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Increase competitiveness when export turnover comes from domestic enterprises

If industrialization only replaces imports, it is very easy to fall into overprotection. Photo: H.Diu

Commenting on the Draft Action Program of the Government to implement Resolution No. 29-NQ/TW dated November 17, 2022 of the 13th Party Central Committee on continuing to promote industrialization and modernization of land country to 2030, with a vision to 2045, VCCI has proposed to supplement and adjust a number of targets.

Specifically, VCCI proposed to add a number of indicators on capital market development, such as national credit rating, country risk, savings and investment to GDP ratio for the medium-term period, credit debt for the industrial sector, the capitalization value of industrial production enterprises on the stock market.

VCCI believes that the experience of industrialized countries in Asia shows that the role of the capital market and the economy's ability to save and invest is especially important to be able to accumulate capital to promote industrial production.

In addition, the VCCI proposed to add more quotas on the export of industrial products in general and the processing and manufacturing industry in particular, and classified by economic sectors.

The reality of many other countries shows that if industrialization only replaces imports, it is very easy to fall into excessive protectionism and cannot escape the middle-income trap. In contrast, export-oriented industrialized countries, especially when exports come from domestic private enterprises, are more competitive and more sustainable when they cut protectionist measures.

The VCCI also believes that the number of inventions is an easy-to-observe indicator and reflects quite a lot of the level of industrialization of the country, so it is necessary to add some indicators on the industrial property such as the number of inventions to the list of industrialization indicators.

Regarding the group of tasks and solutions to implement the action plan, through research, VCCI recommends that it is necessary to add more solutions to enforce the law on competition, especially the acts of an agreement to limit competition in the group of industrial enterprises.

The reason is that the process of national industrialization will often have to choose a number of economic sectors that maintain protectionist measures, restricting market access to foreign countries. In those industries, a number of enterprises will be selected to enjoy preferential policies for a period of time in order to build industrial production capacity. In such a period, these enterprises are less subject to competitive pressure from new and foreign enterprises.

However, according to VCCI, many studies have shown that this is an environment prone to acts of anti-competitive agreements between enterprises, resulting in businesses no longer motivated to improve technology, productivity enhancement, and failed industrialization policies.

Therefore, in order to be able to industrialization, along with maintaining industrial policy, it is always necessary to ensure that enterprises are not allowed to engage in anticompetitive agreements or violations of other competition laws.

Resolution No. 29-NQ/TW sets a target that by 2030, the average GDP growth rate will be about 7%/year. Vietnam is in the group of three leading ASEAN countries in industrial competitiveness; the industrial proportion reached over 40% of GDP; the proportion of the processing and manufacturing industry is about 30% of GDP.

A number of large-scale, multinational domestic industrial corporations and enterprises have been formed, with international competitiveness in the foundation industries, priority industry, and spearhead industry; building and developing a number of domestic industrial clusters with large scale and international competitiveness; own a number of industrial and agricultural value chains.

Therefore, the draft action program of the Government has proposed 10 groups of tasks and specific solutions for ministries, branches and localities with 59 key tasks.

For example, with the Ministry of Finance, in the task group on building and perfecting institutions and policies to promote industrialization and modernization, this agency must build and complete the national database on financial resources; formulating and implementing tax policies to encourage the development of science - technology, innovation; balance the annual state budget for science, technology and innovation according to regulations.

In the task group on financial policy innovation, the Ministry of Finance needs to renew tax incentives in line with international practices, with a focus on prioritizing the development of ecosystems and product, and service value chains; sustainable development of the stock market, becoming an important medium and long-term capital mobilization channel for industrialization and modernization.