Restructuring of the SOE Sector in Vietnam: Where Do We Stand and What are the Challenges Ahead?

Abstract

This paper reviews Vietnam’s recent experience with reforming the state-owned enterprise (SOE) sector. It therefore sets the stage by overviewing key developments since Đổi Mới and highlighting some stylized facts about the SOE sector before quantitatively assessing the legal and institutional reforms and equitisations that have taken place over the last years. While there is little compelling evidence that the state of the SOE sector is as dismal as some analysts suggest, the paper highlights an increasing implementation lag of legal reform progress, possibly reflecting fault lines in the political economy. I argue that SOEs can and should play a vital role in Vietnam’s development strategy going forward but that a more precise vision for the sector, based on a more elaborate assessment of market failures and externalities in different parts of the economy, is needed.