The Vietnamese government in transition: Its changing roles and challenges

Economic development, especially in the early stage of a market economy, usually leads to a number of complicated social problems, which requires practical solutions of the State to ens[r]

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ASIAN CONSTITUTIONAL LAW:RECENT DEVELOPMENTS AND TRENDS

THE VIETNAMESE GOVERNMENT IN TRANSITION: ITS CHANGING ROLES AND CHALLENGES

A/Prof Bui Xuan Duc

Dai Nam University, Vietnam Prof Pham Hong Thai School of Law, Vietnam National University, Hanoi

Dr Bui Tien Dat

School of Law, Vietnam National University, Hanoi

Abstract

This paper analyses changing role and functions of the Vietnamese Government since Doi Moi The 2013 Constitution’s Government/Cabinet has shown its level of independence comparable to the 1946 Constitution’s Government The proposal for a “developmental Government” also advocates the Government’s further independence from the National Assembly

This paper argues for a revisit and a reconception of the notion of developmental state/government in this century The 20th century model, which emphasized economic growth and utilised authoritarian

administration, has gradually transformed into a 21st century democratic developmental model A revisit

to the developmental state model also reflects a revisit to the functions of the state Contemporary states should not be weak minimal states or excessively interfering ones neither 21st century, states

must be strong and moderate to foster development instead of ones focusing on economic growth

1 The conceptual innovation of the role and function of the State/Government1 in Vietnam’s market

economy

The state always affects every social process Thus, the State plays an important role in the economy That influence varies in every economy, every political regime, every period The success of economy closely relates to the awareness of the State’s role as well as the degree of State’s interference towards the economy Not only socialist nations which are in the process of economic transition, but also all international economies, prove that economic growth and development are dependent on specifying and implementing the role and function of the State In the process of building a market economy, the Vietnamese State has to change its role and function towards economy Consequently, understanding the change to promote the State’s role, has greater scientific and practical significance

1 In this paper, two terms “State” and “Government” are interchangeable in most contexts Here, the “Government”

56 ASIAN CONSTITUTIONAL LAW: RECENT DEVELOPMENTS AND TRENDS As to the role of State in a market economy, the developmental history of the market economy was influenced by two theories Either disregard the role of State in the market economy of classical economists represented by Adam Smith1 or dignify the State’s role of the social market economy

school represented by John Maynard Keynes2 These two theories are applyed in some countries

leading to disregarding or dignifying the role of the State with varying degrees In the modern age, like a complement of those, people reached a new awareness - may be considered a third theory - that it is necessary to combine “invisible hand” of the market with “visible hand” of government in the modern market economy Without this combination is similar to “clapping by one hand” Surveying the activities of the State in nations having developed free market, proved that the State plays a more and more important role but doesn’t break basic principles of the market This is the orthodox view of neo-economic liberalism represented by Paul Anthony Samuelson3 Instead of arguing a “big” or

“small” State, they proposed a more proper and effective one Nowadays, almost all nations apply this combined economic model with varying degrees This is regarded as modern developmental model

The 1997 World Bank’s World Development Report “State in a changing world” examined some main matters (The collapse of command-and-control economies in the former Soviet Union and Central and Eastern Europe; The fiscal crisis of the welfare State in most of the established industrial countries; The important role of the State in the “miracle” economies of East Asia; The collapse of States and the explosion in humanitarian emergencies in several parts of the world4 to conclude that

the effectiveness of State is the decisive factor:

“An effective State is vital for the provision of the goods and services-and the rules and institutions-that allow markets to flourish and people to lead healthier, happier lives… The State is central to economic and social development, not as a direct provider of growth but as a partner, catalyst, and facilitator”5

Obviously, factors making an effective State vary in every nation and period The matter is that the State should implement its role suiting its capability and gradually improve its capability

Contemporary economists analysed positive and negative aspects of a market economy to define the role and function of the State To promote positive aspects and reduce the negative aspects of a market economy, it is necessary to co-ordinate unprompted regulation of “invisible hand” (market) and active regulation of “visible hand” (State).According to above points of view, basic functions of the State in a market economy are:

i Establish legal framework appropriate for a market economy ii Execute macroeconomics administration functions

1 Adam Smith (1723-1790), Scottish philosopher and economist, writer of “The Wealth of Nations” - 1776, reckoned

that the government shouldn’t interfere the market and the enterprises’ business The market and the enterprises’ business are regulated by “invisible hand” - the economic laws

2 John Maynard Keynes (1883-1946), British economist, writer of “The General Theory of Employment, Interest and

Money” - 1936, dignified the role of State in economy The government should interfere the economy by “visible hand” - macroeconomics tools

