However, in order to remove barriers and create motivation for new model of economic growth, Dr. Nguyen Dinh Cung said, these barriers must be removed immediately to facilitate the disbursement process of investment fund, with an aim to avoid delays in disbursement similar to what happened 2 years ago. On the other hand, it is necessary to improve efficiency in utilizing funds of state owned enterprises and domestic enterprises. 

For solutions to reform administrative procedures, in turn improves business environment and supporting enterprises development, Dr. Nguyen Dinh Cung said, the government should put more pressure on related administrative agencies to reduce at least 1/3 of the business conditions, and at least 1/2 types of goods subjected for checking before exporting/importing and transforming state management. 

Meanwhile, the government need to put up effort in reducing expenses for enterprises through measures such as reducing lending rates, logistics costs, social insurances, unemployment allowances. The increase rate of salary should not outpace productivity gains in accordance with agreement between employer and employee. Administrative agencies also to follow the Prime Minister’s instruction of not checking enterprises more than once a year, as well as to change attitude and the objective of checking toward support, instruction and help enterprises to follow the law, instead of to punish enterprises. According to Dr. Nguyen Dinh Cung, administrative procedures must be simplified with regard to reducing processing time, the number of required documents for submission, reducing fee in transforming the use of agricultural land; to provide preferential policies for transforming the use of agricultural land.

At present, the investment efficiency of foreign enterprises in Vietnam is a lot higher than domestic enterprises when taking the rate of profit over investment fund into account. As such, it is vital to improve competitiveness of domestic enterprises. 

In August, the government requested the State bank of Vietnam (SBV) to bring down banks’ lending rates to boost business activity. That came a month after SBT reduced its first official interest rate in three years. Quarter percentage-point cuts in both the refinance rate — to 6.25% — and the discount rate — to 4.25% — are feeding credit risks in a nation dealing with a bad debt-hangover from the previous bust. Inflation may be ticking up, too. The consumer price index rose an annualized 3.4% in September from 2.52% in August. Some experts suggested that a high level of credit booms in Vietnam are not sustainable in the long term, as a result, the government needs to consider potential risks and the increase in debt. 

As such, it would be important for Vietnam to continue with structural reforms. In addition to the effort of attracting foreign capital and foreign investors, it is necessary to strengthen financial institutions. That would give the government’s confidence to liberalize the capital account, increase transparency, get the state out of the private sector, make industry more competitive and companies more shareholder-friendly and curb the shadow-banking system. Bold structural reforms are needed to make productive use of capital inflows and slow the pendulum’s swing toward trouble.