The majority of our nation’s resources, especially those critical such as land and forests, are controlled, owned, or allocated by the State.

Add to this the extensive financial control wielded by the State through state-owned enterprises and commercial banks.

With widespread control over resource allocation, the government apparatus is notably large, comprising numerous units at the central and provincial levels, exercising authority. The size of this system, combined with a lack of clearly defined responsibilities at various governance levels, can lead to power misuse, often generating interest groups that seek to dominate resource distribution.

Another concern is that agencies disproportionately allocate funding to their own sectors, monopolizing resources, which results in underfunding for other sectors that need development. This exemplifies the inefficiency in resource allocation.

Moreover, persistent habits within the state apparatus call for significant reforms.

Vietnam has embraced a market economy for nearly forty years and is part of numerous free trade agreements (FTAs), including progressive ones like the CPTPP and EVFTA. These agreements necessitate reforms compatible with the market economies of partner nations.

Nonetheless, the reliance on an administrative command approach prevails, markedly diverging from the market-oriented governance seen elsewhere. This ingrained method is harmful.

The State often bypasses critical processes like research, investigations, and impact assessments in deciding on resource allocations. Moreover, it frequently neglects to consult with market stakeholders, social organizations, and the populace.

We do possess measures like grassroots democracy, public oversight, and media involvement. If effectively leveraged, these could serve as mechanisms to monitor both the State and market, guarding against wasteful resource distribution and usage.

Market activities also contribute to inefficiencies, particularly when companies overinvest in low-potential areas.

As lawyer Truong Thanh Duc has highlighted, the responsibility for institutional reform largely rests with the State, which holds the authority and accountability for resource allocations.

While various organizations and individuals have been assigned roles, accountability remains vague. This lack of clarity is a fundamental flaw within our policy structure, inevitably leading to wastage.

Mr. Nguyen Van Phuc, what is your evaluation of current mechanisms and policies aimed at achieving a socialist-oriented market economy to improve resource allocation?

Let’s revisit the insights shared by General Secretary To Lam. He pointed out the staggering levels of wastefulness that are unacceptable and pose risks similar to, if not greater than, corruption. The General Secretary has even dedicated an article discussing this issue.

I concur with the General Secretary’s assessment.

In recent times, how have we implemented various mechanisms, policies, and regulations to curb waste and encourage thriftiness?

In response, we uphold the Law on Practicing Thrift and Combating Wastefulness, mandating that the government must provide yearly reports along with verification from the National Assembly’s Finance Committee about thrift practices and anti-waste efforts to the National Assembly.

The Party and State have consistently acknowledged wastefulness as a major issue, one that incurs substantial harm to both the economy and the nation. By assessing leadership perspectives and on-the-ground observations, it becomes evident that misuse and neglect of countless projects and land areas are prominent. Waste and loss are pervasive.

During my tenure as a delegate in the National Assembly, concerns regarding waste and losses were my priorities. Many of my speeches and inquiries to ministry leaders revolved around these issues.

In advance of a National Assembly session, I sent out 19 pre-session inquiries to various ministers and government departments, requesting updates on how they were managing to prevent losses and minimize wasteful practices, which guided my forthcoming discussions.

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Challenges in Identifying Government Wastefulness

During my recent inquiries, I sought clarification from ministers regarding their departments’ wasteful practices; however, the responses were not satisfying. Instead of pinpointing concrete projects or significant instances of inefficiency, the conversations remained abstract, touching on risks and general principles.

I specifically addressed my questions to the Minister of Planning and Investment and the Minister of Finance, as I wasn’t able to question all ministers at once. My primary concern was whether our statistical system accounts for the extent of wastefulness in relation to GDP. While discussions about waste are often qualitative, a need exists for precise, quantifiable data, which can only be provided by agencies like the General Statistics Office or the Ministry of Finance.

Before his official reply, Minister Bui Quang Vinh privately mentioned, “You’re posing a tough question! How should I respond?” In addressing the assembly, he acknowledged the complexity of calculating the national wastefulness rate relative to GDP and emphasized the necessity of tackling this issue despite its difficulties.

