The post-Covid-19 period is a decisive opportunity for Vietnam to realize its aspirations to become a high-income country by 2045, and continue to strongly promote the process of economic restructuring and transformation of the growth model in order to completely overcome internal weaknesses, in parallel with solving a series of newly arising problems.

The principles of resource allocation must be made more appropriate and effective.

Resource allocation

Evaluating the process of economic restructuring in the 2016-2020 period, PhD. Dang Thi Thu Hoai, Head of Sector and Sector Economic Research (CIEM), said that economic restructuring in the 2016-2020 period has achieved many positive results. By 2020, 16 out of 23 major targets assigned in the Government's Resolution 27 in 2017 are expected to be completed and likely to be completed (accounting for nearly 70%). Of which, five important goals have exceeded the targets, contributing to creating substantial progress in economic restructuring.

However, besides the positive results, the process of economic restructuring still faces many challenges. Restructuring the economy in the 2011 – 2020 period has not achieved the goals for Vietnam to overcome the middle-income trap and move to a higher position in the development process. The localization rate is low and the private sector remains weak. For state-owned enterprises, the objectives of improving efficiency and competitiveness have not been completed. The autonomy of public non-business units is slow, especially in finance. The scale and financial capacity of credit institutions are still limited, the restructuring of weak credit institutions has not been implemented completely, and bad debts are potentially risky.

Those internal weaknesses were exacerbated during the Covid-19 pandemic, especially in the context of an increasing number of forecasts showing that the world economy will see many changes and shift into a new state in the post-Covid-19 period. The challenge of the next period is not only to completely overcome the shortcomings that exist from the previous growth model but also to propose a new path due to the impacts of Covid-19.

According to Dr. Nguyen Dinh Cung, the main cause of the ineffectiveness of the economy is the non-market resource allocation system, which does not rely on factors of efficiency and this is an issue that needs to be analyzed to find solutions.

According to an earlier CIEM study, the industries that contribute the most to GDP are not the most invested. The allocation of investment resources into sectors, fields or localities is not based on the level of development or efficiency but mainly on administrative factors.

“Therefore, the allocation of resources is the core focus of economic restructuring. And to solve the problem of economic efficiency, it is not necessary to divide the restructuring scenario by industry or sector, but only to build an effective allocation mechanism and thereby let the market lead," Mr. Cung said.

Promote three key elements

According to many experts, this period is a decisive opportunity for Vietnam to realize its aspirations to become a high-income country by 2045, and continue to strongly promote the process of economic restructuring and growth model transformation in order to completely overcome internal weaknesses, in parallel with solving a series of newly arising problems.

At the same time, focus on improving the efficiency of resource allocation through synchronous development of all types of markets combined with taking advantage of opportunities of digital technology and encouraging innovation.

In particular, the results of the process of economic restructuring, the focus on restructuring public investment, state-owned enterprises and credit institutions was previously an important premise in the next five years to focus on developing more synchronously all kinds of markets. From there, building a healthy, fair and favorable competitive business environment, promoting innovation and developing the private economic sector.

According to Mr. Nguyen Tu Anh, Director of Department of General Economy, Central Economic Committee, restructuring is also the principle of reallocating resources, to choose where to prioritize investment and to arrange priority.

Especially in the context of the post-pandemic economy, the means of production and consumption will see significant changes, which will require more appropriate and effective resource allocation principles.

"In the past, we allotted investment equally but not according to efficiency. Each province gets a rate of investment that increases year by year instead of having to be invested enough to concentrate projects that are large enough, giving a boost for the region and in the coming years there may be no need for investment,” said Mr. Nguyen Tu Anh.

Besides changing the principle of resource allocation to be more appropriate, PhD. Cao Viet Sinh, former Deputy Minister of Planning and Investment, said that, like in other countries, the Covid-19 pandemic is causing the biggest changes, especially in economic order and economic structure.

The economy, the mode of governance, economic activities and the way of organizing people's economic life will also be different. Therefore, it is necessary to focus on analyzing the current state and solutions to promote three important factors of the economy, including labor productivity, competitiveness, and resilience to unusual events in the future. The above three factors are capable of determining the health of each economy.

According to Dr. Nguyen Thi Thu Trang, Director of the WTO Center (VCCI), with participation in many Free Trade Agreements (FTAs), especially the Vietnam-EU Free Trade Agreement (EVFTA), is expected to bring positive signals in import-export and investment activities, Vietnam needs to develop sustainable trade when joining new generation FTAs ​​because implementing sustainable development is a guarantee for a sustainable future of the economy. Implementing the commitment to sustainable development is also ensuring the economy's reputation in international trade and attracting sustainable investment. Businesses will benefit from the priority for green goods, meeting the requirements of sustainable development is a necessary condition for them to access large markets, important customers, and potential partners.