3 Paul Anthony Samuelson (1915- ), American economist.

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iii Supply basis of economic-social development through boosting culture, education, science, technology, public health

iv Reduce negative aspects of the market economy by protecting private ownership and consumers’ interests, resisting monopoly and unfair competition

v Guarantee social fairness and security

vi Ensure public order, national security, national defence, protecting the environment vii Performing foreign affairs policy for economic development

In the past, former socialist countries developed a centralized economy due to their simple awareness of socialism The State directly controlled all production, business and distribution activities; the whole country became an “enterprise” under the direct control of the State This model did have some advantages, for example, it rapidly created initial material facilities for socialism and met the needs of national defence However, the model appeared to be ineffective and did not meet the need of economic growth and development and international economic integration in the modern world After the Soviet Union and the socialist countries in Eastern Europe collapsed, most of the socialist countries have shifted to a market economy with the re-determination of the position and role of the State in social life in general and economic life in particular

In Vietnam, due to simple awareness of socialism and socialist economy, we set forth the core mission of our State during the transition to socialism is socialist industrialization, bringing our economy directly to socialism and skipping capitalistic stage We did make a revolution in production relationship in order to build the national economy with two forms of ownership: ownership of the whole people and collective ownership In reality, we built a merely object and directly socialized economy under highly centralized and planned command Due to the above mechanism, economic units became inactive, ineffective and merely relied on the State The whole economy was in long-lasting stagnation and actually it was in crises

The economic innovation policy was initiated by the Vietnamese Communist Party in the Sixth Congress (1986) and was perfected step by step in subsequent congresses of the Party Resolutions of the recent congresses such as the Ninth Congress on April 2001 continually affirmed that:

“The Party and the State shall carry out consistently and in the long-term the policy of developing a multi-sector, commodity economy, which operates in accordance with a market mechanism under the State’s regulation with socialist orientations; that is the socialist-oriented market economy”1

The 1992 Constitution institutionalizes the economic development policy of the Party by setting forth the specific contents of the new economic policy of the State Article 15 of the Constitution stated that:

“The State builds an independent and sovereign economy on the basis of bringing into full play the internal resources and actively integrating into the international economy; and carries out the national industrialization and modernization The State consistently implements the policy of developing a socialist-oriented market economy…”

58 ASIAN CONSTITUTIONAL LAW: RECENT DEVELOPMENTS AND TRENDS The new economic policy which replaces the highly planned mechanism is to develop a multi-sector commodity economy with socialist orientation This new policy has set the foundation for new principles determined to ensure unity between the two sides of economic development The first side is to develop a multi-sector, commodity economy in accordance with the market mechanism and the second one is the socialist-oriented market economy

There has been a viewpoint that the market economy is non-socialist economy and accepting market economy mean turning back to capitalism Our Party and State have a totally different view: Market economy is a model of economic development with a lot of advantages which every society utilizes We use market mechanism to make use of its advantages such as high labour productivity and production efficiency, but we also have to make it oriented in order to gain our objectives like fairness, social stability and progress and to prevent its disadvantages such as unemployment, labour exploitation, speculation, the distance between the rich and the poor, etc That is the socialist orientation

Nevertheless, it is also necessary to point out the characteristics of the Vietnamese market economy, which result in the different role of the Vietnamese State compared to other States

i The socialist-oriented market economy in Vietnam is a commodity economy with multi sectors, operating in compliance with the rules of a market economy but ensuring sustainable development It is based on promoting internal resources and taking advantage of all external resources, ensuring scientific and technological growth and management ability at both macro and micro level, guaranteeing competition, but preventing risks and negatives, protecting the living and ecological environment, utilizing natural resources and other resources properly and effectively

ii Developing market economy goes together with keeping independence, sovereignty and territorial integrity; maintaining the nature of our social regime and of our State, ensuring social fairness and step by step improving material and spiritual life of our people

iii Ensuring the leadership of the Communist Party of Vietnam towards economic development, because it is a reality affirmed by the real history and stated in the Constitution The Party’s leadership in economic development is a component of the party’s leadership in the development of the whole country It was the Party who initiated the economic reform policy and affirmed that economic reform is the keynote Under the Party’s leadership, we have gained great achievements in recent years

iv Actively integrating into the international and the regional economy, rapidly responding to changes of the country and the world situation, fulfilling all missions of every stage It is indispensable to consider the above characteristics when innovating the role and function of our State in current times

2 The change of the role and function of the Vietnamese State in recent two decades

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resources and advantageous conditions for economic activities, prevents and restricts negatives and defects of market mechanism, guarantees social fairness, preserve the people’s interests Those changes are shown in some aspects hereafter:

2.1 The State has focused on establishing policies of national development, setting up advantageous legal environments and framework for socioeconomic activities; directing the development by means of strategies, schemes, plans and mechanism, policies that observe principles of marketing.

