Developing from strength to strength

The Economic Commission reported that since Resolution 10, the Vietnamese private economic sector has been developing by leaps and bounds. Specifically, as of June 30, 2018, Vietnam had more than 670,900 operational POEs.

Since June 2017 when Resolution No.10-NQ/TW of the fifth plenary of the 12th Party Central Committee was issued, defining the private sector as an important impetus of the Vietnamese economy, local privately-owned enterprises have been developing from strength to strength, making major contributions to the country’s economic growth.

Developing from strength to strength

Privately-owned enterprises are ahead of the pack in state revenue contributions

After nearly 20 years since ­opening his rice shop, Dang Dinh Kien last May decided to turn the shop into a company ­specialised in trading rice, ­selling to restaurants and ­people in Hanoi.

“We have been expanding production and business by ­securing new rice suppliers from the Mekong Delta,” Kien told VIR. “We currently have two rice processing facilities at Hanoi’s Quang Minh ­industrial park, and the ­company’s total investment capital stands at about VND50 billion ($2.17 million).”

According to Kien, since the shop was developed into Hoang Ngoc Trading JSC, they have been finding it easier to do business because the company now has a registered stamp and invoices to sign contracts with customers.

“Previously, I had never thought about opening a company, but business conditions have significantly improved,” Kien said.

Hoang Ngoc Trading was among nearly 131,000 newly-established enterprises last year with the total registered capital of VND1,478 trillion ($64.26 billion), up 3.5 and 14.1 per cent against 2017.

Also in 2018, operating ­enterprises added VND2,409 trillion ($104.74 billion) to their business, raising total capital in the economy to $168.6 billion. Besides, 34,010 enterprises resumed operations, up 28.6 per cent on-year.

In the first quarter of 2019, Vietnam saw 28,451 newly-­established enterprises, ­registered at VND375.5 trillion ($16.33 billion), up 6.2 per cent in the number of ­enterprises and 34.8 per cent in capital on-year.

According to the Party Central Committee’s Economic Commission, these ­impressive figures show that private-owned enterprises (POEs) in Vietnam are ­growing strongly, with their confidence improved ­significantly.

“The private economic sector has ­become an important ­propellant of the socialist-oriented market economy,” said a commission report on the results from the ­implementation of Resolution No.10-NQ/TW.

Great contributions

The Economic Commission reported that since Resolution 10, the Vietnamese private economic sector has been developing by leaps and bounds. Specifically, as of June 30, 2018, Vietnam had more than 670,900 operational POEs.

Total investment ratio by POEs in the economy’s total development investment has kept increasing, from 38.7 per cent in 2015 to 38.9 per cent in 2016, 40.6 per cent in 2017, and 43.3 per cent last year.

The private economic sector has ­contributed remarkably to GDP, at 43.22 per cent in 2015, 42.56 per cent in 2016, and 41.74 per cent in 2017. It also accounts for 30 per cent of Vietnam’s industrial production value, nearly 80 per cent of total retail and service ­revenue, and 64 per cent of total transported goods.

Commending the role of the private sector, Nguyen Dinh Thang, chairman of LienVietPostBank, said that the government’s efforts to spur private enterprises over the past few years have helped ­further strengthen the major role of these enterprises.

“It is expected that ­Vietnam will grow 7 per cent this year. However, if the ­government issues more favourable conditions for ­enterprises to develop, such as cutting taxes and business ­conditions, the private economic sector will be able to help drive ther growth rate further, and make even ­bigger contributions to ­national development,” Thang said.

“For example, if corporate income tax is reduced, the number of private firms will rise to one million by 2020, 1.5 million by 2025, and over two million by 2030,” he continued. “It is expected that the private sector will hold 50 per cent of the GDP in 2020 and 60-65 per cent of the GDP in 2030.”

Vietnam’s ranking in the World Bank’s annual Doing Business survey surged to 69th in the world this year, from 99th in 2013, with strong gains in contract enforcement and regulatory environment. ­The country’s per capita income increased to an estimated $2,572 in 2018 from ­approximately $1,754 in 2012.

 

Vietnam’s competitiveness index increased from 56th out of 140 nations surveyed by the World Bank to 55th out of 137 nations in 2017.

“It is clear that Vietnam’s investment and business ­climate has been gradually ­improved, contributing to macroeconomic stability and economic development,” said the Economic Commission’s vice head Cao Duc Phat.

Newly-­established enterprises have been increasing both in ­number and registered capital. The number of enterprises hit 655,000 by late 2017 and 730,000 by late 2018.

“The number of POEs has been strongly ascending and the private economic sector has been growing in scale, while ­playing an increasingly ­important role in socio-economic development and ­international integration,” Phat stressed. “This has affirmed that the implementation of Resolution 10 has led to positive results, ­especially the enhancement of POEs’ confidence in the ­policies of the Party and the state.”