Regrettably, the ministers that followed seemed to overlook both my inquiry and Minister Vinh’s acknowledgment. To this day, I have not encountered any reliable statistics indicating the ratio of waste to GDP in annual socio-economic reports.

Aside from annual government reports and reviews from the Finance and Budget Committee on frugality and anti-waste practices, the National Assembly actively oversees these matters.

As Vice Chairman of the Economic Committee, our oversight focused on waste in basic construction investments. This initiative was significant, yielding data indicating that in several areas, waste could reach up to 30% or even 50% in certain cases.

We questioned the authenticity of such figures, advocating for verified data rather than vague or estimated claims. The oversight team later confirmed the 30% figure, noting some instances may indeed be higher, yet we chose to reference “specific projects” without identifying particular parties involved. Our reports included attached details of projects associated with waste.

General Secretary To Lam has openly addressed these issues, correctly pinpointing the failures within infrastructures such as the 10 trillion VND anti-flood project in Ho Chi Minh City, which remains stagnant for years, reflecting significant waste. He also highlighted the incomplete status of two hospitals in Ha Nam as further evidence of wastage.

Identifying specific projects is essential as they represent not just abstraction but clear, tangible instances of waste.

Intangible wastefulness also poses a considerable issue, often arising from poor planning or impractical regulations that impact businesses, leading to unseen losses in time, effort, and finances.

What actions should we take now? How can we unequivocally define the roles of the market versus the State to enhance resource allocation and minimize waste?

This query might be better directed toward businesses and the public, as they hold the insight into effective practices for minimizing waste.

From a market perspective, Ms. Chi Lan has highlighted that globally and within Vietnam, the market provides the most effective mechanism for resource allocation, rather than reliance on the State. This fact has been substantiated—market forces efficiently guide resource distribution.

Nevertheless, markets have their shortcomings and cannot address every issue alone. While we advocate for a socialist-oriented market economy, the market itself is not intrinsically socialist. My interpretation is that it serves merely as a conduit for transactions influenced by objective factors.

It is the responsibility of institutions, Party policies, and state laws to direct the market towards socialist objectives.

This notion of “socialist orientation” is safeguarded through the institutions and policies established by the State. Thus, it is more accurate to refer to the “institution of a socialist-oriented market economy,” rather than the simplified term.

The Party emphasizes refining the institutions that align the market economy with socialist values, rather than merely the market economy itself.

In my opinion, while the market excels in resource allocation, whether it aligns with socialist values depends entirely on the legal frameworks and mechanisms in place.

In various sectors, the market has shown extraordinary growth once the State reduces its interference. For instance, initiatives like Khoan 10 have thrived in liberty, demonstrating that when allowed to flourish, markets can provide ample supply.

Even if apprehensions about the market exist, we must adapt to it. The market is inherently powerful and acts as a crucial corrective tool. Despite its flaws, the State should only manage a minimal portion of these issues. If the market falters, it is often due to our interference transforming its function.

Embracing a “market economy” reflects our institutional reforms, enabling national growth reminiscent of a phoenix. This overhaul has garnered global astonishment, positioning us for a new era. By dismantling institutional barriers and embracing change, our nation can confidently stride into a renaissance.

A market economy optimizes the supply of goods, swiftly addresses demand, and operates cost-effectively, thus reducing expenses and prices. High prices signal a malfunctioning market, as seen during the COVID-19 pandemic when face masks were regulated improperly, leading to exacerbated shortages.

The market today accurately reflects the policies and institutions we endorse. As Nguyen Van Phuc noted, “Success or failure hinges on the institution.” Misguided interventions can lead to detrimental consequences. Chi Lan pointed out how our actions have frequently contradicted market principles, resulting in a “non-market” approach.

The market holds great potential for positive outcomes if guided appropriately.

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Rethinking Market Intervention and State Roles

The market tends to regulate itself naturally based on its own principles and laws, creating an ideal balance. However, when external forces overly interfere, it can lead to market distortions and adverse outcomes.

