At a workshop held by USAID and the VCCI in Hanoi on May 15, he said economic reforms over the last three decades show the State allowing the private sector to supply goods and services for society has generated benefits.
In the retail sector, State-run department stores have been replaced by markets, supermarkets, stores and shopping malls. While there were only State-run transport businesses in the past, thousands of taxi, bus, tourist car and truck service companies have been set up.
Private firms’ growing participation in all economic sectors, even those originally reserved for State-owned enterprises like airports, seaports and transport infrastructure, aviation, electricity, healthcare, education and notarisation, has shown the sector’s key role in public investment, Loc noted.
However, he said, there remain several public services solely provided by State agencies, which could lead to a lack of transparency.
The most important thing is the State has to withdraw from unnecessary public services, streamline its apparatus and focus on institution building, the VCCI chairman said, adding that institutional quality is decisive to national competitiveness.
Doan Tien Giang, a public-private partnership researcher at USAID, said the private sector’s participation in public service provision, or outsourcing public services to private parties, will bring practical benefits like saving costs, promoting accountability, improving management capacity, using capital and equipment efficiently and enhancing service quality.
He also pointed out risks in the private sector’s supply of public services such as lower security, opaque bidding and procedures to choose contractors, and job losses.
In a recent survey conducted by the VCCI and the World Bank, most respondents said private businesses play the main role in supplying goods and services. However, some also voiced their concern about risks posed by the private sector’s involvement such as price hikes, loss of quality control, frauds and monopolies.
To choose fields to be outsourced to the private sector, Giang recommended several factors be considered, including the longevity of services, regulation and policy flaws, risks, ability to assess service quality and the possibility of changing contracts.
VCCI Chairman Loc called on State agencies to monitor the private sector’s engagement in public services to help improve public service efficiency.