A rise in revenue

After nearly two years of being implemented, the ­resolution has driven the ­private economic sector forward to make increasingly positive contributions to economic growth and the state coffers. Specifically, according to the Economic Commission, the state’s budgetary revenue from domestic POEs has been climbing at an average 15 per cent per annum, which is twice as high as that created by ­foreign-invested enterprises (FIEs). Meanwhile, the state budget revenue from state-owned enterprises (SOEs) has been decreasing strongly (see box).

“The government’s efforts to boost the startup movement and improve the local ­investment and business ­climate have created laudable initial results,” Phat said.

“Last year was the first time ever that POEs overtook FIEs and SOEs in state revenue contribution. These signals reflect the growth in scale and ­effectiveness of the private economic sector. POEs now also play a larger role in strengthening the national financial situation.”

In the case of Hoang Ngoc Trading, for example, Kien said that since last May, the company’s revenue has increased 20 per cent against the time the company remained a small shop.

Boosting reform needed

According to Ousmane Dione, the World Bank’s country director for Vietnam, government reform programmes are going in the right direction, and Resosolution 10 has created bigger spaces for the private economic sector to play. However, he stressed that more reforms would be needed. “If these reform programmes are sequenced and implemented effectively, they would open many ­positive opportunities for ­Vietnam,” he told VIR.

“Firstly, they would help the country consolidate and ­enhance macroeconomic ­stability as well as resilience amid the fast-changing and volatile global conditions. ­Secondly, reforms would help Vietnam improve the quality of its economic development and lift productivity growth. This is critical for the country’s long-term sustainable growth.”

Ousmane added, “Lastly, I would expect an opportunity for Vietnam to benefit much more from international ­integration, not only in ­economic terms, but also through skills and technological transfers and spill-over, as well as improvements in ­governance.”

Raymond Mallon, an ­Australian senior economist who has spent decades ­studying Vietnam’s economic situation, told VIR, “Administrative simplification in ­Vietnam has reached a ­defining moment. If successfully applied, the reductions of sub-licences can encourage ­enterprises to engage more in the market and create healthy competition among enterprises. They will help foster economic growth via the ­improvement of labour ­productivity, curb corruption, and also help create a more level playing field for all ­enterprises.”

Businesspeople like Kien from Hoang Ngoc Trading hopes the government will continue boosting reforms so that they can grow further in the country. “We are planning to ­construct our third rice ­processing facility later this year. I hope that conditions will continue becoming more favourable,” Kien said.

Thang from LienVietPostBank said that the government needs to create a level playing field for all enterprises of all economic sectors in order to play fairly. “A favourable legal ­framework is one of the most important issues now,” he said. “This will enable enterprises to develop.” VIR

VN to become Asia’s next high-performing economy

VN to become Asia’s next high-performing economy

Vietnam should take advantage of the next wave of digital technologies such as blockchain, AI, IoT and cloud-based services to become Asia’s next high-performing economy and improve the living standards of its residents, experts said.

Moderate credit growth positive for Vietnam’s economy

Moderate credit growth positive for Vietnam’s economy

Despite credit growth among Vietnamese credit institutions remaining low this year, experts are not concerned about the slowdown, saying it was a good sign for the economy.  

Vietnam’s economy 2019: ‘basket of paddy’ and ‘credit leverage’

Vietnam’s economy 2019: ‘basket of paddy’ and ‘credit leverage’

The Governor of the State Bank of Vietnam (SBV), Le Minh Hung, is standing firm on low credit growth. This is also an issue that S&P emphasized in in its latest report.

 
 

Other News

.
Latest drastic moves in Vietnam’s vaccine diplomacy strategy
Latest drastic moves in Vietnam’s vaccine diplomacy strategy
FEATUREicon  26/08/2021 

Through vaccine diplomacy, Vietnam has so far received millions of vaccine doses from the support of the international community.

Vietnam-US relationship: comprehensive and strategic
Vietnam-US relationship: comprehensive and strategic
FEATUREicon  26/08/2021 

This is the time to review the relationship between Vietnam and the US, 

Hotels, private hospitals join fight against Covid-19
Hotels, private hospitals join fight against Covid-19
FEATUREicon  26/08/2021 

Many resources in society have been mobilized for testing, vaccination and medical quarantine, which has improved service quality and helped businesses earn revenue.

Teachers explain ’10.0 GPA phenomenon’ among primary school students
Teachers explain ’10.0 GPA phenomenon’ among primary school students
FEATUREicon  25/08/2021 

Two famous secondary schools for the gifted in Hanoi and HCM City have found it difficult to enroll students for the 2021-2022 academic year because there are too many students with a perfect 10.0 GPA (grade point average).

