The rise of domestic "eagles" and the motivation for Vietnam to take off

More than a decade ago, the story of a Vietnamese supporting industry enterprise not being able to produce a screw ordered by Samsung Group (Korea) caused a stir in public opinion.

This was also cited by the 13th National Assembly delegates when talking about the competitiveness of the economy. "How many PhDs are trained each year but why can't we produce screws? So how can we participate in the global value chain?", delegate Tran Quoc Tuan (Tra Vinh) once wondered.

At that time, the story of Vietnamese enterprises "shaking their heads" at the opportunity that this Korean enterprise brought raised many concerns for the domestic supporting industry. Because this is an industry that plays an important role and significance in the process of industrialization and transformation of the production structure of a country.

However, just one year later, four Vietnamese supporting industry enterprises reached the level of Samsung's Tier 1 supplier and continued to increase the number of suppliers for the Korean "giant" in the following years. By 2023, 306 Vietnamese enterprises had joined the supply network of the Korean technology and semiconductor giant.

A corner of Hanoi from above (Photo: Huu Nghi).

This result partly reflects the efforts of domestic enterprises. From a country known for its processing and assembly, Vietnam has made great strides in deeply participating in global supply chains. Especially when more and more Vietnamese enterprises have produced "made in Vietnam" products with serious and systematic investment.

The private economic sector is growing stronger and stronger.

Over the past four decades, Vietnam's GDP has grown strongly, from 14.1 billion USD to 476.3 billion USD in 2024 with a GDP growth rate exceeding 7%, ranking 33rd in the world. Vietnam has transformed from one of the poorest countries in Asia to an upper-middle-income country and an important manufacturing center of the world. To achieve that result, there is a significant contribution from the private economic sector.

Looking back at the history of nearly 40 years of renovation (since 1986 to present), the private enterprise sector has made miraculous progress in both quantity and quality. According to data from the Ministry of Planning and Investment (now the Ministry of Finance), by the end of 2024, Vietnam had more than 930,000 operating enterprises, of which 98% were small and medium-sized enterprises. In addition, there are about 14,400 cooperatives and more than 5 million business households.

To date, private enterprises have contributed about 45% of GDP, 30% of State budget revenue and attracted 85% of the workforce. Over the years, this sector has always grown at a higher rate than State-owned enterprises and foreign-invested enterprises. Many enterprises have "transformed" to develop strongly, accumulating sufficient capacity in terms of capital, technology and management, building brands to reach out to the region and the world.

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Vietnam’s private sector has demonstrated its pioneering role in many areas of the economy. Unlike the early stages, when Vietnamese enterprises mainly focused on consumer goods such as toothpaste, soap, confectionery, etc., Vietnam’s private sector is now present in many important economic sectors such as information technology, mechanics, steel production and mining, banking, real estate, and exports.

Vietnam has more and more large corporations participating in many large-scale infrastructure projects, from airport, seaport, highway projects to difficult fields such as energy infrastructure, automobile manufacturing, smartphones or aviation... also bearing the mark of private enterprises.

In fact, in developed countries, the private economy accounts for 70-90% of GDP, they are the foundation and pillar ensuring the stable and strong development of the national economy. When mentioning the miraculous development of Korea, it is impossible not to mention Samsung, LG, SK and Hyundai. These chaebols (large economic groups since the 1960s) have grown into a powerful force, helping Korea - one of the poorest countries in the world "transform" into the 10th most developed economy in the world.

Or when remembering the miraculous development of Japan in the 60s-80s of the 20th century, we cannot help but remember the great contributions of corporations such as Sumitomo, Toyota, Honda, Mitsubishi...

At a conference in September 2024, Deputy Prime Minister Nguyen Chi Dung, then Minister of Planning and Investment, emphasized that it was time to place greater missions on the shoulders of large enterprises.

"Large enterprises need to proactively take the lead and pioneer in big, difficult, and new tasks, solving problems at the national level to create momentum for economic development and create room for development for small and medium enterprises in other fields," he emphasized.

Big policies and determination

Recognizing the importance of the private economy, over the past nearly four decades, the Party and Government of Vietnam have had positive changes in development ideology, guidelines and policies.

The Party's resolutions and strategies, supplemented and perfected through each period, have played an important role in the development of the private economic sector. In particular, Resolution No. 10-NQ/TW, Session 12, identified the development of the private economy as an important driving force of the socialist-oriented market economy.

The Prime Minister and delegates attending the conference took a photo together, known as the "billion dollar" photo, where many leaders of large enterprises gathered (Photo: VGP/Nhat Bac).

And over the past decades, the Government has realized that policy through many specific actions, making the private sector an "important driving force" to bring Vietnam closer to the goal of becoming a developed, high-income country by 2045. A series of dialogue conferences between the Government and leaders of companies and corporations nationwide have continuously taken place, chaired by the Prime Minister with ministries and branches to resolve issues and recommendations from businesses.

Legal frameworks and administrative procedures for businesses are also increasingly focused on and resolutely removed. "Removing difficulties for businesses is contributing to removing difficulties for the economy, business development means the country develops. The spirit is to remove obstacles wherever they are, and to remove obstacles wherever they are, without pushing them away, without avoiding them, without causing trouble or harassment," the Prime Minister once emphasized.

And up to now, non-state enterprises have participated in many major projects of the country through the Government's orders for private corporations. In particular, the Politburo will soon have a resolution on private economic development.

