Vietnam's Reform 2.0: Three core lessons from 40 years of Đổi Mới on market development, confronting reality, and decisive policy implementation

In a discussion about Reform 2.0, Dr. Nguyen Dinh Cung, former director of the Central Institute for Economic Management (CIEM), said the country’s top leaders have shifted their thinking toward the “execution factor” as the central requirement for institutional reform. He argued that Reform 2.0 must go beyond reforming markets for goods and services and instead focus on factor markets—land, capital, labor, science and technology, and natural resources—where resources are mobilized, allocated, and used.

Dr. Cung also emphasized that the state’s role must change. It should be strong enough to ensure fair competition, eliminate the “license–permission” mechanism, and allocate resources based on efficiency. He noted that Reform 2.0 is more complex than the first reform because the allocation mechanism is tied to many vested interests. While the first reform was largely “win–win,” the second is “win–lose,” where society benefits but some groups lose, making incentive shifts and the dismantling of entrenched interests the key challenge.

National interest and the new growth model

Dr. Cung said the biggest driver for Reform 2.0 is national interest. He described the current direction as building a new growth model powered by science, technology, innovation, and digital transformation to raise productivity and efficiency. In his view, improving efficiency depends on using the market to allocate resources, with early gains coming from allocation efficiency and subsequent gains from technical efficiency enabled by technology.

Key bottlenecks: land and credit distortions

On the challenges Reform 2.0 faces, Dr. Cung pointed to bottlenecks in untangling distortions in resource allocation.

Land

He said the first bottleneck is land. If land and real estate remain mainly a way to store assets, capture price differences, and collect rents, it becomes difficult to achieve efficient resource allocation. He argued that if growth is to be driven by productivity, science and technology, and innovation, this distortion must be addressed first.

Credit

The second bottleneck is credit. Dr. Cung said that when land becomes the most profitable channel, capital flows into real estate rather than into production, leaving productive enterprises short of capital and limiting science and technology to slogans. He said incentives need to be realigned so that speculation becomes less attractive and investment in production and innovation becomes more attractive.

He cited the example of a property tax as a tool to reduce speculative behavior by making holding real estate more expensive and encouraging actors to abandon speculation. He described this as a market mechanism rather than a top-down decree.

Changing incentives and the role of technology policy

Dr. Cung said the core of Reform 2.0 is changing incentives and behavior. If large profits are easy to obtain from land and planning information, he argued, people will not commit to production, research, or innovation. He said the gradual removal of bottlenecks outlined in the resolutions can help because people will see the reform direction as aligned with national interest.

He also argued that sound policy can create positive spillovers in society and motivate broader behavioral change. On science and technology, he said development should begin from business needs, with enterprises as the primary users of technology. When the business environment forces competition on productivity, quality, and innovation, enterprises will demand technology. In that framework, he said the state’s role is to create a development space and connect supply and demand for technology, rather than maintaining a persistent license–permission regime in research, transfer, or project approvals.

Growth targets, sustainability, and public trust

Regarding growth targets in a complex geopolitical context, Dr. Cung said aiming high can be beneficial because it creates ambition. However, he stressed that the prerequisite is changing the growth model, not merely setting a number. He said high growth cannot rely indefinitely on credit expansion, stimulus spending, or channeling capital into growth sectors.

For growth to be both fast and sustainable, he argued it must be based on productivity, quality, efficiency, and competitiveness, with science, technology, innovation, and digital transformation as core drivers. He added that public trust increases when people see real institutional change, reoriented growth incentives, and resource reallocation. He suggested that even if growth settles at 8–9% instead of 10%, public support may remain if people perceive genuine progress. Conversely, he warned that discussing growth targets without changing underlying growth drivers risks turning targets into hollow slogans.

Execution as the decisive factor

Dr. Cung concluded that sustainable growth depends decisively on execution. He said successful reform of the growth model requires capable executors, capable teams, and appropriate implementation methods. At this stage, he argued for focusing on fixing real problems, removing obstacles, and gradually building a coherent legal framework rather than issuing many new regulations.

He said the state’s role must evolve accordingly, including governance tools, organizational structures, and administrative capabilities. He characterized Reform 2.0 as a synchronized reform rather than piecemeal changes, adding that policy proposals should be vetted by independent bodies to ensure quality and feasibility.