To reform institutions, it’s crucial to minimize direct administrative interference in market dynamics. Instead, the focus should shift towards utilizing mechanisms, policies, and economic instruments for intervention.

As noted by Ms. Chi Lan, it is essential that interventions are guided by legal frameworks rather than administrative measures. Unfortunately, laws have often been twisted into tools of administrative intervention in the market.

The state’s involvement should be limited to rectifying market failures. Even in the most established economies, while state intervention exists, it is important to limit detrimental interactions while promoting beneficial actions.

For instance, when my daughter attempted to purchase a tael of gold and faced difficulties, it highlighted that market intervention should aim to enhance market conditions without contradicting its foundational principles. Acknowledging and aligning with market regulations is vital, as they are not negative by nature. Adapting to these laws supports the functioning of a vibrant market.

I hold the belief that no extraordinary intelligence, formidable force, or dominant nation can replace the market’s essential role, though the state’s influence remains significantly important.

Reflecting on past decades of reform, whenever the state took progressive steps, such as the Khoan 10 initiative that empowered farmers to cultivate freely and trade, it resulted in increased rice production.

While the market does not inherently espouse a “socialist orientation,” the state plays a crucial role in providing a legal framework that addresses market shortcomings.

As society progresses, it is vital that markets develop their own operational rules alongside the legal frameworks established by the state.

For example, businesses have widely embraced corporate social responsibility (CSR) standards. Firms not adhering to these standards often find themselves unable to export to developed nations.

When Vietnam first entered the Bilateral Trade Agreement with the United States, it was necessary for its export businesses, like textiles and seafood, to adopt CSR standards as a commitment to their international customers, leading to increased exports.

Recognizing the limitations of CSR, businesses began to embrace new standards like ESG (Environmental, Social, and Governance), which demand integrity, transparency, and ethical governance practices.

This continual push for improvement compels businesses to meet market demands that prioritize social responsibility, environmental care, and transparent governance.

Uncle Ho’s principle of “Three Builds, Three Fights” holds immense relevance today, addressing key issues as follows:

Combatting bureaucracy: The bureaucratic nature of the state often results in a disconnect with societal and market needs, causing misallocation of resources.

Tackling wastefulness: This issue refers to ineffective management of national resources. Despite being known as a land abundant in natural resources, waste has historically posed a severe challenge.

Addressing embezzlement: Weak oversight in bureaucratic systems not only encourages waste but also invites corruption.

These principles are essential for confronting the challenges faced in modern governance and resource management.

Mr. Nguyen Van Phuc: It’s important to differentiate between combating waste in the public sector versus the private sector, as their dynamics and tactics differ greatly.

While the Law on Practicing Thrift and Combating Wastefulness imposes mandatory requirements on the public sector, the private sector’s guidelines are merely advisory. Interestingly, the private sector has often proven more effective at eliminating waste than the public sector.

In the private domain, waste reduction is directly linked to production expenses and pricing; thus, the public sector can learn valuable lessons from private management practices for thrift and waste reduction strategies.

Public-sector wastefulness often arises from poor awareness, bureaucratic inefficiencies, and shortcomings in the legal framework, as highlighted by Ms. Chi Lan.

In contrast, wastefulness in the private sector is generally driven by financial or technological constraints rather than a lack of awareness. Private organizations routinely assess ways to cut costs effectively.

In households, children are taught by their parents to conserve energy, such as turning off lights and fans when leaving a room. These practices should also extend to public sector management. The state must initiate reforms in its institutions, legal structures, planning, and project execution. Currently, regular expenditures constitute an excessive 70% of the total budget.

General Secretary To Lam has highlighted crucial societal challenges regarding public assets, emphasizing that any misuse can lead to public discontent and sorrow.

Recently, at a meeting with the Vietnam Fatherland Front, of which I am a Central Committee member, I emphasized that a key duty is to oversee and provide feedback on initiatives aimed at combating wastefulness. The Front must evaluate and give input on each specific project and initiative aimed at this goal. Everyone in every organization must take concrete actions to combat wastefulness.

VietNamNet

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