State-owned enterprise reform in Vietnam: A dynamic CGE analysis

Abstract

In this paper, we consider the potential impact of State-Owned Enterprise (SOE) reform in Vietnam. We model a baseline for the Vietnamese economy to the year 2035, and then consider how a limited reform of SOEs might affect the structure of output, trade and employment. The SOE reform modeled assumes a gradual and partial approach: SOEs that are considered strategic are excluded from reform, while SOEs that are profitable and perform better than their non-SOE counterparts are assumed to stay in state hands. Of the remaining SOEs, we assume only 50 percent are reformed over a five-year period from 2016. Our results suggest that even this limited SOE reform could increase cumulative baseline real GDP by nearly nine percent for Vietnam in 2035. Wages for all occupation groups are found to increase and investment in Vietnam is projected to rise by up to 16 percent, relative to the baseline.