Promoting private investment to improve growth quality

Private investment plays a very important role, affecting the quality of economic growth not only in the short term.

Recovery but many challenges remain

According to the General Statistics Office, in the period from 2019 to 2023, although investment in the non-state sector did not experience negative growth (as in the foreign direct investment sector in 2020 and 2021, or the state sector in 2021), it also experienced a sharp decline and poor recovery. The situation remained unchanged until the end of the first quarter of 2024 (up 4.2%) before becoming more positive in the second quarter (up 7.9%), thereby helping the first half of this year to achieve an increase of 6.7%.

As the sector with the largest business community and always accounting for the largest proportion of total investment capital implemented in society (often over 55% to 60%), the slow growth of the non-state sector not only reflects the difficulties and challenges faced by the private sector, but is also one of the reasons for the slowdown in overall economic growth. According to Dr. Can Van Luc - Member of the National Monetary and Financial Policy Advisory Council, the private economy is an extremely important sector, contributing about 50% of GDP, 19% of the budget, 25% of exports and creating 80% of jobs. Therefore, if the growth of this sector slows down, it will cause the economy to stagnate and growth to be difficult.

Currently, large private corporations have participated in many key areas of the economy.

This is a reality that experts are very concerned about, although they know that objective factors, especially the Covid pandemic and its long-term consequences, are a significant part of the difficulties in the recent period for investment activities in general and the private sector in particular, but there are also many subjective, domestic causes that need to be resolved.

Dr. Le Duy Binh, CEO of Economica Vietnam, pointed out the fact that recently, the number of large-scale investment projects of private enterprises that have been started is not as high as before. Many decisions of investors have been delayed due to concerns about legal risks, administrative procedures, etc. In addition, the data on the number of newly established enterprises and enterprises returning to operation compared to the number of enterprises withdrawing from the market, although larger in absolute numbers, is significantly lower in growth rate. This partly shows that the confidence in starting a business and returning to operation is not high.

Public investment needs to be a lever for private investment

Noting that the results of the first 6 months of the year were very positive, growth drivers such as import and export, public investment, tourism, consumption, FDI attraction, etc. have recovered, which is the basis for expecting a higher GDP growth rate for the whole year of 2024, but experts say that private investment is still a weak point, the recovery is still low compared to the pre-pandemic period. "In the context that public investment is also limited and cannot expand forever because it can still affect the macro balance, foreign investment can continue to be positive, but there are still certain limitations, the most important thing is to promote the role of private investment to achieve rapid and sustainable growth for the future", Dr. Le Duy Binh emphasized.

One of the specific goals set out in Resolution No. 45/NQ-CP dated March 31, 2023 of the Government (Issuing the Government's Action Program to continue implementing Resolution No. 10-NQ/TW dated June 3, 2017 of the 5th Conference of the 12th Central Executive Committee on developing the private economy into an important driving force of the socialist-oriented market economy) is: Improving the quality and efficiency of business in the private economic sector. The growth rate of the private economy is higher than the general growth rate of the economy. Strive to increase the contribution of the private economic sector to GDP to about 55% by 2025; about 60 - 65% of GDP by 2030.

As an experienced expert in consulting businesses and investors in implementing investment projects, lawyer Bui Van Thanh - New Sun Law Office believes that to promote private sector investment, the most important thing is to build a transparent and equal business environment, and this needs to be reflected in access to resources, access to policies, access to land and capital. Sharing the same view, according to Dr. Le Duy Binh, the important thing now is to promote confidence and investment enthusiasm from the business community through improving the business environment, creating more favorable conditions for the business sector. The problems that have been pointed out in the past such as procedural difficulties, high costs, concerns about legal risks, etc. need to be resolved in general as well as for each project and each enterprise so that enterprises are confident when deciding to invest capital in business, bringing cash flow into the economy. Along with that, it is necessary to promote the leading, paving, and stimulating role of public investment in private investment.

“I believe that public investment will continue to play an important role as a growth driver for the economy in 2024 and the coming years, and it can also be used as a lever to spread and promote private investment,” said Dr. Binh, adding that exploiting public investment well will not only make it a driving force contributing to GDP in terms of quantity but also play a very important role in improving the quality of growth and supporting other sectors, thereby establishing a harmonious and sustainable structure of the overall social investment capital structure.

Therefore, the effectiveness of State investment capital also needs to be assessed from the perspective of its impact on supporting and stimulating private investment, becoming one of the criteria for selecting and approving projects invested from State capital. As a result, the economy will develop sustainably with a solid, sustainable structure and higher autonomy and self-reliance, if domestic private investment continues to play a pivotal role in the total investment capital implemented in the whole society.

In the same spirit, at the recent meeting of the Government Standing Committee on reports proposing amendments and supplements to laws under the management of the Ministry of Planning and Investment, including the report on the draft revised Law on Public Investment, Prime Minister Pham Minh Chinh directed: The contents that are clear, proven to be correct in practice, effectively implemented, and agreed by the majority, should continue to be implemented and legalized; do not spread investment, use the central investment budget; take public investment as the leader, activate private investment, mobilize and effectively use all social resources.

Source: https://thoibaonganhang.vn/phat-huy-dau-tu-tu-nhan-de-nang-chat-tang-truong-154723.html