Raise revenues from private sector

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The private sector plays a more and more important role for economic development. Photo: TD

The Ministry of Finance reported that, in the first six months of 2021, budget revenue saw a year-on-year increase of 15.3%. A notable point in budget revenue is revenue from private enterprises is higher than the results of SOEs and FDI enterprises.

Specifically, revenue from State-owned enterprises (SOE) reached 52.8% of the estimate, up 17.8% year-on-year; revenue from foreign-direct invested enterprises (FDI) reached 57.7% of the estimate, up 19.9% year-on-year and revenue from private firms hit 59.3% of the estimate, up 39.6% % year-on-year.

Director of Economica Vietnam Dr Le Duy Binh said that this shows increasingly important role of the private sector for the economic development as well as the State budget revenue and its proportion contributed to the State budget will be increasing.

“This is a very positive trend and should be encouraged. Vietnam's economy should not be too dependent on SOEs and FDI enterprises. We need to nurture revenues from the private sector due to its impact on the resilience and sustainability of the economy,” said Dr Binh said.

According to Binh, this figure reflects the current situation of Vietnamese private enterprises, that is, a number of private enterprises are working well and had good contributions to the economy via their remittances to the State due to their better competitiveness and timely response to new conditions

However, many private firms are facing many difficulties and challenges such as closing or stopping operation. This shows strong and fierce ongoing clearance and restructuring in the private sector

Therefore, Binh proposed that ministries and agencies such as the Ministry of Finance consider solutions to help private firms overcome difficulties and develop to raise revenues from this sector,

In particular, the Ministry of Finance should pay attention to the microenterprise sector. The rate of this sector suspending operation is significant. Recently, there have been proposals to reduce the CIT rate for some groups of businesses by their size. This can also be a point helping them use their retained earnings to raise capital and invest in production and business.

“There are many different ways to nurse revenues such as supporting or reducing taxes, fees and charges in allowance rate under competence. The Ministry of Finance can use support measures to continue maintaining normal operations of enterprises," said Dr Binh.

In addition, it is possible to expand the private sector via more flexible support policies to stimulate, develop and expand the private sector, supporting the development of private firms in the fields of innovation, e-commerce and digital economy, raising revenues. This is a long-term issue the Ministry of Finance needs to take into account.

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Through business-friendly policies, the Ministry of Finance as well as other ministries can provide greater support to private enterprises, especially those in new fields, to help them develop. This is new and stable revenue for the State budget.