Private sector, a driving force of growth

Prime Minister Nguyen Xuan Phuc chairs the second Vietnam Private Sector Forum

Fostering economic growth

The private sector has contributed significantly to the state budget, the generation of jobs and the resolution of social problems. Since 2010, it has contributed about 40 percent to Vietnam’s gross domestic product (GDP) annually, compared to 28.9 percent by the state-owned sector, and 18 percent by businesses with foreign direct investment (FDI). The number of private businesses has grown strongly. In 2016, a record number of more than 110,000 new private companies were established. Many brands of the private sector have carved a niche in the domestic, regional and global markets. Some private groups and large-size businesses are operating in fields with high requirements in terms of capital and technology.

PM Phuc indicated that the Communist Party and the state have identified the role of the private sector as an important driving force of economic growth, pointing to the party resolution that highlights the necessity of eliminating all barriers to private sector development, and creating favorable conditions for it to grow in a healthy manner. “The key to growth lies in the private sector. A major principle is that the state should facilitate the operations of private companies in fields where they can show their good performance,” PM Phuc said.

He told the forum that since the beginning of 2017, the government had organized 25 investment promotion conferences and hundreds of meetings and dialogues with businesses. These activities enabled the government to identify and resolve problems facing private companies. The government has proposed a number of institutional reforms and promulgated appropriate policies to facilitate the development of the private sector.

Further efforts

Vietnam Young Entrepreneurs Association President Tran Anh Vuong, head of the VPSF 2017 Organizing Board, said the forum contributed to concretizing the resolution of the fifth meeting of the 12th Party Central Committee. Through the forum, the government showed its determination to promote institutional reforms and create a favorable environment for private businesses to develop.

In his speech, PM Phuc affirmed, “We are here to listen to your opinions. Don’t hesitate to speak out about your problems”.

Discussing the Vietnam Private Sector Action Program in light of the Central Committee Resolution, Vu Van Tien, Chairman of the Board at the An Binh Commercial Joint Stock Bank, spoke of the need for “an entity to represent the private sector to work with domestic and foreign organizations. It can be the Vietnam Chamber of Commerce and Industry, the Vietnam Association of Small and Medium Enterprises, or a new organization”.

Minister Mai Tien Dung, head of the Government Office, said the prime minister had established a consultancy council for administrative reform. Major tasks of the council include promoting the connectivity between domestic and foreign businesses, proposing initiatives to help businesses overcome difficulties, and assessing administrative reforms conducted by ministries, sectors and localities to improve the business environment. In the near future, the council will admit new members from the private sector to accelerate administrative reforms.

PM Phuc said the government would boost administrative reforms to help businesses reduce costs and enhance investment effectiveness. The government has provided guidance for commercial banks to lower lending interest rates and will take further action to help businesses reduce other expenses, such as social insurance.

PM Phuc said the banking sector must share responsibility for attracting capital resources into Vietnam. He emphasized, “We are making a strategy to convert capital outflows into inflows, while at the same time further improving the business environment to attract more foreign investment”.