Unblocking bottlenecks, creating a "boost" for the private economy

Currently, the private economic sector has more than 940,000 enterprises and more than 5 million business households in operation. This is the core force that creates wealth and material, making important contributions to economic growth, creating jobs, increasing income, promoting innovation, contributing to poverty reduction and social stability.

The private economic sector contributes about 51% of GDP, more than 30% of total state budget revenue, more than 30% of total import-export turnover, nearly 60% of total social investment capital, and 82% of total labor in the economy.

Many private enterprises have grown strongly, not only dominating the domestic market but also affirming their brands in the international market... However, the private economy still has many shortcomings and limitations, and has not met the requirements of being the most important driving force of the country's economy...

Recently, the Prime Minister issued Decision No. 526/QD-TTg to establish a Steering Committee to develop a Private Economic Development Project to create a "boost" for the private economy, ensure the removal of bottlenecks and barriers, and create excitement, trust and an open, attractive environment for the private economic sector to develop.

Currently, the Government is receiving opinions from ministries, branches and localities to develop a Draft Project on Private Economic Development to create motivation to help private enterprises rise up and become a leading important contributor to the economy in the coming decades.

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Untie institutional knots

Emphasizing the role of private enterprises, Dr. Nguyen Dinh Cung - former Director of the Central Institute for Economic Management (CIEM) pointed out the reality: In economic regions of the country, especially difficult areas, private economic sector enterprises are present. "In the industries that we used to say that only state-owned enterprises could do, now private enterprises do better," said Mr. Cung.

According to Dr. Nguyen Dinh Cung, to date, private enterprises have been developing passively and facing many barriers, the biggest of which is institutional. Private enterprises have not been systematically encouraged and supported to fully exploit their potential.

Dr. Nguyen Dinh Cung

Mr. Cung said that private enterprises are the most important driving force of economic growth and need to grow the most. If this sector does not achieve a growth rate of about 10%, the economy will certainly not achieve its set target.

The former director of CIEM emphasized two pillars: The first is institutional reform. To remove the “bottleneck of the bottleneck”, create a “breakthrough of the breakthrough”, the focus of this pillar must be transformed and removed. Removing and transforming the legal system that is overlapping, duplicate, unclear, ineffective, not specific, transparent…

The legal system that is biased towards management, “if you can’t manage it, then ban it”, meaning “to the extent that the state agency has the capacity to understand it, then let it do it”, needs to be transformed into an open legal system, creating an environment of true freedom of business, true freedom of creativity, equal business with low compliance costs, and no legal risks in business activities. Enterprises can demonstrate their full potential to contribute to enriching themselves and the country. At the same time, disputes that arise are resolved fairly and effectively.

The second pillar, in terms of capital from enterprises, needs to create an environment, a system of policies to support and encourage the development of private enterprises. Here, create an environment for them to access capital, land, science and technology, data... in a timely manner, large enough in scale and synchronously for them to break through to a new level, from micro to medium, medium to large - a very difficult threshold for enterprises.

“The framework for business development is not only credit capital, but also long-term investment capital. Thus, the State needs to open up a more diverse investment capital market, reducing the burden on banks. It is necessary to develop a capital market with various types of funds, which we currently lack a lot. Because of the lack, many businesses have not been able to develop,” Dr. Cung emphasized.

Solving the "thirst" for capital

According to the assessment of the Chairman of the Vietnam Association of Small and Medium Enterprises, Dr. Nguyen Van Than, the debt ratio of private enterprises can be said to be very high. High debt shows that small and medium enterprises are developing.

Dr. Nguyen Van Than

For private enterprises, capital is always important, so Mr. Than said that it is necessary to think about how to ensure that banks feel secure in lending. “There is no other way but through science and technology. To lend, businesses need to connect with each other,” Mr. Than said.

The Chairman of the Vietnam Association of Small and Medium Enterprises frankly stated: There is a phenomenon that banks are focusing on lending to large enterprises. We also need to sympathize because the pressure from revenue to banks is very large. Thus, small and medium enterprises that want to borrow need to focus on linking up into one address, through the Association to introduce businesses that need to borrow capital to banks.

“This is beneficial in terms of time. Lending banks are also much more secure. It is necessary to connect and work together so that the Association can help businesses. There are many options for businesses to mobilize capital, in addition to banks, there are also funds… But it is still necessary to create conditions for small and medium enterprises to have easier access than borrowing from banks,” Mr. Than suggested.

Bank capital is still the "salvation"

On the business side, Chairman of the Board of Directors of Kim Nam Group, Mr. Nguyen Kim Hung said: Recently, the Politburo has issued two very important Resolutions for businesses and entrepreneurs in the new situation. This is an important driving force to promote the spirit of entrepreneurship, develop production and business, recover and grow after difficult times.

Mr. Nguyen Kim Hung

Currently, banks are still an important “salvation” for any type of business. However, to break through, businesses are looking forward to having programs and policies to support financial innovation.

“We really hope that banks will allocate a certain amount of capital for this field. It takes at least 10 years for businesses to develop science and technology. If there is support, this time will be significantly shortened,” Mr. Hung suggested.

Referring to the capital channel for enterprises, former Vice Chairman of the National Financial Supervision Committee, Dr. Le Xuan Nghia said: Vietnam has about 900,000 enterprises, but only about 500 enterprises raise capital on the stock exchange, of which some enterprises list for brand name, not to raise capital. Even enterprises that raise capital from the stock exchange still have to rely on bank capital.

“We once had hope for a short time to develop the medium and long-term capital market, but it is time to “wake up”. A Vietnamese billionaire shared that he had raised capital on international exchanges from Japan and South Korea about 1.1 billion USD to cover some activities for 2 years, but raising capital on domestic exchanges is very difficult. Speaking out shows that the capital of enterprises today mainly depends on commercial banks and there is no other way”, Mr. Nghia stated the reality.

Source: https://vov.vn/kinh-te/khoi-thong-cac-diem-nghen-tao-cu-hich-cho-kinh-te-tu-nhan-post1163770.vov