Government pushes private sector to promote growth
The government has taken strong measures on promoting private enterprises in a move to make the sector generate half of the country’s economic output in the next two years.
According to the Ministry of Planning and Investment, the private sector currently made up some 43 percent of the country’s GDP. It also accounts for 39 percent of the total social investment, and generates 11.9 percent of all jobs.
The government has so far tried to put in place the most favorable policies and create the most favorable environment so that by 2020, Vietnam will have over one million enterprises in operation.
To hit the goal, institutional reforms have been applied to relax red tape on doing business, while securing fair competition by improving access to land, capital, information and other production factors for private enterprises.
According to the latest report from the Central Institute for Economic Management, up to 738 business conditions have been removed or simplified by the end of the first quarter of this year to ease businesses according to the government’s Resolution No.19-2018/NQ-CP, the third consecutive year it was issued.
Vietnam’s efforts to improve the business environment in recent years have yielded remarkable results. According to the World Bank’s Doing Business report, Vietnam’s ranking has consistently improved during the last few years, including the 14-step improvement witnessed in 2017 (from 82th to 68th out of 190 economies), the 12-step improvement in innovation (from 59th to 47th out of 127 economies), and the 5-rank leap of national competitiveness (from 60th to 55th out of 137 economies). These are the biggest ranking improvements so far.
Ousmane Dione, the World Bank’s country director for Vietnam, highly appreciated the government’s approach in comparison with regional and international economies. He said that the private sector has been becoming a major growth motivation of Vietnam, and there are many places for this sector to further develop effectively and improve its competitiveness.
More actions needed
“The private sector has received more attention from the government than ever before,” Chairman of the Vietnam Chamber of Commerce and Industry Vu Tien Loc said, adding that he believed the private sector will become the backbone of the economy in the future.
However, he said, private enterprises still need more support from the government to help them cash in on opportunities during the country’s international integration process, explaining that nearly 60 percent of them are unable to make a profit.
According to Loc, despite the improvement of reforms in the past years, administrative procedures are still a big obstacle to business performance, causing them many time and money.
Echoing Loc, General Director of the General Statistics Office Nguyen Bich Lam said that favorable conditions are still needed to increase the number of new businesses and startups in order to realize the target of one million enterprises by 2020.
The government should continue speeding up administrative reform, improving the business climate and legal framework, while enforcing the Law on Support for Small- and Medium-Sized Enterprises, he said.
Economist Tran Hoang Ngan, a National Assembly deputy for Ho Chi Minh City, also suggested that it is necessary to focus more on small and medium-sized enterprises (SMEs) and review the Law on SMEs and other legal documents on private sector, considering them a master strategy to increase the private sector’s competitive edge.
Besides, looking at the experience from South Korea and Japan, where SMEs have a leading position in research and development (R&D), experts also recommended the government to offer direct and indirect financial support, including tax relief for hi-tech firms and providing funds to firms with good track records.
Vietnam plans to have over one million enterprises in operation by 2020.
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To hit the goal, institutional reforms have been applied to relax red tape on doing business, while securing fair competition by improving access to land, capital, information and other production factors for private enterprises.
According to the latest report from the Central Institute for Economic Management, up to 738 business conditions have been removed or simplified by the end of the first quarter of this year to ease businesses according to the government’s Resolution No.19-2018/NQ-CP, the third consecutive year it was issued.
Vietnam’s efforts to improve the business environment in recent years have yielded remarkable results. According to the World Bank’s Doing Business report, Vietnam’s ranking has consistently improved during the last few years, including the 14-step improvement witnessed in 2017 (from 82th to 68th out of 190 economies), the 12-step improvement in innovation (from 59th to 47th out of 127 economies), and the 5-rank leap of national competitiveness (from 60th to 55th out of 137 economies). These are the biggest ranking improvements so far.
Ousmane Dione, the World Bank’s country director for Vietnam, highly appreciated the government’s approach in comparison with regional and international economies. He said that the private sector has been becoming a major growth motivation of Vietnam, and there are many places for this sector to further develop effectively and improve its competitiveness.
More actions needed
“The private sector has received more attention from the government than ever before,” Chairman of the Vietnam Chamber of Commerce and Industry Vu Tien Loc said, adding that he believed the private sector will become the backbone of the economy in the future.
However, he said, private enterprises still need more support from the government to help them cash in on opportunities during the country’s international integration process, explaining that nearly 60 percent of them are unable to make a profit.
According to Loc, despite the improvement of reforms in the past years, administrative procedures are still a big obstacle to business performance, causing them many time and money.
Echoing Loc, General Director of the General Statistics Office Nguyen Bich Lam said that favorable conditions are still needed to increase the number of new businesses and startups in order to realize the target of one million enterprises by 2020.
The government should continue speeding up administrative reform, improving the business climate and legal framework, while enforcing the Law on Support for Small- and Medium-Sized Enterprises, he said.
Economist Tran Hoang Ngan, a National Assembly deputy for Ho Chi Minh City, also suggested that it is necessary to focus more on small and medium-sized enterprises (SMEs) and review the Law on SMEs and other legal documents on private sector, considering them a master strategy to increase the private sector’s competitive edge.
Besides, looking at the experience from South Korea and Japan, where SMEs have a leading position in research and development (R&D), experts also recommended the government to offer direct and indirect financial support, including tax relief for hi-tech firms and providing funds to firms with good track records.
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Vietnam news in brief - August 24
Read The Hanoi Times to stay up to date on developments in Vietnam.
- Growing number of FDI firms moving to Vietnam
- Vietnam Gov’t committed to facilitating Adani Group’s US$2-billion port project
- Vietnam Railway proposes US$87 million for Hanoi–Dong Dang railway upgrade
- Vietnam’s North-South high-speed railway to be designed for 350km/h
- Vietnamese gov’t urged to address impact of global minimum tax
- Samsung plans drastic investment increase in Vietnam over next three years