The existence, operation and development of society are based on policies of the State in the form of law Thus, making policies is the central role of the State’s activities The policies of the State are always the basis of the establishment and the operation of country’s political life It determines the social developmental direction, stabilizes or alters political relations emerging from different political-social institutions

In democratic countries, the destiny of governments depends on how they implement specific policies There is a rule of political life in developed countries: if a government enforces policies, according to people’s interests and aspirations, it will exist and be supported by the people - the most important political motivation of democratic society On the contrary, the government will be opposed not only by political forces, but also by the people Under the circumstances, there are two probabilities: either the government collapses or resorts to violence to maintain their policies causing political conflict

A united or separated society, a stable or chaotic State, a prosperous or poor country depends on how the State’s leaders implement their policies Consequently, making and implementing policies play a decisive role in national political life That requires great responsibility of the State In modern politics, State is the sole political institution having the right to make and implement policies in the form of legal documents Legal documents contain legal rules applying to the whole society Thus, it is necessary to establish a truly democratic mechanism in making and implement policies

2.2 The State has administered the multi-sector economy in general way; abandoned the function of business administration; abolished governing-body mechanism.

The State’s political attitude towards the economic life has a great significance not only for production and trading activities, but also for national political-social life The State must ensure citizens’ business right, equality of all economic sectors before the law and protect the regime of multi-sector ownership The State must determinedly give up administrative intervention in economic relations, must really respect business organizations’ rights It is necessary to reject “organism in charge” over State owned enterprises and prohibit state organizations from doing business in any form To stabilize socioeconomic relations - the basis of political stability, the State must determinedly and strongly oppose economic negativities and prevent the risk of mercenary connection between economic forces and authorities The prestige, power of State depends on “purity” degree of governmental apparatus Anti-corruption has great significance for creating a democratic State

60 ASIAN CONSTITUTIONAL LAW: RECENT DEVELOPMENTS AND TRENDS

2.3 The State have been handing over most public services to society, but still take responsibility for supplying public goods and services of great social significance.

Formerly, due to wrong awareness, socialist nations in general and Vietnam in particular rapidly nationalised almost all public services Even business activities were considered public service and supplied by the State Nowadays, in Vietnam, there is differentiation between business and public service Socialising (precisely de-nationalising) public services is being executed For instance, the private sector is permitted to participate partially in education, public health…

However, because public goods and services have great significance in serving people’s life, ensuring fairness, stability and national development, every State are responsible for supplying direct (besides administering social supply) Along with transferring public services to society, the State still controls and supply special services that should not be transferred such as national defence, public security, infrastructure (electricity, water, transportation, post and telecommunications…), education, public health… The State must be the supplier because those services are essential to national development Only State which have enough financial capability and make an overall strategic project on a national scale can fulfil these tasks

2.4 The State has paid more attention to making and implementing social policies, ensuring stability and social fairness.

Economic development, especially in the early stage of a market economy, usually leads to a number of complicated social problems, which requires practical solutions of the State to ensure compatibility between economic growth and social needs If economic values are over-absolutized and social affairs are commercialized, a series of hot problems of the society such as jobs and unemployment; life of the poor, the old, the retired and the disabled; traditional cultural values and national character will be considered subordinate issues The social division between the rich and the poor can easily result in separation in the society and undermine the solidarity among people’s communities To prevent such dangers, the State must make sure that the market economy is developed on a solid humanity foundation The moral grounds of the market economy should be concretely determined and expressed in the building and implementing social policies of the State The State’s social policies aim at the following objectives:

i Thoroughly eliminate egalitarianism, restore and respect the principle of social fairness ii Emancipate the people from any dependency, making them become positive individuals

with a good sense of responsibility, who know how to bring into full play their own strengths to afford their own lives as well as to make a contribution to the community’s lives

iii Respect and encourage all legitimate enrichments and at the same time prevent the danger of restoring inhuman exploitation, make sure that the distance between the rich and the poor is at a certain level that does not lead to discrimination in social life

iv Assist people suffering from difficulty, unemployment, poverty, disasters, loneliness or disability

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the reinforcement and promotion of good habits and customs and the building and development of people’s solidarity and mutual assistance By carrying out such policy, the State shall maintain a stable, humane and democratic social order based on the solidarity of all social forces in a democratic political system

