Promoting private business toward sustainable growth

With the reforms and innovations in institutions and policies of the Party and the State in the past three decades, especially in the past ten years, Vietnam's private economic sector has experienced significant growth in quantity and quality. As a result, it has become one of the most important driving forces of the socialist-oriented market economy.

Notably, this economic sector continuously maintained a good growth rate, accounting for about 40% of GDP, attracting about 85% of the economy's labor force, making an important contribution to mobilizing social resources for investment, production and business development, economic growth, economic restructuring, and increased income state budget, create jobs, improve people's lives, ensure social security.

However, according to the Deputy Minister of Planning and Investment Tran Quoc Phuong, domestic private enterprises are weak and lacking in both the quantity and quality of this area. In the coming time, Vietnamese enterprises will face many new challenges, increasingly fierce competition, pressure on labor productivity and digital transformation in the new context. In addition, the production and business situation of enterprises is expected to continue to face many difficulties and challenges from objective factors such as the risk of a resurgence of the Covid-19 pandemic; climate change issues, droughts and floods are unusually happening; the Russian-Ukrainian military conflict could be protracted; high inflation is likely to become a persistent problem in the medium term; The prices of gasoline, fuel, and raw materials are high, which affects the resilience of businesses and the economy.

According to Deputy Minister Tran Quoc Phuong, climate change is increasingly impacting the life, economy and society of every country in the world, and Vietnam is no exception. Facing that impact, the requirements of partners and the market towards sustainable production and consumption are taking place strongly; Vietnam's commitments when joining the United Nations Framework Convention on Climate Change (COP26), priorities in the international cooperation frameworks ASEAN, APEC on sustainable business, green production, Carbon tax issues, a carbon verification tool that is being applied more and more in countries around the world is posing challenges that need to be innovated for Vietnamese enterprises to catch up with new trends; otherwise, their competitiveness will be reduced and lost the opportunity to participate and move deep into the global value chain.

USAID will support Vietnamese SGBs to compete worldwide and develop more sustainably. Photo: Saigon Transportation Mechanical Corporation - One Member Limited Liability Company (SAMCO)

Assessing the challenges of the private sector in the coming time, Michael Schiffer, Asia Regional Director of the US Agency for International Development (USAID), said that despite being a source of job creation, however, Vietnam's SGBs are facing many challenges in sustainable development. Accordingly, USAID is expanding its partnership with the Ministry of Planning and Investment to help these enterprises overcome difficulties and seize opportunities to enhance their competitiveness. Specifically, USAID and the Ministry of Planning and Investment signed a cooperation agreement to further strengthen the capacity of the SME sector.

"We will support Vietnamese SGBs so they can compete worldwide and have more sustainable development," said Michael Schiffer.

USAID support to help raise awareness for 100,000 SGBs on Environment, Society and Governance (ESG); deploying ESG technical support package for 300 SGBs to meet the requirements of sustainable development of key export markets, develop an inclusive business model, green production; sponsoring piloting, implementing or scaling up 10 excellent ESG initiatives to spread sustainable business models with a total value of technical assistance of up to VND 6 billion.

At the same time, USAID will support through technology of renewable energy, green energy development; further strengthening solutions for the business sector (including Vietnamese small and medium enterprises) to develop sustainably and shape market solutions.

It is known that this is the first ESG initiative in Vietnam for SGBs. These enterprises currently account for 97% of the private sector enterprises and play an important role in Vietnam's economic, social and environmental sustainability.