Vietnam is already a market economy

The US Commerce Department held a hearing on the potential designation of Vietnam as a market economy on May 8. This is an important step in the process of reviewing the application for recognition of Vietnam’s market economy status, which is of great interest to the public. Dr. Nguyen Duc Kien, former head of Economic Advisory Group to the Prime Minister, granted an interview to Nhan Dan Newspaper to discuss this issue.

Q: From the perspective of an economic researcher, what do you think about the US Commerce Department’s hearing on upgrading market economy status for Vietnam on May 8?

A: The US Department of Commerce’s holding a hearing on whether Vietnam meets the criteria of a market economy is a positive sign in the diplomatic relations between the two countries. This shows that Vietnam’s reforms in implementing the Party Platform for national construction during the transitional period to socialism (amended in 2011) and the Resolution of the 13th National Party Congress have been moving in the right direction.

During the hearing, one of the contents Vietnam most interested in was the US’s commitment to respecting each other’s differences in political institutions. This is being implemented by both sides, in a manner befitting of the Vietnam-US relationship at the comprehensive strategic partnership level. A positive point that can be seen through the hearing is that Vietnam’s institutional reforms have been noticed and considered by international organisations, especially in the US, the country that defines the rules of the market economy. That was a positive outcome because in the past, what we did was assumed to be wrong, but now, Vietnam actions are recognised by others. In my opinion, it is a progress in awareness and in the relationship between the two countries.

Q: What do you think about the opposing viewpoints among research organisations and associations in the US regarding the Commerce Department’s considering the recognition of market status for Vietnam?

A: In the process of developing a market economy, even capitalist countries themselves have many different models. If France’s market economy is an old growth model, the US chooses a new market economic growth model. Germany and Austria are social market economic models while Nordic countries develop a welfare market economy. The market economies in different countries depend on their culture, ethnicity, geography, and mineral resources to achieve rapid economic growth and improve the living standards of the people. Vietnam’s goal of building a socialist-oriented market economy is completely compatible with the path that other countries have chosen and experienced.

During that process, some domestic and foreign experts comment that Vietnam has not done well, reflected in the limitations in the state-owned enterprise sector and the intervention of the State in the market, specifically regarding petroleum and electricity. This opinion is one-sided, not giving an overall picture of the characteristics of the Vietnamese economy. Regarding the petroleum market, Vietnam does not restrict wholesale enterprises from participating in the market but stipulates that this is a sector with specific business conditions whereby businesses must meet the requirements of warehousing, capital, and foreign currency for import.

Therefore, it is easy to misread that the State still has a monopoly in the petroleum market. But if looking at specific data on the market, market share, and the ability to ensure petroleum supply even in mountainous areas, it is obvious that only state-owned enterprise Petrolimex is responsible for supplying petroleum throughout the country, even in areas without profits. This means that the State is performing the function of ensuring social security and is also part of the function of a welfare state. That is a simple and straightforward explanation of Vietnam’s market economic model.

Regarding State intervention in businesses, we can see in the story of handling the banking crisis in the US in 2023 when the government of this country must pledge that people’s deposits in banks would not be lost. Vietnam also has a similar solution when dealing with weak banks. Otherwise, what will happen to businesses, the people, and the economy? I think it is necessary to look broadly to understand that handling economic situations must be very flexible towards long-term goals to see that the process of operating the socialist-oriented market economy in Vietnam is transparent.

Vietnam’s success in operating the socialist-oriented market economy model is the stability, which limits the negative impact of the market economy on society and people at an acceptable level, without mass unemployment and homelessness.

Q: Within the set of criteria to determine a market economy, in which areas did Vietnam perform best?

A: One of our successes is that we have perfected and synchronised institutions to operate the economy smoothly. Of course, there are times when the institution shows inadequacies, but even the US established the Chip 4 Alliance and declared not to sell this technology to unfriendly countries. That is State intervention in the economy, and it can be seen in every country. An economy is determined to be a market economy when it operates according to a market economy and during that process, the State decides which direction to proceed.

We need to explain to international friends that Vietnam’s legal system, especially after the birth of the 2013 Constitution, have most of the laws promulgated compatible with the international legal system and international treaties to which the Government of Vietnam has committed. So far, no organisation in multilateral and bilateral cooperation with Vietnam has reported that the country broke its commitments.

In addition, Vietnam achieved the goal of hunger eradication and poverty reduction early. Our concept of social security and socialist-oriented market economy has been recognised by the world through hunger eradication and poverty reduction and leaving no one behind. These are our success and what we feel most proud of.

Q: With the rapidly increasing trade flow between the two countries, how will the US recognition of Vietnam as a market economy benefit each side?

A: From an economic perspective, being recognised as a market economy will help Vietnam expand trade and investment with the US, indirectly creating more jobs. US companies will also have more opportunities to access the market and export to Vietnam, thus contributing to promoting the supply chain in accordance with US interests, especially at the present time, with Vietnam emerging as a major production hub for consumer electronics and garments, and with the potential for the development of the semiconductor industry.

Most importantly, the US’s early recognition of Vietnam’s market economy status will contribute to concretising the commitments of the two countries’ senior leaders and strengthening the Vietnam-US Comprehensive Strategic Partnership relationship, thereby promoting economic and trade relations and bringing practical benefits to the businesses and people of both sides.

Thank you very much!

Source: Nhan Dan News