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Vietnam Today

Private sector a key driver of Vietnam's economy

Released at: 16:45, 13/03/2019

Private sector a key driver of Vietnam's economy

Photo: Khanh Chi (VET)

Issues facing private enterprises discussed at latest VET conference in HCMC.

by Hong Nhung

The private sector plays an important role in any country’s economy but private enterprises in Vietnam are still subject to a host of risks and difficulties posed by administrative institutions, the Annual Vietnam Economic Conference 2019 with the theme “Breakthrough from growth drivers” held by Vietnam Economic Times on March 12 in Ho Chi Minh City heard.

Experts at the seminar acknowledged the profile and role of the private sector in the country, saying its contribution to the economy is clearly evident. It will not only be a major contributor to national GDP but will also create many jobs.

New jobs in the non-State sector accounted for only 26.1 per cent of the total in 2000 but now account for 60 per cent, according to Fulbright’s economic expert Huynh The Du. The contribution by the private sector (excluding households and individuals) to GDP, meanwhile, remains quite low, at only 10 per cent. “This rate is not as high as expected,” Mr. Du told the conference.

However, Dr. Vu Tien Loc, Chairman of the Vietnam Chamber of Commerce and Industry (VCCI), said the private sector is not only comprised of 700,000 registered enterprises but also includes household and individual enterprises and foreign-invested enterprises (FIEs), so the contribution actually stands at 61 per cent. When the private sector is defined in such broad terms, it plays an increasingly important role in Vietnam’s economy.

Moreover, Ms. Le Thi Nam Phuong, Deputy Chairman of the Vietnamese Young Entrepreneurs Council, said that if household and individual businesses were categorized separately, the country would misidentify a force that contributes to GDP and is in need of support. It is crucial for the government to place the private sector as the major force in the economy.

According to Dr. Loc, in developed economies such as the US, Japan, and Europe, small and micro enterprises are considered the backbone of the economy, and this should also be the case in Vietnam.

The private sector’s important role in the economy is beyond question, according to Dr. Tran Du Lich, a member of the Prime Minister’s Economic Advisory Group. Vietnam has been changing its growth strategy since 2016, setting a fast and sustainable growth target. This goes hand-in-hand with the growth of the private sector.

The private sector, he went on, could not operate without the State’s permission, and only since 2015 has it has been free to conduct business, when the new Law on Enterprise was introduced, but this still came with certain conditions. Private enterprises have been held back for such a long period of time they are unable to develop further.

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