The State-Owned Enterprise Paradox: Why Vietnam’s Reform Strategy Needs a Radical Shift
There’s a fascinating paradox at the heart of Vietnam’s economic narrative: while the country has become a poster child for rapid growth and industrialization, its State-owned enterprises (SOEs) remain a stubborn bottleneck. These entities, controlling assets worth over $172 billion, are supposed to be the backbone of strategic industries. Yet, their performance often feels like a relic of a bygone era. Personally, I think this disconnect isn’t just about inefficiency—it’s a symptom of a deeper misalignment between Vietnam’s ambitions and its reform strategies.
The Problem Isn’t Just About Reorganization
One thing that immediately stands out is the call by Nguyễn Đức Hiển, deputy head of the Party Central Committee’s Commission for Policies and Strategies, to rethink SOE reform. His argument isn’t revolutionary, but it’s refreshingly candid: administrative reshuffling isn’t enough. What many people don’t realize is that Vietnam’s SOEs aren’t failing because of poor management alone; they’re failing because the system itself is designed to prioritize control over innovation. From my perspective, this is where the real challenge lies.
Take, for instance, the fact that 695 SOEs are overseen by 45 different ministries and agencies. This fragmented governance structure is a recipe for inertia. If you take a step back and think about it, it’s like trying to steer a battleship with a committee—decisions are slow, and accountability is diffuse. What this really suggests is that Vietnam needs to move beyond bureaucratic tinkering and focus on creating agile, competitive corporations that can lead in sectors like infrastructure, technology, and public services.
The Hidden Cost of Slow Reform
What makes this particularly fascinating is the timing. Vietnam is at a crossroads, aiming for sustainable growth by 2030. Yet, SOE restructuring has been glacially slow, especially since 2021. This raises a deeper question: can Vietnam afford to wait? In my opinion, the answer is a resounding no. The longer these reforms are delayed, the more Vietnam risks falling behind in a global economy that rewards speed and innovation.
A detail that I find especially interesting is the contrast between SOEs’ resource control and their performance. Despite holding massive assets, many of these enterprises are struggling with low productivity, outdated technology, and weak governance. This isn’t just an economic issue—it’s a strategic one. If Vietnam wants to be a regional leader, its SOEs need to be more than just state-backed entities; they need to be engines of innovation and competitiveness.
The Role of Governance: A Double-Edged Sword
Governance reform is often touted as the silver bullet for SOE woes, but here’s where it gets complicated. Resolution 79, which mandates OECD-standard governance by 2030, is a step in the right direction. However, what many people overlook is the cultural shift required to implement it. Vietnamese officials are often risk-averse, fearing accountability more than embracing innovation. This isn’t just a legal issue—it’s a psychological one.
From my perspective, the key lies in balancing autonomy with oversight. SOEs need the freedom to make bold investment decisions, but without robust accountability mechanisms, this could lead to mismanagement. Personally, I think Vietnam should look to models like Singapore’s Temasek Holdings, where state enterprises operate with commercial discipline while serving national interests.
The Stock Market: A Missing Piece of the Puzzle
Another underappreciated aspect is the role of the stock market. Hoàng Văn Thu, Vice Chairman of the State Securities Commission, rightly points out that public listings can improve transparency and valuation. But what this really implies is that Vietnam’s capital markets need to mature faster. Without a vibrant stock market, SOEs will continue to rely on bank financing, limiting their growth potential.
If you take a step back and think about it, this is a chicken-and-egg problem. SOEs need to list to attract investment, but investors are wary of poorly governed companies. Breaking this cycle requires not just policy changes but a mindset shift—one that prioritizes long-term value creation over short-term control.
The Bigger Picture: Strategic Self-Reliance
Hiển’s emphasis on strategic self-reliance is spot-on. Small and medium-sized enterprises (SMEs) can’t thrive in a vacuum; they need strong anchor companies to connect them to supply chains and markets. This raises a deeper question: can Vietnam’s SOEs fill this role? In my opinion, the answer depends on how quickly they can transform from state-controlled entities into competitive corporations.
What many people don’t realize is that this transformation isn’t just about economics—it’s about national identity. Strong SOEs could position Vietnam as a regional powerhouse, capable of competing with China and South Korea. But achieving this requires bold reforms, not incremental changes.
Conclusion: The Clock is Ticking
If there’s one takeaway from Vietnam’s SOE reform debate, it’s this: the status quo is no longer an option. Personally, I think the next few years will be decisive. Vietnam has the resources, the talent, and the ambition to succeed. What it needs now is the courage to rethink its approach.
From my perspective, the real test will be whether policymakers can move beyond administrative reorganization and tackle the systemic issues holding SOEs back. If they can, Vietnam’s SOEs could become a model for state-led development. If not, they risk becoming a cautionary tale. The choice is clear—but the clock is ticking.
