New arguments on development of socialist-oriented market economy in Vietnam
7/10/2016 10:13' Send story Print story

It is noted that market economy is a product of human civilization, which survives and adapts to different social forms. Though market economy has developed at high level under capitalism, it is not identical with or opposed to capitalism. Though not a perfect mechanism, market economy has proved to be able to mobilize and allocate resources, promote innovation and development which is considered the most dominant driver. A country which is based on market platform for economic growth might not succeed but a country without market economy will certainly not grow in the long run. Market economy itself does not lead to socialism, but it is important to develop market economy for successful socialism.

The option for socialist-oriented market economy for Vietnam comes from the right perception of Communist Party of Vietnam. Socialist-oriented market economy in Vietnam is a completely new model in the history with approximately 30 years of development. Therefore, the development of socialist-oriented market economy is a comprehensive, innovative and creative process in perception, critical thinking and practical reasoning. The Documents from 12th Congress of Communist Party of Vietnam has inherited, clarified and demonstrated new stage of development with several points to be mentioned for the first time.

Firstly, the socialist-oriented market economy in Vietnam is fully operated in line with the rules of market economy. This point had been mentioned several times in previous party congresses and has been clarified and specified in the 12th Congress. In fact, Vietnam’s economy has been gradually recognized as a market economy and will be recognized as fully operated market economy by World Trade Organization (WTO) members in 2018. Such recognition means that Vietnam’s market economy does not stand alone but carries with it all common characteristics of a market economy such as free business and competition, openness toward freedom, diversification in forms of ownership, identification of price based on value and supply-demand relationship, promotion of start-up with competition as driving force for development, allocation of resources for development and mitigation of weakness. Practical development of the country has vividly proved that without proper operation of market economy, we cannot free production forces for successful development and integration.

Secondly, Vietnam’s socialist-oriented market economy is modern and internationally integrated. This is the first point affirmed in 12th Congress’ documents by Communist Party of Vietnam which is necessary and appropriate with practical development of the country, reflecting the deep and broad international integration at different levels, instituting Vietnam’s economy as an organic composition of the global market economy. It also emphasizes the modernity and integrity of the socialist-oriented market economy in compliance with global standards for development, trade liberation, investment, finance, services, and high-skilled labor, etc. It is more important to comply with agreed commitments, make efforts in economic institutional reforms to meet requirements of full market economy. This new attribute requires Vietnam to continue its institutional reform for development, to renovate its growth model, and restructure the economy to improve productivity, quality and efficiency for rapid and sustainable development. It also integrates itself into global value chain and production network, with focus on the knowledge economy and innovation of modern scientific and technology platforms to set up markets of factors, goods, and services, develop advanced welfare and social security, promote and complete civilized standards in production and consumption.

Thirdly, the market plays significant role in effectively mobilizing and allocating development resources, which is the main driver for production force. In fact, Vietnam has operated its economy in line with this principle but this is the first time the idea was confirmed in an official document. Recently, Vietnam’s economy has undergone strong development of private sector, FDI, equitized state-owned enterprises, financial market, socialization of public services, innovative public-private partnership in construction and infrastructure, etc. Such growth has helped to unleash production force a well as internal and external development potentials. The prerequisite for resource mobilization and allocation is to ensure free trade and competition; to establish and improve healthy and transparent market mechanism; develop and promote and synchronized different forms of markets; enable fair and equal competition especially equality in opportunity for investment, production and conducting business with different economic stakeholders at the same time eliminate any discrimination against any sectors (individual or collective, private-owned or state-owned enterprises). The market also acts as major mechanism to allocate economic outputs, in which individuals’ income is corresponding to their capacity and labor contribution for the economic output. It is an important premise for every member in the society to promote their capability and potential, enriching themselves and the society.

Fourthly, private sector, which was previously considered as driving factor for the economy, is now further affirmed strongly and decisively in the 12th Congress.

The awareness of the critical role of private sector comes from vibrant development of the country’s economy. Private sector has enabled the dynamics of the country’s economy, contributing to job creation, income generation and bold breakthrough in new manufacture and business. In the integration process, private business has developed and reached out to global market. Vietnamese business persons are many in number, form and scale and have increasingly important voice and role in the formulation of country policy. Therefore, creating favorable conditions for private sector also means freeing development resources within society and maximizing its development potential. This point surely encourages start-up, innovation, and creativity for a breakthrough development of the country’s economy in the new period.

