The private sector is the key to Vietnam’s economic development and the government will do what it can to provide it with full assistance, Prime Minister Nguyen Xuan Phuc told the second Vietnam Private Sector Forum (VPSF) on July 31.

He stressed that the private sector requires further attention to open up more fields of the economy that were previously limited, such as transport infrastructure and hospitals. He also hoped that the private sector would contribute 60 per cent of the country’s GDP.

“The private sector is a driving force for the economy and is key to economic development,” the Prime Minister said, adding that this is the right course to take in economic restructuring and in raising Vietnam’s profile in the global economy.

Mr. Truong Gia Binh, Chairman of the FPT Group, told the meeting it would continue to invest strongly in Vietnam and that he believes the private sector will grow 15-20 per cent each year.

“At first, VinaCapital only invested in KIDO and Hoa Phat, but investments have now increased to several billion dollars,” said Mr. Don Lam, CEO and Founding Partner of VinaCapital. “VinaCapital mainly attracts foreign capital while domestic capital only represents 10 per cent. I hope the amount of domestic capital will increase to support the development of Vietnamese enterprises in the future.”

Private firms at the Forum said they have found it difficult to handle high administrative and informal costs, which affect the development of the private sector. Mr. Vu Van Tien, Chairman of the Geleximco Group, told the Prime Minister that all private enterprises desire from the outset to contribute to the country’s development.

“The cost of exporting goods in Vietnam is up to 23 per cent, while according to a World Bank study, the cost in other countries is just 10 per cent,” he said, adding that there are too many unofficial costs in business that the government needs to remove. “Private enterprises are an important driving force for Vietnam’s economic development, so policies need to be far-sighted.”

Answering questions from Mr. Tien and the private enterprise community, the Prime Minister emphasized that there are many unofficial expenses, interest costs, and logistics costs that are an obstacle to business. The government is committed to accelerating the improvement of the investment environment and reducing costs, and all banks must reduce their interest rates.

The second VPSF this year also released its CEO Confidence Index (CEO.CI) for this year, which reached just 58/100. The business environment and business performance were rated at 46 and 64, respectively.

In terms of business performance, 60 per cent of businesses surveyed said that sales rose in 2016 and 67 per cent said sales rose in 2017. Meanwhile, 52 per cent said their profits rose in 2016 and 61 per cent believe their profits will increase in 2017. Forty-four per cent said that profits are increasing due to technological innovation.

Regarding the business environment, 63 per cent plan to expand but 44 per cent said they have missed business opportunities because of legal barriers and market restrictions. Only 37 per cent think that business conditions are more favorable this year.

The VPSF is an initiative of the Vietnam Young Entrepreneurs’ Association and The Mekong Business Initiative (MBI), funded by the ADB and the Australian Government.

It acts as a bridge between the government, public authorities, and the private sector in continuous and close consultation on public and private policy, based on the gathering and reflection of voices from enterprises.