Removing the "bottleneck of bottlenecks" to unlock production capacity and tap into all development resources

DNHN - General Secretary To Lam's important speech: Among the three biggest bottlenecks today—institution, infrastructure, and human resources—the institutional framework is the bottleneck of bottlenecks.

On the morning of October 21, during the opening session of the 8th meeting of the 15th National Assembly, General Secretary and State President To Lam delivered an important speech, emphasizing: "Among the three biggest bottlenecks today—institution, infrastructure, and human resources—the institutional framework is the bottleneck of bottlenecks."

The speech by the General Secretary and President was considered rare in history by many experts, observers, and businesses both domestic and foreign. It came before he handed over responsibilities to the newly elected President by the National Assembly, returning to the power of a Party leader. The General Secretary highlighted fundamental bottlenecks in the legal system, making precise, clear, and direct calls for pressure to reform Vietnam's legal framework.

"Institution is the bottleneck of bottlenecks"

"Frankly, the organization and activities of the National Assembly still have shortcomings that need to be addressed. Among the three biggest bottlenecks today—institution, infrastructure, and human resources—the institution is the bottleneck of bottlenecks. The quality of legal construction and perfection has not met practical demands, with some recently issued laws needing amendments, regulations lacking coherence, overlapping, and many rules hindering implementation, leading to resource waste. They have not created a truly favorable environment to attract resources from domestic and foreign investors, unclogging resources within the population. Administrative procedures remain cumbersome, and although online public services have improved, they are still not user-friendly or seamless. The organization of law enforcement and policy implementation remains weak; decentralization is incomplete, and responsibilities are unclear. The arrangement and streamlining of the state administrative apparatus, reducing intermediaries, still face issues. Some parts are cumbersome and overlapping, and there is a lack of coherence between legislative and executive functions. These long-standing problems must be urgently resolved to prevent obstruction of development and waste of opportunities in the new era."

The General Secretary, pointing out these shortcomings, demanded a strong shift in legislative work. He called for changing the mindset of lawmaking to balance state management requirements with encouraging innovation, unlocking production capacity, and tapping all resources for development. The management approach must not be rigid, with a firm shift away from a mindset of "ban what cannot be managed." Efforts should be proactive, positive, and urgent in building a legal framework for new issues, especially those related to the Fourth Industrial Revolution, artificial intelligence, digital transformation, and green transformation, to set a legal foundation for successful digital transformation and breakthrough national development in the coming years.

The General Secretary directed the National Assembly to enhance its supreme supervisory functions and decide on key national issues. He called for early studies to define suitable methods and forms of supreme oversight, avoiding redundancy with other state agencies' activities, which cause waste.

To realize these significant goals, the General Secretary emphasized the need for a strong reform of the National Assembly's organization and operations, ensuring effectiveness and efficiency. Enhancing the quality and performance of National Assembly deputies should be seen as a key factor in modernizing the legislature's functions.

Why must institutional reform be carried out?

Institutions encompass the structures of the Party, State, social organizations, and the rules and regulations governing their activities. "Institutional bottlenecks" occur when these structures operate inefficiently due to overlapping, conflicting, and overly restrictive rules and regulations.

If institutions are inefficient, they create bottlenecks, obstructing infrastructure development, investment, business activities, and optimal utilization of human resources.

Therefore, to remove the "bottleneck of bottlenecks," it is essential to reform the legal system, and another critical issue is the effective reform of administrative procedures. These core issues stem from the directives of the General Secretary.

Institutional bottlenecks, shortcomings, and legal system deficiencies worsen the investment environment, making it difficult to attract resources from domestic and foreign investors, particularly in new fields.

Take, for instance, the renewable energy sector, especially offshore wind power in Vietnam. Recent pilot offshore wind power projects have progressed very slowly due to legal gaps, necessitating a National Assembly resolution on pilot projects for offshore wind power to meet green energy transition demands.

Vietnam has outlined strategic directions for developing and utilizing marine energy resources. The 8th Party Central Committee's Resolution on the Sustainable Marine Economic Development Strategy until 2030, with a vision to 2045 (Resolution No. 36-NQ/TW dated October 22, 2018), has proposed breakthroughs in marine economy development, emphasizing "renewable energy and new marine economic sectors."

The government has also issued resolutions and decisions, especially regarding Power Development Plan VIII, as a basis for developing offshore wind power. However, there remain numerous legal and practical obstacles.

Legally, there is still no specific legal document regulating offshore wind power, only general mentions in the Power Development Plan VIII issued in 2023. Meanwhile, the Vietnam Maritime Law of 2012 still lacks specific provisions for leasing sea space to renewable energy sectors, including offshore wind power.

The 2015 Law on Marine Resources and Environment has Article 19, which specifies the process and content for issuing permits for scientific research on Vietnam's seas for foreign organizations and individuals. However, this article does not provide for the survey, research, or construction of general (privately funded) marine economic development projects, including offshore wind power, but only fundamental research funded by the budget.

Various ministries still face legal and regulatory gaps. Notably, the national marine spatial plan has not been approved, hindering the implementation of the power plan. Other important technical issues also remain unresolved.

