Debate over reform of the dominant state-owned sector is growing, but it is not being matched by action

Reform of Vietnam’s lumbering state-owned sector has slowed. The global economic and financial crisis has made conditions for “equitising”, or part-privatising, state-run companies more challenging, and some policymakers also seem to be having second thoughts about the process itself. The government is actively considering reforms, but it is likely to move cautiously, and there is still considerable resistance to challenging the state-dominated status quo.

Debate over Vietnam’s long-term economic development strategy is growing. Policymakers are preparing a Strategy for Socio-economic Development for 2011-20. One element of their discussion will be the viability (or otherwise) of the country’s current industrial strategy, and in particular Vietnam’s reliance on large state-owned enterprises (SOEs). For more than a decade, large SOEs have been at the forefront of the country’s industrial development strategy. This has reflected a belief in government circles that the fledgling private sector is insufficiently developed to take on this role, as it lacks a sufficient number of large and robust companies. …