Strategy sought for private sector development

Vietnam’s private sector has around 700,000 firms and 5.2 million business households

“After more than three decades of Doi Moi (Reform), the country still does not have a true development strategy for private firms,” economic expert Tran Dinh Thien said at the forum about private sector development held by the Vietnam Institute of Economics.

He said that more attention is paid to how many firms are established rather than how healthy they are.

According to Thien, the economic structure of Vietnam is showing considerable problems. He cited statistics showing that the private sector altogether contributed around 40 percent to the country’s gross domestic product (GDP), of which, some 32 percent was from business households and only eight percent was from private firms. State-owned enterprises (SOEs) contributed around 28 percent.

SOEs and business households are the two major contributors to GDP but they both have problems in capacity. Business households are of small scale while SOEs lack efficiency in operation, Thien said, adding that these two forces are not major contributors to Vietnam’s successful economic integration and international competition.

He pointed out that private firms faced a number of barriers, such as more difficult access to resources than other economic sectors.

The role of the private sector must be leveraged in the next five to seven years, he said, adding that private firms should be regarded as a dynamic driver of the market economy and it is critical to offer them fairness in accessing economic resources.

According to Bui Quang Tuan, Director of the Vietnam Institute of Economics, the business climate of Vietnam needs to be further improved together with the transition of the economic growth model towards promoting innovation.

"The digital economy and Industry 4.0 are disrupting a number of industries but offered opportunities for firms to speed up and make breakthroughs," Tuan said.

He said that Vietnam has a number of policies to promote business development but the enforcement of policies remains weak, stressing that it is important to ensure that policies work to benefit firms.

Vietnam’s private sector has around 700,000 firms and 5.2 million business households.

The country targets one million firms in operation in 2020 and is encouraging business households to be transformed into firms in order to achieve this goal.