The Hanoitimes - The government should focus on drafting and perfecting legal framework, while divesting state resources from providing general public services that the private sector are capable of.
Breaking up the state monopoly in public services through drawing the participation of private sector would create competition and greater benefits for the people, according to Vu Tien Loc, president of the Vietnam Chamber of Commerce and Industry (VCCI).
“The government should focus on drafting and perfecting the legal framework, while divesting state resources from providing general public services that the private sector are capable of,” Loc said in a conference discussing the role of the private sector in public services held on May 15.
Overview of the conference. Source: Ngoc Thuy.
“Institutional framework and regulation are decisive factors for national competitiveness, which should be given the utmost priority by the government,” Loc stressed.
Loc added some certain fields, which were once considered the “play yard ” of state-owned enterpirses (SOEs) such as transport infrastructure, aviation, healthcare, education, sports, among others, have been opened to private companies and witnessed strong growth.
Dau Anh Tuan, director of the VCCI’s Legal Department, said private resources are proving its significance as public investment and expenditure are limited.
“The advantages of the private sector are not only capital, but also corporate governance capability, which could be a driving force in a market economy,” Tuan added.
Meanwhile, there remain a number of public services under state authority, including license issuance or capacity assessment, leaving the government to be the judge in its own case, Tuan continued.
“The government now plays the role of drafting the laws, supervising law compliance and also a player by its own rule, which results in the lack of transparency throughout all the processes,” he stressed.
Michael Greene, mission director of USAID Vietnam, said the key question would be how Vietnam can leverage the private sector in delivering quality goods and services.
According to Greene, Vietnam has mobilized US$55 billion for 290 public-private partnership (PPP) projects in energy and transport. However, for the country to maintain high growth and meet the sustainable development goals (SDGs), Vietnam would need in average US$26 billion per year in infrastructure development from now to 2022.
“Countries like the US or UK see the important role of the private sector not only in improving infrastructure through PPP, but also in providing public services, so that the government only focuses on its core functions,” Greene added.
This is valuable experience for Vietnam to promote innovation, however, for a PPP project to realize its potential, Greene expected people to play an integral part of the project and taking the people as direct beneficiary.
USAID expert Doan Tieng Giang suggested the the government may consider the form of “contracting out” or “outsourcing”, meaning an arrangement whereby a government agency enters into a contract with a private entity for the provision of services which typically have been provided internally by the government agency.
“The ultimate goal would be to offer better service quality at a more affordable price and convenience for the people,” Giang said.
However, the government must ensure a transparent procurement process, along with public supervision and well-designed contract, to minimize the negative impacts from leaving public services in the hand of the private sector.