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Maturation of the CPV’s theory on the private sector in the renewal period

(LLCT) - More than 30 years of renewal also means over 30 years of developing the Party's theory on the private sector, with three fundamental breakthroughs: 1) The 6th Party Congress, with new perspectives on the long-term role and position of the private sector; 2) The 10th Party Congress, with new awareness of the private sector as one of the accelerators for the economy; 3) The 12th Party Congress, with the view to consider the private sector as an important motive for the economy. In order to implement the Resolution of the 12th National Party Congress, the Party Central Committee’s 5th Plenum has issued Resolution No.10 on private sector development.

Keywords: private sector development.

Summarizing the theory of economic development in general and private sector growth in particular in the pre-renewal period has given significant learning from international experiences, and since its 6th Congress, the Party has taken the proper mature steps toward private sector development in Vietnam. This is one of the theoretical contributions to building socialism in countries with economic, cultural, and social conditions such as Vietnam.

As a matter of fact, Vietnam “cannot merge all individuals into collective economic entities in a short time. Some lines of business are proved ineffective when being merged into a collective entity. While State collective entities capital is still limited, the residual capital of the people is almost exclusively spent on the consumption or stockpiling and buying of goods”(1). At the same time, the view of V.I. Lenin is used “to consider the economy with a multi-component structure is a characteristic of the transitional period”(2). The 6th Party Congress had the appropriate policy, in accordance with the reality of Vietnam, of which “there must be a policy to facilitate workers to create jobs themselves, stimulate people to put capital into production, business, and consumption savings to accumulate reproduction on the scale of the whole society”(3), “there must be a policy to properly use and improve other economic sectors”(4). In that spirit, the 6th Party Congress clearly stated: “There should be no prejudice, or discrimination against, or making it difficult for individual workers who do not want to join collective economic organizations or who withdraw from those organizations”(5). The 6th Party Congress affirmed: “However, it is impossible to remove small businesses freely due to subjective wishes by administrative orders; they can only be narrowed down by better substitution of the socialist trade and know how to use them in sectors where socialist businesses cannot operate well or there is no need for them”(6). These are the right points of view on economic development in general and the development of the private sector in particular.

To conclude the implementation of the 6th Party Congress’s Resolution and to achieve the objective of economic stabilization and development, initially having accumulation from the internal economy, the 7th Party Congress continued to affirm “Upholding the strength of economic components to compete and cooperate at the same time and complement one another in the united national economy”(7). On this basis, the 7th Congress encouraged “people to increase their incomes and enrich themselves on the basis of labor result and economic efficiency”(8), “Everyone is free to do business under the law and to heave their ownership and legal income be protected”(9), the individual economic sector “is developed for occupations in both urban and rural areas, without the expansion limit of business”(10). Thus, the Party’s view on private economic development was further strengthened at its 7th Congress.

In reviewing 10 years of renewal and the implementation of the policy on private sector development, the 8th Party Congress frankly recognized the constraints, which “did not sufficiently resolve a number of policies to encourage the private sector and promote potential and did not correctly manage this economic component”(11), although the private sector accounted for a significant share of the economy. Continuing the renewal spirit, the 8th Party Congress affirmed “to encourage the development of economic sectors and forms of business organizations”(12). The 8th Party Congress also asserted that the individual and smallholder businesses had a long and important position, therefore the State should help individual and smallholder businesses to solve difficulties of capital, science, technology and consumption market; to encourage private capitalists to invest in production for long-term business; to protect property rights and legal interests of the private capitalist economy(13), etc. On that basis, the 8th Party Congress set out the task to enhance the State’s capacity and efficiency of economic management. For the private sector, the State needs to “establish a legal framework and a consistent policy system to create a stable and favorable environment for prosperous business”(14). To achieve this goal, the Party’s point of view at its 8th Congress was to encourage all economic sectors, all citizens, and all investors to expand their businesses, create jobs, and hire employees under the law(15). Thanks to these important ideas, individual and smallholder economic components have developed rapidly in the fields of agriculture, forestry, fishery, handicraft, and trade, contributing significantly to the socio-economic achievements of the country. The private capitalist economy has initially developed, although just focusing on commercial, service and real estate sectors with small and medium scale(16). The 8th Party Congress also pointed out that non-State economic sectors had not yet either fully promoted the potential or ensured the orderly and disciplined activities under the law. However, it was necessary to expand forms of cooperation and linkage between the state and private sector, both inbound and outbound(17).