Playing the role of a factor which can ensure political and social stability, the State must create all conditions for the citizens to assemble in various socio-political organizations, with equal and real abilities to participate actively in the political life “All citizens are equal before the State and law” is a constitutional principle in the relationship between the State and citizens In this relationship, on one hand, the State makes sure that all citizens can perform their rights, freedom, democracy and obligations in reality with no obstacles or discrimination from the authorities or public officials; on the other hand, the State prevents and eradicates all possibilities and acts which violate the legal rights and interests of its citizens Social security and national stability must be constituted from each citizen’s security and stability Therefore, taking care of its citizen’s legal rights and interests is the mission of each democratic State

2.5 The State has performed the function of foreign affairs in a wide-open way; proactively carried out the international and regional integration

With the guideline of broadening international and regional integration, The State of Vietnam has built and performed foreign policies such as to diversify and multilateral foreign relations; extend the friendship and cooperation relations with countries in the world based on the principle of respecting independence, sovereignty and territorial integrity of each other, non-intervention into each other’s internal affairs, equality and mutual benefit; pay attention to the friendship relations with socialist, neighbouring and regional countries; take advantage of external support and resources, broaden the market and partnership relations, build reliable relations, create a peaceful environment to serve the national industrialization and modernization process, improve the position and reputation of Vietnam in the international arena

3 Changing functions of the Government in the post-1992-Constitution era

3.1 The 1992-Constitution period (1992-2013): Doi Moi Government

Politics and national political system are always dependent on economic life However, on the other hand, political relations have considerable influence on economic life Thus, the State plays an important role in the economy The transformation of the centrally planned economy into a market economy does not lower the State’s economic role but gives the State heavy responsibilities

62 ASIAN CONSTITUTIONAL LAW: RECENT DEVELOPMENTS AND TRENDS It is essential to have a sound awareness of the role and function of the State in the context of a market economy and integration, as well as to carry out comprehensive renovative solutions so that the State can perform its role and function well The role of the State as a central political institution of the Vietnamese political system has been heightened However, the need of renovating the political system and building a new politics in conformity with the current socioeconomic reform and the integration of our country into an international community, requires us to review the role of the State, especially the relations between the State and other political institutions The innovation directions should be as follows:

Firstly, according to Report of the Project on 2001–2010 socioeconomic development Strategy of the Vietnamese Government, sponsored by UNDP, “Vietnam has a government which is at once too much and too little – Too much in respect of controlling production and investment, but too little in respect of the rule of law and supplying public goods and services”1 This role now should be changed

The Government should get involved in the public service supply instead of participating directly in productive activities The new development strategy should emphasize the necessity of shifting the Government’s resources from directly participating in production activities into two specific fields: one is to provide high-quality education, medical treatment, agricultural research and infrastructure and to assist vulnerable groups in the society; the other is to provide transparent institutions with the participation of the public, which are able to promote the rule of law, to ensure macroeconomic and financial stability and create a better environment for business

Secondly, the development of the socialist-oriented market economy in Vietnam requires the State to govern economic processes appropriately, especially in the context of transition The market economy, which is taking shape step by step in Vietnam cannot be a “wild” market economy It shall be a “civilized” market economy regulated by the State at the macro level The macro regulation of the State of the economic life ensures healthiness and sustainability of all market relationships However, this regulation cannot be administered and orderly like it used to be in the centralized and planned economy period; it should be conducted by law and through law in order to ensure a competitive order in which competition is based on the principle of fairness, civilization and legality It is also necessary to avoid extreme attitude that shifts sharply from overestimating the role of the State to underestimating it That is a naïve understanding about the market economy In a market economy, the Government still plays a key role, i.e building institutions and ensuring a harmonized social environment Joseph Stiglitz claimed that the government should play an important role in a free market economy.2

To have an effective and efficient State, there should be an action programme with the following essential elements:

i Building and performing a new strategy and new policies on the role of the State in the society as well as in the national economy;

ii Strengthening the State’s capacity and ability in satisfying the needs of a modern society and a market economy;

1 UNDPI and MPI/DSI, ‘Vietnam towards 2010’, Collection of co-research report on socio-economic development strategy by foreign and Vietnamese experts Volume (National Political Publishing House 2001).

