State sector remains backbone of Vietnam's economy

THE HANOI TIMES — Vietnam’s state sector continues to serve as the backbone of the national economy, playing a central role in macroeconomic stability and long-term development.

This view is reaffirmed in Resolution 79 on state economic development, signed on January 6 by Party General Secretary To Lam on behalf of the Politburo.

The resolution defines the state economy as the core force of the economy and a critical resource, enabling the State to stabilize the macroeconomy, guide development and intervene when necessary.

At the same time, the state sector operates on an equal legal footing with other economic sectors and participates in cooperation and fair competition under market principles.

State economic resources must be managed transparently and efficiently, with full cost accounting and strict controls to prevent waste and losses, while taking the lead in innovation, digital transformation and the green transition.

The state economy includes assets owned, managed, or dominated by the State, such as land and natural resources, infrastructure, the State budget, national reserves, off-budget financial funds, state-owned enterprises and credit institutions, State capital in enterprises and public service units.

After nearly 40 years of Doi Moi (Renewal), the sector continues to play a role in guiding, leading and regulating the economy.

However, the Politburo noted that policies on the state economy have been slow to evolve, while the management and use of many State assets and resources remain inefficient.

Many state-owned enterprises operate below their potential, given the resources they control and their international competitiveness is limited. Long-standing shortcomings have yet to be resolved promptly, leading to waste and losses.

These issues stem largely from an incomplete understanding of the state economy’s role in a market economy, an inconsistent legal framework and weak enforcement discipline. Governance capacity remains limited and accountability of leadership has not been sufficiently strong.

Vietnam aims to become a developing country with a modern industry and upper-middle income by 2030, eventually transforming into a high-income country by 2045.

To meet these goals, the efficiency of the state economy must be enhanced and its leading and pioneering role strengthened.

By 2030, the Politburo targets having 50 state-owned enterprises among Southeast Asia’s 500 largest companies and one to three firms in the global top 500.

Vietnam is also expected to have at least three state-owned commercial banks among Asia’s 100 largest. Public service units will continue to be streamlined with stronger autonomy and expanded socialisation of public services.

By 2045, the state economy is expected to form a solid foundation, ensuring national autonomy and resilience while working alongside other sectors to achieve Vietnam’s development and high-income goals.

In this phase, national reserves, comprising State-managed financial reserves and strategic stockpiles of key goods, are projected to reach 2% of GDP and around 60 state-owned enterprises are expected to rank among Southeast Asia’s top 500 companies.

To meet these goals, the Politburo called for renewed leadership thinking and a more coherent and transparent legal framework to remove institutional bottlenecks, with strict law enforcement aligned with international commitments.

The resolution urges clear separation between political and non-profit mandates and commercial activities within the state sector, while ensuring a fair competitive environment for all economic sectors and promoting public-private partnerships.

Administrative reform will continue through reduced direct intervention, a shift from pre-approval to post-supervision and improved workforce quality with income levels aligned to the labour market.

Stronger supervision of state asset use

The Politburo also called for the completion of national databases and stronger supervision and evaluation of State capital and asset use.

Overlapping inspections and audits must end, violations must be handled strictly and lost assets must be recovered to the maximum extent possible. Stalled projects should be resolved more quickly to unlock resources.

Land is reaffirmed as a special means of production owned by the people and uniformly managed by the State, with nationwide land measurement, inventory, digitisation and data integration to be completed by the end of 2026.

Equal access will apply across all economic sectors, with priority land allocation for infrastructure, industry, services, urban development and social housing.

Infrastructure assets will be developed in a coordinated and modern manner, with expanded use of public-private investment models to improve project construction, management and operation efficiency.

State-owned enterprises will be selectively invested in and developed into strong, large-scale groups that play a leading role in key sectors. The State will encourage consolidation, mergers and transfers to enhance overall sectoral efficiency.

Policies will ensure adequate capital, interest rate support and sufficient credit for national priority projects or overseas investments assigned by competent authorities beyond enterprise plans.

By the end of 2024, total assets of 671 state-owned enterprises, including 473 fully State-owned firms and 198 with over 50% State ownership, exceeded VND5.6 quadrillion (US$224 billion), up 45% year on year. These enterprises hold dominant market shares in sectors such as energy, telecommunications and banking and contribute about 29% of GDP.

Total revenue reached nearly VND3.3 quadrillion ($132 billion), up 24%. Pre-tax profit stood at nearly VND227.5 trillion ($9.1 billion), up 8%. Contributions to the State budget reached nearly VND400 trillion ($16 billion), up 9%.

The Politburo called for the early review and resolution of weak projects and persistently loss-making enterprises, with clear accountability to enable timely bankruptcy or restructuring and prevent prolonged waste.

The State Capital Investment Corporation (SCIC) will be restructured into a professional capital investor to form a national investment fund. Meanwhile, the Vietnam Asset Management Company (VAMC) and the Vietnam Debt and Asset Trading Corporation (DATC) will have their capacity strengthened to support market-based restructuring of state-owned enterprises and commercial banks.