The 9th Party Congress continued to affirm the important long-term role and position of individual smallholder economic components in urban and rural areas. Thus, the State should facilitate and support their development. The Party and the State also encourage private capitalist sector development, which is widely grown in production and business sectors that are not prohibited by law. It is necessary to create a favorable business environment in terms of policy and legislation for the private capitalist sector to develop follows the priority directions of the State, including those about outbound investment(18). The 9th Party Congress continued to affirm the goal: “To implement the consistent policy of multi-sector development. All legal business sectors are important components of the socialist-oriented market economy, for long-term development, cooperation, and healthy competition; of which the state-owned sector plays a leading role and the state and the collective sectors increasingly become a solid foundation of the national economy”(19). The 9th Party Congress gained a great progress of awareness when setting out the task of “amending and supplementing the legal system to ensure equality of opportunity for all organizations and individuals of all economic sectors. We work on eliminating all forms of discrimination and ensuring opportunities and equal choice abilities for all economic sectors to access capital, land, labor, and technology in production and business, import and export, etc., to develop a law that has a unified application to different types of enterprises across economic sectors”(20). This demonstrates the maturation of the Party’s theory on the private sector. The advocacy of private sector development and equality among economic sectors was set out by the Party since the beginning of Renewal (1986), however, this was the first time the Party required making the idea on equal opportunity a reality in accessing capital, land, labor, and technology in production, business, and import and export. Equal opportunity to access investment capital is one of the inadequacies that non-state economic sectors in our country have not benefited from. In that spirit, the Resolution of the 5th Plenum of the Party Central Committee (9th tenure) on the continuing renewal of mechanisms and policies, encouraging and facilitating the development of the private sector (in March 18, 2002) came into being. The Resolution of the 5th Plenum of the Party Central Committee (9th tenure) appreciates the private sector role including individual, smallholder, and private capitalist sectors in the country. The Resolution also frankly acknowledges the Party’s point of view on some specific issues of private sector development that have not been clarified before. The Resolution unifies the directives for private sector development. Firstly, the private sector is an important component of the national economy. Developing the private sector is a long-term strategic issue in the growth of a multi-sector economy in the socialist orientation. Secondly, the State respects and ensures the right to freely do business under the law and protects the citizens’ right to ownership of legal property; to encourage, support, facilitate, orient and manage the development of the private sector under the law and equality among economic sectors. Thirdly, the State protects the legitimate and righteous interests of both employees and employers. It has the goal of taking care of educating and improving business owners in raising patriotism and national pride, sticking to the interests of the country and the cause of socialist construction. Fourthly, it is imperative to strengthen the leadership of the Party and promote the role of socio-political organizations and business associations to the private sector. The Resolution of the 5th Plenum of the Party Central Committee (9th tenure) also affirms that the Party and the State will create a favorable environment for the institution and social psychology for the development of the private sector; amending and supplementing several policies on land, finance, credit, labor and wage; science and technology to booster private sector development. However, in reality the implementation of this Resolution has been slow and ineffective.

The 10th Party Congress reviewed the implementation of the 9th Party Congress’s Resolution on the private sector, identifying: “The private sector has not had enough favorable conditions for development created; its scale is small, its competitiveness is weak, and it is not well managed”(21). On the experience drawn from the implementation of the 9th Party Congress’s Resolution, especially the Resolution of the 5th Plenum of the Party Central Committee (9th tenure), the 10th Party Congress continued to consider the private sector, including the individual, smallholder and private capitalist components and the ongoing spirit of equality among other economic components under the law to develop together in a long-term, cooperate and healthy compete with each other. In particular, from the practical review, for the first time at the 10th Party Congress, our Party assessed: “The private sector plays an important role, being one of the driving forces of the economy”(22). This is a breakthrough in our Party’s awareness of the private sector’s role in the multi-sector economy in our country. The 10th Party Congress continued to affirm: “To eliminate all discrimination in the form of ownership”(23). Also at its 10th Congress, the Party set out a development plan for private enterprises: “Every citizen has the right to engage in investment and business activities with property ownership rights and freedom rights to do business being protected by law; having equal rights in investment, business, access to opportunities, business resources, information, and receiving information. We will accomplish this by eliminating all barriers, creating a social psychology and a favorable business environment for all types of private enterprises to develop without any scale limitation in all industries and fields, including important production and business field of the economy which is not prohibited by the law”(24).

