Private sector needs state help for pandemic recovery

06:00 | 17/11/2021 Economy

(VEN) - The resilience of Vietnam’s private sector to withstand and recover from external shocks remains limited, meaning that the state must create more favorable conditions to help the private sector improve its competitiveness.

private sector needs state help for pandemic recovery
A majority of private firms in Vietnam are of micro, small and medium sizes

Improved capacity

Dr. Nguyen Thi Luyen, deputy head of the Department for Research Reform and Enterprise Development under the Central Institute for Economic Management (CIEM), said that over the years, many policies to promote development and improve competitiveness of the private sector have been promulgated, creating favorable conditions for them to develop strongly.

The number of newly established enterprises has increased significantly, especially in the 2015-2020 period with more than 735,000 firms. Despite the impact of the Covid-19 pandemic, the first nine months of 2021 witnessed the establishment of 85,483 enterprises.

According to a CIEM report on strengthening the capacity of Vietnam’s private sector in the new stage, the number of private enterprises listed in Vietnam’s top 10, top 50 and top 100 largest companies has increased strongly over the years. Technology and management capacity has improved, while performance on net revenues and before-tax profits has increased significantly. In particular, many Vietnamese private enterprises have reached out to the world and the region.

However, the private sector’s low competitiveness, weak internal capacity and slowness to change are considerable concerns. A majority of private firms in Vietnam are of micro, small and medium sizes, and most of them have limited capacity in terms of technology, management, business connectivity and cooperation, and joining global and regional supply chains. Their contributions to the country’s innovation and socioeconomic development have not met the potential.

More opportunities

Shortcomings of the private sector are partly due to mechanisms and policies that have proven inefficient. State management remains inconsistent, especially in pandemic-hit localities, while the business environment has not seen major improvements.

Associate Professor Tran Dinh Thien, former director of the Vietnam Institute of Economics, said that although parts of Vietnam’s private sector are doing well, they cannot surpass the foreign-invested sector due to lack of support policies.

To improve the capacity of the private sector, experts recommend that the government focus on measures to support enterprises in restoring production and minimizing the negative impacts of the Covid-19 pandemic. In the medium- and long-term, it is necessary to finalize mechanisms and policies and improve the business and investment environment. In particular, support policies should be fair to create favorable conditions for the development of the private sector, helping them make more contributions to the country’s socioeconomic development. The private sector also needs to be active in improving product quality to meet the increasing requirements of consumers and the economy.

The state plays an important role in improving the capacity of the private sector through mechanisms and policies to facilitate their development.

Nguyen Hoa