Without addressing these issues, investment and calls for offshore wind power investment cannot proceed, delaying the progress of Vietnam's green energy and green production strategy.

Foreign investors are keen on this sector and wish to invest, but legal uncertainties make them hesitant or even withdraw.

In June 2023, Denmark's Ørsted announced the suspension of its offshore wind investment projects in Ninh Thuan, planned from 2029 to 2037, with a $5.5 billion investment for 2GW of offshore wind power before 2030, creating 25,000 jobs. The reason for the company's withdrawal was the lack of suitable policies in Vietnam.

More recently, Norwegian energy giant Equinor also announced its exit and closure of its Hanoi office, despite assessing Vietnam, with its 100 million population, as having great potential to become a leading offshore wind power market.

Legal bottlenecks still hinder localities in offshore wind power investments. For instance, Ho Chi Minh City faces gridlock with two offshore wind projects off the coast of Can Gio district.

In Binh Dinh, on October 22, 2024, the provincial leaders met with Per Hornung Pedersen, Chairman and CEO of Germany's PNE Group, about a mega offshore wind project in the province. The project, with a 2,000 MW capacity, is divided into three phases, with a total investment of approximately $4.6 billion. However, like other projects, legal bottlenecks must be resolved before implementation can proceed. Binh Dinh's leaders have sought assistance from the Ministry of Industry and Trade for this billion-dollar project, but the Ministry can only manage state affairs, and the legal system in this area cannot be quickly addressed...

Not only offshore wind power but also rooftop solar power faced similar legal gaps for a long time, leading to investment and development gridlock for this promising renewable energy.

Bottlenecks in administrative procedures, mechanisms

The General Secretary also pointed out that administrative procedures remain cumbersome, overlapping, with legislative and executive functions failing to meet the requirements for improving state management efficiency.

Take Ho Chi Minh City as an example. Resolution 98 of the National Assembly granted HCMC 44 mechanisms and policies across fields such as investment, finance and state budget, strategic investor attraction, construction planning, and organizational structure. The HCMC People's Council held four sessions, passing 24 resolutions, concretizing 19 out of 27 mechanisms and policies under its jurisdiction. Many decentralized and authorized measures have been implemented by the HCMC People's Committee. However, the city has yet to fully utilize the power of this resolution.

On October 5, National Assembly Chairman Tran Thanh Man, Politburo Member, and Head of the National Assembly Party delegation met with the HCMC Party Committee Standing Committee. At the meeting, Chairman Man stated: "I often hear about HCMC's special resolutions, but everything still needs approval. The city has not been proactive, flexible, or creative enough to implement them. This needs to be reviewed because once authority is given, the city must be allowed to act autonomously within the law. Every request is a meeting, how can we reduce meetings? Secondly, how do we reduce document exchanges...".

HCMC Party Secretary Nguyen Van Nen indicated that one reason for the delay in implementing Resolution 98 was the persistent comparison of special mechanisms and policies with existing legal regulations to ensure safety for various agencies and ministries. This leads to delays and prolonged issues when executing special mechanisms and policies."

Another issue is the slow process of state-owned enterprise equitization, even though many of these enterprises are suffering significant losses. This is identified as one of three key measures to restructure the economy. Equitization of state-owned enterprises is a vital aspect, but progress has been slow, failing to meet planned targets.

Data from the Corporate Finance Department (Ministry of Finance) shows that, cumulatively from 2016 to 2020, 180 enterprises had their equitization plans approved, with a total enterprise value of 489.69 trillion VND. However, of these 180 enterprises, only 39 out of 128 companies in the list for equitization according to the Prime Minister’s plan were completed, achieving just 30% of the target. Meanwhile, 89 enterprises have yet to finalize the approval of their equitization plans.

The Corporate Finance Department noted that the pace of equitization in recent years has been slow, failing to meet the planned targets, primarily due to issues arising during the planning phase and the implementation process. In particular, delays were observed in the stages of plan approval, capital divestment strategies, handling financial issues, and arranging the use of public assets, such as real estate, in accordance with legal regulations on the management and use of public assets.

Moreover, there are no mechanisms in place to hold the leaders of state-owned enterprises (SOEs), state ownership representatives, or state management agencies accountable for delays in the equitization and divestment process. According to the Corporate Finance Department, relevant legal mechanisms and policies are not well coordinated. Therefore, in the near future, the Ministry of Finance will continue to review and research additional measures to present to the Prime Minister.

Addressing issues in the sectors mentioned above highlights General Secretary Tô Lâm’s accurate assessment: “Among the three major bottlenecks today—institutions, infrastructure, and human resources—institutions are the bottleneck of all bottlenecks.”

Without addressing this “bottleneck of bottlenecks,” as pointed out by the General Secretary, and without improving the quality of administrative reforms and decisively moving away from the mindset of "banning what cannot be managed," it will be impossible to unlock the full potential of production, attract domestic and foreign investment, or prevent barriers to development that lead to waste and missed opportunities for growth in the new era.

To achieve these goals, the General Secretary has called for a shift in the approach to legislative development, emphasizing the need to balance effective state management with encouraging creativity, thus meeting the demands of a new phase of development.

Vinh Hy