Thus, it can be said that at its 10th Congress, the Party made a breakthrough in the theory on the private sector. This is manifested by: firstly, confirming the important role of the private sector as one of the driving forces of the multi-sector economy in the country; secondly, continuing to assert the equal rights of the private sector in investment, business, and access to opportunities and business resources; thirdly, allowing the private sector to develop without limitation in all industries and sectors, including important production and business fields of the economy, which are not prohibited by law. These theoretical points of view have worked, creating opportunities for the private sector to promote the internal strength and development opportunities in our country. Therefore, one of the five lessons learned from the 10th Party Congress was the implementation of socio-economic development tasks set forth by the 9th Party Congress is “The lesson of mobilizing and using effectively resources, especially internal resources “(25).

In this lesson, the Party clearly pointed out that “it is crucial to have the right policy to maximize the material, intellectual, and spiritual capacities of all people and all economic components, particularly in the private sector, which is a rich potential resource of our nation, contributing significantly to employment solutions, accelerating and enhancing the efficiency of socio-economic development”(26). Based on this, the 10th Party Congress set out policies and solutions:

Firstly, to further significantly develop all types of private enterprises, without limitation of scale, industry, field, and geographical areas.

Secondly, to eliminate all forms of discrimination, to ensure truly equality, facilitate private enterprises (especially small and medium sized enterprises), to access capital sources at State credit institutions (including the development assistance fund) and favorably meeting the needs of land use for production and business.

Thirdly, encourage to develop large private enterprises, private sector groups with various owners in the form of joint stock companies.

Fourthly, encourage the private sector to buy shares of State-owned enterprises, invest in important production and business sectors of the economy. Encourage large private companies to sell shares to employees.

Fifthly, protect the legitimate property of citizens and businesses. Eliminate unsuitable legal provisions on the search of residence and work, confiscation or seizure of property of citizens and businesses(27).  Thus, it can be said that with the 10th Party Congress, the theory of private sector development of the Party got completed, supplemented quite sufficiently and comprehensively on the basis of theory, practice, legal basis for private sector in the country to be formed and developed. This is an outstanding step in the development of the Party’s theory on the private sector.

The 9th Party Congress continued the spirit of the previous Congresses, affirming that all economic sectors in the country were equal under the law and were all important parts of the economy, long-term survival, cooperation, and healthy competition, and that the private sector was one of the driving forces of the economy, “Promoting strong development of the private sector”(28).

The 11th Party Congress also set out the task “to complete mechanisms and policies to strongly develop the private sector into one of the driving forces of the economy”(29); “to promote the formation of private economic corporations and encourage private capital flows into State-owned enterprises”(30); and “Strongly develop the private sector in most industries and economic fields in accordance with planning and under the law”(31). It can be said that the 11th Congress continued to implement and realize the private sector theories that the 10th Party Congress proposed.

The 12th Party Congress summarized the private sector development in the spirit of the Resolution of the 11th Party Congress, clearly stating restrictions: “Most small-scale private enterprises lack linkages and have weak ability to cope with risks, and many of them have to dissolve or stop operating”(32). One of the causes of this restriction under the 12th Party Congress is that “it does not fully harness the freedom of doing business of the people in accordance with the Constitution and the law”(33).

The 12th Party Congress took a new step in assessing the private sector’s role in thecountry: “The private sector is an important driving force of the economy”(34). Compared to the 10th and 11th Congresses, the 12th Party Congress added the adjective “important” to the role and position of the private sector. Although this is just a sentence and one word within it, it clearly resulted from the actual development of the private sector that our Party has evaluated. Another significant development is that in order to ensure equality among enterprises in reality as well as in theory, the 12th Congress required that “All enterprises of all economic sectors must operate in accordance with the market mechanisms, equality and competition under the law”(35); To perfect mechanisms and policies, to encourage and facilitate the development of the private sector in almost all economic branches and fields, thus becoming an important motive of the economy. To improve policies to support small and medium enterprises, enterprises and start-up businesses. To encourage the formation of private and multi-ownership private sector groups to contribute capital to state-owned companies”(36).