It is important to emphasize that state-owned enterprises play the key role while private sector is the main driver of the economy. That is not to discriminate against any sector but to imply the dependability of two sectors in the country’s economy. State-owned enterprises play steering role by managing strategic resources, developing infrastructure and providing public services, which require high investment and return lower gains but it is essential to the economy and society, especially when the private sector is not ready to assume such jobs as defense and security, high-risked investment, etc. In fact, state-owned sector always plays critical role in modern market economy. Examples include Nordic or Norwegian economies whose state economies are always strong and efficient, especially in petroleum, maritime and telecommunication. Therefore, many economists emphasize the importance of state economy even when it suffers from lower efficiency, especially at several state-owned enterprises at some certain stages. It is dangerous to deny role of state economy and state-owned enterprises. It is even more dangerous to be extreme in underestimating state economy and creating opportunities for private monopoly. Such argument helps to understand why the Communist Party of Vietnam continues its affirmation of steering role of state economy (or state-owned enterprises) in the new context which is in line with political program for country development (revised in 2011) and the Constitution of Vietnam (revised 2013).

Fifthly, state resources are allocated strategically following planned scheme and development policies which fit with market mechanism. At a low level of development as our economy, the State still plays an important role in socio-economic development. State uses its resources, tools, and policies to regulate its economy, promote the production, realize progress and social justice, and protect the environment. At current condition, allocation of state resources cannot be applied subjectively, regardless of plan and development scheme but should be based on market signals to ensure transparency and efficiency. This argument puts a decisive end to subsidiary mechanism of “asking - giving”, which acts as basis to handle scattered and inefficient investment especially in resource allocation of the State and society. It requires faster restructure of public investment, state-owned enterprises and state budget in accordance with market mechanism; special attention to handle bad and public debts. State has to shift from direct interference to creation of favorable conditions and development management with attention to stabilize macro economy, enable opportunity for start-up, establish legal framework, policies, and mechanism for smooth execution of different market forms in a transparent, effective and competitive manner. It can be said that compliance and conformation with rules of market economy have become thorough thought in organizing and managing our present country’s economy.

Socialist-oriented market economy is the overall economic model of Vietnam. Socialist orientation and market economy are the perfect whole. The development of market economy under socialist state management, under direction of Communist Party of Vietnam for the benefits of the majority of people. It focuses on human, works for human and creates human-centered development, which benefits and includes everyone. This is the humane attribute of socialist-oriented market economy, which is peculiar to Vietnam.

Socialist orientation is illustrated in many ways. The first is in development goals, which include successful development towards socialism and for people of Vietnam, and implementation of “rich people, strong country, democracy, equality, civilization”. The second is in mode of development, which is development of different forms of ownership, economic sectors in which state economy plays the key role, especially in overcoming limitations or failure of the market, ensuring the completion of development goals. The third is in mode of distribution, in which State manages social progress and justice step by step through development policies, distribution scheme based on economic efficiency, social welfare with special support for the poor, the disadvantaged and the most vulnerable. The fourth is in economic governance and management, which is the democratic implementation within society to promote public role in socio-economic development, to ensure management role of the State under leadership of the Communist Party of Vietnam.

The emphasis on new arguments helps us, common people, to have full awareness and confidence in the Party’s leadership. In order to successfully realize the resolutions from the 12th Congress, it is necessary to have synchronized and creative solutions. It is also important to have decisively strong political determination and action. Specifically, it is crucial to follow vivid reality of the country at different times, different locations, and in different fields of development. Three strategic breakthroughs and three focuses in restructuring country’s economy are associated to innovation of development model that were set out in 11th Congress remain intact and value. We should agree that, the new context brings potential opportunity but also poses visible challenges, especially in a deeper and wider international integration process and with existing weaknesses in the country’s economy. In order to take advantages of the opportunities and to transform challenges into opportunities, we need to be determined on the chosen path, which is the promotion of socialist-oriented market economy for a successful shift towards socialism in Vietnam for “rich people, strong country, democracy, equality, and civilization”.


Prof. Dr. Nguyen Xuan Thang

Member of Party Central Committee

President of Ho Chi Minh National Academy of Politics

Translator: Thanh Ha/ Proofreader: Vu Thanh Van