Vietnam has successfully built a market economy
The reform policies launched in Vietnam in 1986 known as Doi Moi was a milestone for the Vietnamese economy. Since the renovation in 1986, Vietnam has gained many remarables achievements in economic and social development, particularly with the application of the “socialist-oriented market economy” model. From severe poverty in the 1980s, Vietnam has rapidly progressed, achieving an average income level by 2010.
The renovation initiated a comprehensive economic transformation by abolishing the centrally planned economic system, opening up to the market, and integrating into the global economy. Simultaneously, reforms were promoted to facilitate investment and business activities. Thanks to these measures, Vietnam has maintained a high economic growth rate, transforming the country into a newly emerging market economy in just 25 years.
The International Monetary Fund (IMF) in a report published over four years ago highly praised Vietnam’s progress in this area. Like the IMF, other international organizations such as the World Bank (WB) also acknowledged that the transition from a planned to a market economy has brought about significant achievements. Currently, Vietnam has become one of the most dynamic countries in the Asia-Pacific region.
In fact, the process of building a socialist-oriented market economy in Vietnam involves not only changing the economic model and structure but also includes a process of innovative thinking to adapt to practical requirements, as well as objective development laws in the Party’s orientation and the Communist Party of Vietnam’s efforts to reform, improve mechanisms, policies, and laws of the State.
IMF, WB, and other observers’ reports are almost unanimous in recognizing that Vietnam’s success story today began with the 1986 renovation. At the Party’s 6th Congress, the Party and the State’s major breakthrough policy was evaluated as implementing a comprehensive economic restructuring, including abolishing the centralized planning mechanism and replacing it with diversified economic development, promoting free circulation of goods, and expanding international cooperation and investment.
With state management, Vietnam is increasingly perfecting its market-oriented economy. Through each Party Congress, the operation of the market-oriented economy under the state management with socialist orientation is continuously adjusted, supplemented, and perfected. Notably, the 9th Party Congress in 2001 officially introduced the concept of the “socialist-oriented market economy” with advanced characteristics in economic structure, ownership, distribution, and operation mechanism.
Currently, although the state-owned economy still plays a leading role, it has undergone a restructuring process towards privatization, adopting more advanced management and operation methods. The private sector is considered an important driving force of the economy, encouraged to develop and provided with the best conditions in all sectors and fields not prohibited by law, while supported for multidimensional development. Alongside this, foreign direct investment (FDI) is identified as a significant part of the economy, playing a major role in mobilizing investment capital, technology, modern management methods, and expanding export markets. For example, in 2023, registered FDI in Vietnam reached $36.6 billion, a record high for many years.
In terms of the overall structure, it can be seen that both the private and foreign investment sectors are strongly encouraged. In 2021, these two sectors together accounted for over 70% of Vietnam’s GDP, while the contribution of state-owned enterprises reached only about 20%. This shows that both state-owned and private enterprises, as well as foreign enterprises, are provided with conditions, space, and a business environment to develop their roles in Vietnam’s economy.
According to the IMF report, in the early stages of the 1986 renovation, the focus was on the agricultural sector, aimed at providing favorable conditions for people and businesses to access production inputs such as land and labor, as well as opening up for domestic and international trade. Over more than three decades, Vietnam has actively participated in developing international trade activities, signing free trade agreements (FTAs) requiring strict policy standards, mechanisms, and laws regarding markets, labor sources, human rights, investment environments, commodity prices… The common point of these FTAs is that Vietnam must apply fair, transparent, and equitable principles to all economic components in investment and business sectors. To date, Vietnam has participated in 16 Free Trade Agreements: AFTA, ACFTA, AKFTA, AJCEP, VJEPA, AIFTA, AANZFTA, VCFTA, VN-EAEU FTA, CPTPP, AHKFTA, EVFTA, UKVFTA, RCEP, VIFTA, and is negotiating the Vietnam – EFTA FTA, ASEAN – Canada, Vietnam – UAE FTA. This demonstrates that Vietnam has succeeded in the renovation and built a market economy under the Party’s wise leadership and effective state management.