In order to realize the policy of the 12th Congress on private sector development, the 5th Plenum of the Party Central Committee (12th tenure) issued Resolution No. 10 on the development of the private sector to make it an important driving force of socialist-oriented market economy.

This Resolution states clearly that the private sector in our country, since implementing the Resolution of the 5th Plenum of the Party Central Committee (9th tenure) on continuing to renew the mechanisms and policies, encourage and facilitate the development of the private sector, has continuously maintained a fairly good growth rate and accounted for 39-40% of GDP, attracting about 85% of the labor force of the economy; however, the development of the private sector in our country still faces many restrictions. From a practical review, the Resolution of the 5th Plenum of the Party Central Committee (12th tenure) affirms:

Firstly, developing a healthy private sector under the market mechanism is an objective requirement; it is a solution to release productivity, to mobilize and allocate resources for development; secondly, the private sector is an important driving force for economic development; thirdly, to remove all barriers, prejudices and create favorable conditions for the private sector to develop in a healthy and right way; fourthly, the private sector is developed in all industries and fields that are not prohibited by law; fifthly, to encourage the private sector to contribute capital to, and purchase shares from, state enterprises during equalization or divestment by the State; sixthly, taking care of education, fostering development, and harnessing Vietnamese entrepreneurs in building a good corporate culture and business ethics(37).

Thus, there have been three breakthroughs in developing the Party’s theory of private sector development: 1) The 6th Congress, with new awareness of the role and long-term position of the private sector; 2) The 10th Congress, with new perspectives on the private sector as one of the economy’s driving forces, with more specific views on private sector development including individual, smallholder, and private capitalist components; and 3) The 12th Congress’s view of the private sector as an important driving force of the economy with specific viewpoints implemented due to Resolution of the 5th Plenum of the Party Central Committee on the development of the private sector to become an important driving force of the socialist-oriented market economy. This is the result of practical reviews, theoretical studies, and learning from international experiences of the Party on development of the private sector.

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l Endnotes:

(1), (2), (3), (4), (5), (6) CPV: Document of the 6th National Party Congress, Su That

(the Truth)Publishing House, Hanoi, 1986, p.55, 56, 56, 55- 56, 56, 60, 69.

 (7), (8), (9), (10) CPV: Document of the 7th National Party Congress, Su That (the Truth) Publishing House, Hanoi, 1991, p.66, 73, 116, 117.

(11), (12) CPV: Documents of the 8th National Party Congress, National Political Publishing House, Hanoi, 1996, pp. 65-66.

(14) CPV: Documents of the 8th National Party Congress, National Political Publishing House, Hanoi, 1996, pp.103-104.

(13), (15), (16), (17) CPV: Documents of the 8th National Party Congress, National Political Publishing House, Hanoi, 1996, p. 96, 114, 158, 164 - 169.

(18) See CPV: Document of the 9th National Party Congress, National Political Publishing House, Hanoi, 2001, p.31.

(19), (20) CPV: Document of the 9th National Congress, National Political Publishing House, Hanoi, 2001, pp. 95-96, 320- 321.

(21), (22), (23), (24), (25), (26) CPV: Documents of the 10th National Party Congress, National Political Publishing House, Hanoi, 2006, p.165, 83, 84, 86, 179, 179-180.

(27) See the CPV: Document of the 10th National Party Congress, National Political Publishing House, Hanoi, 2006, p. 236-237.

(28), (29), (30), (31) CPV: Documents of the 11th National Party Congress, National Political Publishing House, Hanoi, 2011, pages 36, 101, 110-111. 209.

(32), (33), (34), (35), (36) CPV: Documents of the 12th National Party Congress, Office of the Central Committee of the Communist Party of Vietnam, Hanoi, 2016, p.99, 101, 25 and 103, 105, 108.

(37) See CPV: Document of the 5th Plenum of the Party Central Committee (12th tenure), Office of the Central Committee of the Communist Party of Vietnam, Hanoi, 2017, pp. 94-97.

Prof., Dr. TRAN VAN PHONG

Institute of Philosophy, Ho Chi Minh National Academy of Politics

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