Accordingly, in early March, the Prime Minister decided to establish a Steering Committee to develop a Private Economic Development Project to submit to the Politburo. In the steering committee meeting on March 15, Deputy Prime Minister Nguyen Chi Dung emphasized the need to "remove the bolts" and clear the bottlenecks so that the private economic sector can flourish.

In the article "Private economic development - a lever for a prosperous Vietnam", General Secretary To Lam affirmed that the private economy is a pioneering force in the new era, contributing to building a dynamic, independent, self-reliant, self-reliant and prosperous Vietnam.

Speaking to Dan Tri reporter , Dr. Chau Dinh Linh, lecturer at Banking University of Ho Chi Minh City, expressed his support for the viewpoints and orientational decisions of the Party and Government of Vietnam to develop the private economy. He said that Vietnam has specific strategies for development in the period 2030-2045. In particular, the private economy is one of the important driving forces to implement the big plan.

After more than two years of transforming into a technology corporation, Vingroup has become self-sufficient in automobile production (Photo: Gia An).

The expert believes that this driving force needs to become a pillar of the economy. "Driving force is an urge and we must make the private economy a pillar of the economy, alongside FDI enterprises...", he emphasized.

Similarly, Dr. Le Duy Binh, Director of Economica Vietnam, also highly appreciated the policies and orientations of the Party and Government of Vietnam to promote the development of the private economy. He said that these policies are very suitable for the practical requirements and development trends of the country as well as the expectations of the private economic sector.

"This will be the foundation to help Vietnam accelerate reforms in terms of institutions, legal regulations, and organizational apparatus to have better and more effective models to serve the development of the private economic sector in particular and the economy in general," Mr. Binh said.

According to the expert, the private economic sector currently contributes nearly 50% of GDP, 56% of total social investment and creates about 80% of jobs. Therefore, more than half of the country's GDP, both in quantity and quality, is determined by the private economic sector. Vietnam cannot grow highly and cannot "take off" without the contribution of the private economic sector.

From the perspective of a foreign expert, Professor Kenichi Ohno, National Institute for Policy Studies, Japan, also emphasized that the initiative, creativity, daring to think, daring to do, and daring to make breakthroughs of private enterprises will be the most fundamental decisive factor for the economic efficiency of the country. Meanwhile, mechanisms and policies will play an important role in enhancing the flexibility of the private economy and coping with external "shocks".

"In later-developing countries, a strong private sector must be created with the support of the Government. Strong policies are needed to enhance the development of the private sector. But first, the Government must reform itself before it can support the private sector, which is not an easy task," the expert noted.

What "keys" need to be removed for the private economy to break through?

To realize the goal of turning the private economic sector into the most important driving force leading Vietnam into an era of prosperous development, experts say the Government will need more solutions and efforts.

Dr. Chau Dinh Linh believes that the first important thing is to reform the institutions, not to discriminate between economic sectors. Previously, our country tended to value FDI enterprises, state-owned enterprises, etc., while for the private economy, policies on promotion and support were all on paper, just slogans, and most small and medium enterprises said they could not access them.

"In addition, it is necessary to remove barriers that are hindering the development of the private economy. At the same time, policies issued for private enterprises need to be transparent. The State and Government need to shift their management mindset to a service mindset. They need to be seen as service objects, both collecting service fees and understanding how to help them develop. Policies to support FDI enterprises also need to be applied to private economic enterprises," the expert said.

According to experts, the important thing for private enterprises to make a strong breakthrough is a safe, friendly, low-cost, and internationally standardized business environment (Photo: HPG).

In addition, Mr. Linh said that it is necessary to support businesses in a practical way such as reducing taxes for startups, high-tech businesses or supporting businesses in R&D (Research and development) to increase product value and competitiveness.

"The government also needs to further promote digital transformation, which will be transferred to the group of small and medium enterprises (SMEs). In particular, it is necessary to help this group of enterprises have many solutions in the picture of capital access," the expert suggested.

Mr. Linh also believes that it is necessary to change the perception of leaders of small and medium enterprises, and increase the level of management. At the same time, it is necessary to promote large leading enterprises and corporations to become the leading cranes. Together, they create connections to bring about the ultimate goal of products made in Vietnam.

Similarly, Dr. Le Duy Binh said that the business environment for the private economic sector still contains many legal risks. Private enterprises still face many obstacles in terms of legal regulations, which do not guarantee freedom in business, and the principle that private enterprises and people are allowed to do everything that is not prohibited by law.

"Therefore, the important thing for private enterprises to make a strong breakthrough is a safe, friendly, low-cost and internationally standardized business environment. In particular, low costs in the business environment are a very important factor for enterprises," Mr. Binh acknowledged.

At that time, the expert believes that it will stimulate the spirit of innovation of private enterprises, venture business, and venture into new fields and technologies. He emphasized that removing difficulties in the business environment and legal risks will be the foundation for removing many other difficulties that private enterprises are facing such as capital, human resources, infrastructure, etc.

"The private economic sector still has a lot of potential for development. Especially the informal economic sector, small and medium enterprises, have encountered many difficulties in the past time, and have not had any remarkable development, especially since 2017. Small enterprises and individual business households - an important part of the private economic sector - still face many difficulties in terms of legal status. Hopefully, in the coming time, we will solve these problems and pay more attention to micro-enterprises and individual business households," Mr. Binh proposed.