Removing policy shortcomings to promote the role of the private economy

Mr. Le Quoc Minh, Editor-in-Chief of Nhan Dan Newspaper, delivered the opening speech at the Workshop.

This is also the content of the workshop on March 21, jointly organized by Nhan Dan Newspaper, Vietnam Television (VTV) and Ho Chi Minh City Business Association (HUBA).

Speaking at the opening of the workshop, Mr. Le Quoc Minh, Editor-in-Chief of Nhan Dan Newspaper, affirmed the importance of the private economy through Party Congress documents, Resolutions and orientations of the Party such as Resolution No. 10-NQ/TW dated June 3, 2017 or Resolution No. 41-NQ/TW dated October 10, 2023 of the Politburo.

To date, the Vietnamese private economic sector includes about 940 thousand enterprises and more than 5 million individual business households, contributing more than 50% of GDP, more than 30% of the state budget, creating jobs for more than 80% of the total labor force in the country. Some enterprises have reached out to the world, affirming their brands and competitiveness in the international market, contributing to enhancing the position and prestige of Vietnam.

However, the private economy is still facing many difficulties and major obstacles from barriers in accessing resources, especially land, technology, etc., which are the reasons why private enterprises cannot grow or do not want to grow. "We need to clarify the policy shortcomings that are hindering the development of the private economic sector, and propose solutions to remove them so that the private economy can truly become the most important driving force of the economy," Mr. Minh emphasized.

Mr. Thai Thanh Quy, Deputy Head of the Central Policy and Strategy Committee

Affirming the role of the private economy, Mr. Thai Thanh Quy, Deputy Head of the Central Policy and Strategy Committee, said that private enterprises have the responsibility to promote the country's development in the new period. Currently, the private economic sector has become the most populous sector, making great contributions to the Vietnamese economy. Many large private enterprises such as Vingroup, Masan, Sun Group, Vietjet, Thaco, TH... have reached regional and global levels, becoming brands that bring pride to the Vietnamese people; along with a force of more than 5 million individual business households spread across all localities in the country.

In order to truly resolve and remove bottlenecks and promote the potential and strength of the private economic sector in the coming time, Mr. Quy requires a spirit of innovation, new momentum and excitement in the whole society about the rise of the economy, considering this a historic opportunity that cannot be delayed any longer to do this.

Next, it is necessary to identify promoting reform and perfecting institutions as core factors, playing a leading and consistent role to create breakthroughs in the development of the private economic sector in the coming time.

Develop a clear development strategy for groups of entities in the private economic sector, from large to medium and small enterprises, as well as individual business households; promptly issue a Resolution of the Politburo on private economic development, with specific tasks, solutions and mechanisms for inspection, supervision and handling of implementation...

“Finally, the business community, entrepreneurs and associations representing the business community and entrepreneurs must further promote their dynamism, creativity and proactively participate actively in the process of building the Party's guidelines and policies, the State's mechanisms, policies and laws to work with the Party and the State to build a modern and healthy business investment environment, helping the whole country and the business community to develop,” Mr. Quy stated.

Central and local delegates attending the Workshop

On the business side, Ms. La Thi Lan, General Director of Tien Loc Group, recommended that the State and Government continue to remove legal barriers, create more favorable conditions for businesses in accessing capital and land, as well as ensuring a transparent and fair business environment.

The government needs to have policies to support supporting industry enterprises; have binding conditions for FDI enterprises on cooperation with domestic enterprises, technology transfer... To improve productivity and competitiveness, the state needs to create stronger incentive mechanisms for research and development (R&D) activities. There needs to be preferential tax and credit policies and support for enterprises to invest in science and technology, innovation.

In particular, it is necessary to boldly place orders with private enterprises in infrastructure projects, industrial production and green energy. This not only helps develop domestic enterprises but also creates products and services of international stature, enhancing the position of Vietnamese enterprises in the international market.

More specifically, on the issue of removing difficulties for businesses, Ms. Ly Kim Chi, Chairman of Tan Dong Hiep Group, Chairman of Ho Chi Minh City Food and Foodstuff Association, said that practical support is needed for the policy to be truly effective. Currently, administrative procedures are cumbersome and complicated, every year we hear businesses complaining about being tired of tax refunds. Or like applying for an investment license, some businesses have to spend a whole year, or procedures related to factory construction also take up to six months... Corporate income tax is paid at the same rate of 20%, but in terms of access to public services, capital, land and business opportunities... private businesses are completely disadvantaged.

The mindset of “if you can’t manage it, ban it” has been going on for a long time in many fields. The ban is sometimes “abused” and is considered a “treasure” that helps authorities “breathe easier” in management. The Law on Support for Small and Medium Enterprises 2017 is considered to have many progressive points, especially the requirement to issue tax support policies, but it has not been seriously implemented. Why have tax support regulations for small and medium enterprises not been fully issued up to now?

What should the State do to have a strong Vietnamese business force, what should be done to make the Vietnamese private economy, large Vietnamese enterprises worthy of playing their historical role in creating leverage, Dr. Tran Dinh Thien, former Director of the Vietnam Economic Institute, suggested: "The State economy creates conditions to lead the development of the private sector. The State needs to overcome the old according to the new reform logic to remove constraints, clear institutional bottlenecks that are binding and holding back (infrastructure, human resources). State reform goes hand in hand with market reform. It is necessary to build an equal business environment between economic sectors and economic forces so that the economy is an organic and equal whole. At the same time, create new, replace the Vietnamese business force, modern enterprises, new enterprise structures, assign roles and functions of the private economy, the state economy..."

Dr. Nguyen Duc Kien, former Head of the Prime Minister's Economic Advisory Group, said that despite many difficulties, Vietnam's economy has continued to transform strongly over the past 7 years, as demonstrated by the structure of economic sectors contributing to the total domestic income (GDP).

Regarding the reasons why the development of the private economic sector has not met expectations, Mr. Kien said that the reasons come from both sides: the management system of ministries and local authorities has not really innovated to follow the socialist-oriented market economy model; the management of ministries is still heavily dependent on the mechanism of asking and giving, directly intervening in the management and mobilization of capital sources of enterprises... On the non-state economic side, the private economic sector with the majority being small, micro-enterprises and individual business households, so the efficiency of production and business and the ability to participate in the product value chain are low, only a few enterprises have reached the national and regional scale...

Further clarifying the reasons why Vietnamese enterprises cannot develop, Mr. Kien said that because Vietnamese enterprises all originate from family-owned enterprises, their corporate governance methods are still backward; their ability to mobilize capital is limited because they mainly rely on bank loans and have not yet applied other forms of capital mobilization in the market; they do not have enough knowledge and human resources to grasp and absorb new technologies; the nature of enterprises is that they all want to do business in an informal form, fear of transparency in the financial sector, and tax evasion are also very important reasons that limit the development of private enterprises, leading to individual business households not wanting to become small enterprises and small and medium enterprises not wanting to become large enterprises.

“Hopefully, through this workshop, each agency will contribute a perspective to have a panoramic picture of the current Vietnamese private economy, thereby helping the Politburo and the Party Central Committee to soon summarize Resolution 10/BCHTW12/2017 to issue a new, vibrant Resolution, creating a breakthrough to step into the era of growth,” said Mr. Kien.

The Organizing Committee of the Workshop also said that recommendations, proposals, and comments from businesses will be summarized and sent to State agencies to contribute to the development of the Politburo's Resolution on private economic development that will soon be issued.