framework isan important foundation to accelerate SOE restructuring. However, manylaws relating to this issue are still in the making and amendmentphases.
Regarding public investment, this sector is onlyregulated by the Government’s Resolution 11/NQ-CP on measures to curbinflation, stabilise the macro-economy and ensure social security issuedon February 2011, and the Prime Minister’s Directive 1792/CT-TTg onstrengthening management of public investment from State capital andGovernment bonds issued on October 2011. Meanwhile the Law on PublicInvestment was adopted in June 2014, so there has not been a full legalfoundation yet to restructure public investment. In fact, the number ofpublic investment projects dropped compared with 2011 but therestructuring has only dealt with simply reducing the number ofprojects, meanwhile further steps after project suspension have not yetbeen implemented.
*It is obvious that there are still manyproblems in the restructuring in these areas. Can you elaborate on whatis going to be discussed at the Autumn Economic Forum?
ThisAutumn Economic Forum will discuss a wide range of issues in these areasbecause they are strongly correlated. In public investment, we aregoing to discuss offering investment incentives by region and sector andhow these incentives should be provided so that they come in line withinternational integration commitments. From January 1, 2015, the ASEANCommunity will be formed and from January 1, 2018, the WTO’s graceperiod for Vietnam will end, creating much pressure on the Vietnameseeconomy. Therefore, we have to collect opinions of experts andadministrators on how to offer investment incentives to gain the mostbenefits. Regarding SOEs, one the goals of SOE restructuring isenhancing their performance, so that more SOEs can take part in theglobal value chain. The number of SOEs in the global value chain is agauge of the effectiveness of State capital in SOEs. For creditinstitutions, we must allow weak banks to go bankrupt and dissolve.Otherwise, bank owners will not be responsible for what they do. We havethe Law on Deposit Insurance so we are not afraid that depositors’interests will be jeopardised.-VNA
*Inthe areas of economic restructuring, public investment, State-ownedenterprises and credit institutions, which do you think has made themost significant progress?
In my opinion, credit institutionrestructuring has recorded the most significant progress. The firstachievement is the establishment of a legal framework. The plan torestructure credit institutions during 2011-2015 was approved by thePrime Minister in March 2012 with Decision 254/QD-TTg, while the overalleconomic restructuring plan was not approved until February 2013. Thuscredit institution restructuring was implemented one year earlier thanthe overall economic structuring plan. Decision 254/QD-TTg is consideredthe earliest and most important legal effort to restructure the bankingsystem, opening an avenue to deal with weak banks and provide a roadmapuntil 2015, under which Vietnam needs to develop a system of largecredit institutions with better quality and performance.
Second,we promulgated the Law on Deposit Insurance, amended the Ordinance onForeign Exchange Control and issued the Decree on Gold TradingManagement. With these legal documents, the worst scenarios have beenconsidered. For example, the Law on Deposit Insurance affirmed that evenwhen credit institutions go bankrupt, the depositors’ interest will beensured by deposit insurance agencies. This helps calm the sentiment ofdepositors. The Ordinance on Foreign Exchange Control is a fundamentalstep to rule out foreign currency as a payment instrument for domestictransactions, while the Government’s Decree on Gold Trading Managementis a step towards streamlining management of the gold market, removinggold as a means of payment in the economy. Thanks to these measures,stability was re-established in the currency and gold markets, creating afavourable condition for the credit institution restructuring drive.Risks were reduced and credit institutions’ safety and liquidity wereimproved. So far, the most notable success of credit institutionrestructuring is preventing credit institutions from collapsing,ensuring the country’s monetary security.
*The result of credit institution restructuring is quite obvious. What about SOEs and public investment?
SOErestructuring also saw many successes. In terms of legal documents, wehave issued many decrees on enhancing SOE administration, streamliningmanagement of State capital in SOEs and financial management incompanies wholly owned by the State. Perfecting the legal framework isan important foundation to accelerate SOE restructuring. However, manylaws relating to this issue are still in the making and amendmentphases.
Regarding public investment, this sector is onlyregulated by the Government’s Resolution 11/NQ-CP on measures to curbinflation, stabilise the macro-economy and ensure social security issuedon February 2011, and the Prime Minister’s Directive 1792/CT-TTg onstrengthening management of public investment from State capital andGovernment bonds issued on October 2011. Meanwhile the Law on PublicInvestment was adopted in June 2014, so there has not been a full legalfoundation yet to restructure public investment. In fact, the number ofpublic investment projects dropped compared with 2011 but therestructuring has only dealt with simply reducing the number ofprojects, meanwhile further steps after project suspension have not yetbeen implemented.
*It is obvious that there are still manyproblems in the restructuring in these areas. Can you elaborate on whatis going to be discussed at the Autumn Economic Forum?
ThisAutumn Economic Forum will discuss a wide range of issues in these areasbecause they are strongly correlated. In public investment, we aregoing to discuss offering investment incentives by region and sector andhow these incentives should be provided so that they come in line withinternational integration commitments. From January 1, 2015, the ASEANCommunity will be formed and from January 1, 2018, the WTO’s graceperiod for Vietnam will end, creating much pressure on the Vietnameseeconomy. Therefore, we have to collect opinions of experts andadministrators on how to offer investment incentives to gain the mostbenefits. Regarding SOEs, one the goals of SOE restructuring isenhancing their performance, so that more SOEs can take part in theglobal value chain. The number of SOEs in the global value chain is agauge of the effectiveness of State capital in SOEs. For creditinstitutions, we must allow weak banks to go bankrupt and dissolve.Otherwise, bank owners will not be responsible for what they do. We havethe Law on Deposit Insurance so we are not afraid that depositors’interests will be jeopardised.-VNA