2 Joseph Stiglitz, ‘There is no invisible hand’ The Guardian (<https://www.theguardian.com/education/2002/dec/20/

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iii Restructuring the public administration system, creating professional public officials and public servants;

iv Reforming the decision-making process and the management of public resources of the State to enhance transparency, accountability and predictability

v Encouraging the participation of the public and improving dialogues between the State and its citizens

3.2 The 2013-Constitution period: “developmental” Government?

By comparing the roles of the Government/Cabinet (the executive branch) vis-à-vis the National Assembly since the establishment of the Democratic Republic of Vietnam in 1945 (currently the Socialist Republic of Vietnam), the authors argue that over the past seven decades, the roles of the Government have drawn a circle The circle started with the Government’s high independence of the People’s Parliament according to the 1946 Constitution, and came to the executive and relatively independent Government in the 1959 Constitution, purely executive Government in the 1980 Constitution, and moved back to increasingly independent Government under the 1992 and 2013 Constitutions The 2013 Constitution’s Government has shown its level of independence comparable to the 1946 Constitution’s Government This observation is based on three features: (1) “assignment, co-ordination, control” of state organs in the exercise of legislative, executive and judicial powers; (2) changing responsibility of the Government and its members; (3) trend in repositioning powers for state organs

The Prime Minister Nguyen Xuan Phuc of the current Cabinet/Government (2016-2021), has shown his commitment to a “developmental Government, which is an upright and decisive one to serve the people”.1 So, what is a development state truly about? What is an appropriate concept of

developmental state/government? This paper argues for a revisit and a reconception of the notion of developmental state/government in this century

Arguably, there has been a theoretical and practical transformation of the developmental state model The 20th century model, which emphasized economic growth and utilised authoritarian

administration, has gradually transformed into a 21st century democratic developmental model A

revisit to the developmental state model also reflects a revisit to the functions of the state Contemporary states should not be weak minimal states or excessively interfering ones neither 21st century, states

must be strong and moderate to foster development (modern understanding) instead of ones focusing on economic growth As Joseph Stiglitz argues, “development strategies will incorporate social as well as economic development, arrived at through open, transparent, and participatory processes, that extend the fruits of development in a sustainable way to all the citizens of the developing world”.2

In the context of a transitional Vietnam, this paper identifies four criteria for a developmental Government as follows

1 Hong Tra, ‘The Prime Minister’s Statement of “Developmental Government” in Vietnam (“Chính phủ kiến tạo”

Việt Nam qua định nghĩa Thủ tướng)’ VNEconomy (<http://vneconomy.vn/chinh-phu-kien-tao-tai-viet-nam-qua-dinh-nghia-cua-thu-tuong-2017111816395712.htm>

2 Joseph Stiglitz, ‘Participation and Development: Perspectives from the Comprehensive Development Paradigm’ in

64 ASIAN CONSTITUTIONAL LAW: RECENT DEVELOPMENTS AND TRENDS

(1) Human factor

Human resource is an essential factor for success of any organisations including the state In an era of democracy and rule of law today, the state apparatus is comprised of institutions that represent national and local community rather than groups basing on ethnic identities, interests, etc

(2) Strong leaders of state organs

Leaders of state organs should be both independent and accountable The practice in many countries has shown a power shift from collective leadership to individual leadership

(3) Decentralisation

In the trend towards democracy and rule of law, a strong government should seek to facilitate local developments Therefore, decentralisation is a proper replacement for command-only administration

(4) Result-oriented Government

To facilitate a result-oriented Government, this paper identifies some criteria for evaluating effectiveness of the Government’s administration as follows: (i) economic growth; (ii) economic stability; (iii) social welfare; (iv) effectiveness of public service; (v) social security and safety; (vi) economic distribution and equality; (vii) environmental protection; (viii) cost of administration; ix) legality and reasonableness of policies and legal documents

(5) Market-oriented Government

A market-oriented government needs to be friendly to the market The government serves the market and provides necessary public goods for the people Furthermore, the state should not things that the market can

The proposal for a “developmental Government” advocates the Government’s further independence from the National Assembly However, the Vietnamese political regime raises significant challenges to this proposal The changing role of the Government towards “separation of powers” and “East-Asia-style developmental state” cannot be realistic in current political context

References:

Communist Party of Vietnam, Ninth Congress’s Documents (National Political Publishing House 2001) World Bank, The State in a changing world (World Development Report) (Oxford University Press 1997) Stiglitz J, ‘Participation and Development: Perspectives from the Comprehensive Development

Paradigm’ in Iqbal F and You J-I (eds), Democracy, Market Economics, and Development: An

Asian Perspective (The World Bank 2001)

UNDPI and MPI/DSI, ‘Vietnam towards 2010’, Collection of co-research report on socio-economic

development strategy by foreign and Vietnamese experts Volume (National Political Publishing

House 2001)

Stiglitz J, ‘There is no invisible hand’ The Guardian (<https://www.theguardian.com/education/2002/ dec/20/highereducation.uk1> accessed 27 April 2020

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