Vietnam has become a strategic partner of major powers and has deeply integrated into the global economy. With Vietnam in its “era of national rise,” what role do entrepreneurs play in this process?

Tran Si Chuong: Never before has Vietnam had such a favorable position. The remaining question is how to make the most of it. Opportunities only stay open for a limited time before they close and pass us by. I believe Vietnam is currently taking advantage of these opportunities, and we must do so thoroughly within the next three years; otherwise, the chances will gradually slip away.

Can we work together to build the internal strength necessary to seize this historic opportunity, which may never come again? How can domestic businesses gain the confidence to build an internationally recognized culture of integrity? If they are trusted, this will create “social capital,” which will generate boundless internal strength for the nation to take off. Vietnam could then be recognized as a stable, prosperous country.

At that point, we can hope that the vision of a wealthy and powerful Vietnam will be realized.

Entrepreneurial spirit and social trust are critical right now, aren’t they?

Tran Si Chuong: When Singapore was founded in 1965, it was in turmoil, divided by different ethnicities and religions. But thanks to a leader like Lee Kuan Yew, the country has become what it is today.

At the founding of Singapore, Lee Kuan Yew said something along the lines of: “Entrepreneurs are the backbone of the nation. The country only needs one thing from you: ‘Say what you mean and do what you say.’”

This statement helped them build a national culture, manage the country, create a way of life, and generate great social trust and capital. It also shaped the mindset of both public and private sectors in Singapore. Wherever Singaporean entrepreneurs go, they are trusted, and they have contributed greatly to building the nation.

However, in Vietnam, social trust and capital are low. Domestic entrepreneurs find it difficult to trust each other and have yet to build a system of governance that is disciplined and trustworthy.

Thus, entrepreneurs need to be sincere with their partners, employees, and surrounding communities. Only when everyone operates this way will we gain the trust of society at large.

You have argued that Vietnam’s private sector could have developed even more. Could you elaborate?

Tran Si Chuong: Everyone is influenced by their environment. As the saying goes, “In a round container, you are round; in a long container, you are long.” Or as others have said, “The system shapes the enterprise.” In the broader ecosystem, the State’s role is to ensure predictability for businesses. For instance, if a business applies for a permit, they should know exactly how many days it will take to be processed. But private businesses hesitate to invest boldly or commit to deals based on their potential because of the uncertainties in the system.

When I wrote a report for the World Bank nearly 30 years ago, we identified several obstacles to the development of private enterprises. To this day, 70% of the challenges mentioned back then still exist, according to VCCI.

Why haven’t these issues been addressed after all these years? The administrative system remains convoluted and slow, with many afraid to make decisions. Ho Chi Minh City, the country’s economic hub, had to send over 600 documents to central ministries and agencies asking for clarification on regulations. How do you think domestic businesses can operate under such conditions?

High interest rates have long been a major problem for businesses. Do you have any suggestions on how Vietnamese companies can overcome this hurdle?

Tran Si Chuong: Currently, the global economy is slowing, exports are difficult, and markets are shrinking, so businesses are not generating profits and are hesitant to borrow from banks. Even if a business makes a 15% profit, high interest rates erode that gain.

Vietnamese businesses should seek to collaborate with foreign-invested enterprises (FDI) to access capital at lower interest rates. For instance, partnering with Japanese companies can allow them to borrow at rates as low as 3-4%. This is a good approach, in addition to other benefits such as improving governance and gaining access to new technology.

Additionally, with a solid, feasible project and good management, businesses can also access long-term, competitive-rate loans from international institutions like the IFC.

Vietnam’s per capita GDP has reached around $4,300 after nearly 40 years of reform. During the same time, countries like Japan, South Korea, and Singapore have risen to the top with high GDP levels...

If we can achieve growth of over 10%, we will rise above. Singapore, for example, was founded in 1965 and by 1985, had already achieved significant progress. Japan saw rapid development from 1945 to 1960, and South Korea did the same by the early 1980s. All these countries made extraordinary leaps from the ashes of war.

Can we rise above? Can we escape the middle-income trap? What concerns me is our aging population.

For takeoff, an airplane must accelerate during the takeoff roll. Without sufficient speed, it won’t take off and will fall into a pit.

Experts have calculated that Vietnam’s GDP growth has declined by 1 percentage point per decade since the early 1990s. This is something worth reflecting on?

Tran Si Chuong: We once conducted research showing that a country must grow by 10% in the first 10 years to take off.

Looking at the five Asian Tigers, including China, they all grew by more than 10% in their first 10-15 years. Economic takeoff is like an airplane - it can’t just roll slowly down the runway and then take off. The plane needs enough speed to take off within 1 kilometer; otherwise, it will crash. For an economy, the crash is the middle-income trap.

We made a strong effort and achieved 8-9% growth in the early years. However, the airplane lost momentum and stalled, preventing takeoff.

What should Vietnam do moving forward?

Tran Si Chuong: We need to ask what is holding us back from achieving high-speed growth. Do we have the strength?

That’s why we need to rethink our approach. Not everyone can become an Olympic athlete. With our limited resources, we need to aim for equitable growth. We don’t need per capita GDP to reach $40,000 if

 it comes at the expense of the environment or societal trust. Wouldn’t it be better to have $10,000 per capita but still maintain good healthcare, education, and a healthy environment? This is what truly matters.

When we talk about a market economy, we should let resources flow naturally to the places and people where they can be most effectively used. If there’s forced administrative intervention, the system will run inefficiently, and resources will be wasted.

Tu Giang - Lan Anh

* Mr. Tran Si Chuong is currently a strategic development and corporate governance consultant and a Senior Partner at 3 Horizons, a consulting firm based in the United Kingdom. He previously served as an economic and banking advisor for the U.S. Congressional Banking Committee. Since 1995, he has regularly worked in Vietnam and several countries in the region, advising international financial institutions and both domestic and foreign enterprises in the areas of macroeconomics, governance, and business development strategy.