Privatization of public services

Currently, most public services in Vietnam are provided by state agencies. As of 31/12/2016, the total number of public service units nationwide is 556,213; 90% of them are in education and health field, with more than 2 millions of civil servants and officials. Despite their huge investment, these agencies do not work effectively and do not meet the society’s demand. For example, in the two sectors where state agencies involved the most are education and health. In 2016, up to 42.23% of the unemployed are qualified, and there are 343,600 college graduates who can not find a job. Many ineffective universities and colleges cannot sustain themselves without state subsidies because they can not attract students. In the health sector, overcrowding is still occurring in main hospitals, while capacity in local hospitals has not been fully utilized. For the use of the Health Insurance Fund, in 2016 it is estimated that there are over 45 provinces overspending the medical examination and treatment fund with the amount of over 7,376 billion VND, and 15 provinces with medical care coverage over 200 billion VND. In light of the above, the issue of applying mechanisms and policies to increase the participation of the private sector and the application of market mechanisms to the delivery of services and public goods is becoming more urgent than ever, especially in the context of Vietnam’s soaring public debt.

In the area of research on improving the efficiency of public service delivery, MASSEI has pioneered the application of the most up-to-date knowledge of New Institutional Economics (NIEs) to the level of each transaction, optimized the proposition of solutions for increasing private sector participation and applying market mechanisms to the delivery of public goods. Our research is always based on sound theoretical foundations, referring to the experience of other countries, empirical evidence, and the use of market simulation methods to suggest the most practical recommendations for the Vietnam market economy. This will help increasing competition in the public goods supply market, improving transparency, service quality and reducing the budget burden.

In the field of improving the efficiency of public service delivery, MASSEI has implemented a major research project in 2016-2017, led by Dinh Tuan Minh, the leading economist in the New Institutional Economics, along with independent researchers at four leading research institutes in Vietnam, including the Central Institute for Economic Management (CIEM), the Vietnam Institute of Economics (VIE), the Institute for Economic Research Economic Policy and Policy (VEPR), and Vietnam Chamber of Commerce and Industry (VCCI). This is a comprehensive study that not only provides solid theoretical foundations for the analysis of all public goods, but also extends into many case studies in Vietnam. These include the higher education market, urban environmental services, the provision of high-speed road infrastructure and conformity assessment services.

MASSEI’s priority research priorities in improving the delivery of public services:

– Research on mechanisms to promote public services provision from the private sector.

– Study on reforming the system of condominiums / state-owned enterprises in the public services field.

– Research on using education slips in the education system of Vietnam

– Research on performance measurement and performance management in the public service field.

– Research on developing a market mechanism in public service delivery.

Privatization of public services