Directorate of Market Surveillance officials arrested for abuse of power
Directorate of Market Surveillance officials arrested for abuse of power
FEATUREicon  25/08/2021 

While many officials have been honored for their excellent fulfillment of official duties, many others have been prosecuted for their involvement in trade fraud.

Experts warn of high risks from real estate firms' corporate bond issuance
Experts warn of high risks from real estate firms' corporate bond issuance
FEATUREicon  25/08/2021 

Corporate bonds issued by real estate firms account for a high proportion of securities that mature in three years. Experts warn of high risks if the real estate market cannot recover by that time.

State revenue from registration fees increases
State revenue from registration fees increases
FEATUREicon  24/08/2021 

The registration fees collected for the state budget increased from VND11,816 billion in 2012 to VND40,194 billion in 2019, up by 240% or VND28,378 billion.

Hanoi protects green zones from the core
Hanoi protects green zones from the core
FEATUREicon  25/08/2021 

Each residential area, commune and ward are considered the core level – the ‘cell’ that needs to be protected. Many places in Hanoi are effectively promoting the "green zone" model for safe residential areas.

More medical data needed to fight Covid-19
More medical data needed to fight Covid-19
FEATUREicon  24/08/2021 

Data from epidemiological studies using antibody tests to measure the proportion of the population who have acquired protective immunity will help to make more accurate assessments about the epidemic situation.

Street-front high-rise owners incur losses as renters leave
Street-front high-rise owners incur losses as renters leave
FEATUREicon  24/08/2021 

The long fourth Covid-19 outbreak and social distancing regulations have posed great challenges to the office leasing market.

Businesses seek interest rate cuts, banks worry about declining profits
Businesses seek interest rate cuts, banks worry about declining profits
FEATUREicon  24/08/2021 

Business associations and industries have repeatedly asked commercial banks to ease lending interest rates to share difficulties with them in the Covid-19 pandemic.

Six production options offered to companies amid pandemic
Six production options offered to companies amid pandemic
FEATUREicon  23/08/2021 

The HCM City Department of Industry and Trade has released guidance on safe production in the conditions of the fight against Covid-19 pandemic. There are six options:

Four-day campaign suceeds in stopping vegetable price chaos in HCM City
Four-day campaign suceeds in stopping vegetable price chaos in HCM City
FEATUREicon  21/08/2021 

A campaign deployed within four days helped rescue the vegetable distribution network in HCM City and stop price fluctuations during social distancing.

A breath of fresh air in literature textbooks for sixth graders
A breath of fresh air in literature textbooks for sixth graders
FEATUREicon  21/08/2021 

Teachers say sixth graders this year will be able to access literature works that their parents and grandparents did not have in their textbooks.

Highly contagious Delta variant lengthens outbreak in Vietnam
Highly contagious Delta variant lengthens outbreak in Vietnam
FEATUREicon  20/08/2021 

The Delta variant of the SARS-CoV-2 virus, with its rapid and strong spread in a very short time, has put huge pressure on the health system.

A midnight call from a pregnant woman, and return trips to hometowns
A midnight call from a pregnant woman, and return trips to hometowns
FEATUREicon  20/08/2021 

On the evening of August 15, Pham Thi Minh Hien, deputy director of the Phu Yen Department of Labor, War Invalids and Social Affairs, received a call for help from a young couple.

Joining forces with VietNamNet to stamp out the pandemic
Joining forces with VietNamNet to stamp out the pandemic
FEATUREicon  19/08/2021 

In order to make a contribution to the country’s fight against Covid-19, VietNamNet has launched the "Joining forces with VietNamNet to stamp out the pandemic" program.

It’s time for Vietnam to begin pilot study on cryptocurrency: expert
It’s time for Vietnam to begin pilot study on cryptocurrency: expert
FEATUREicon  22/08/2021 

The Prime Minister has assigned the State Bank of Vietnam (SBV) to study and try to use a cryptocurrency based on blockchain technology as a part of a strategy on e-government in 2021-2025.

Vietnamese graduate wins full scholarship to attend medical school in the US
Vietnamese graduate wins full scholarship to attend medical school in the US
FEATUREicon  22/08/2021 

After graduating from Wellesley College majoring in biochemistry, Trinh Mai Chi, with impressive research achievements, has won a full scholarship to study at Johns Hopkins, the world’s leading medical university.

After restructuring, banks gear up, ready for big deals
After restructuring, banks gear up, ready for big deals
FEATUREicon  19/08/2021 

After many years of undergoing restructuring, joint stock banks have expanded operation scale and profits.

 
 
 
Leave your comment on an article

OR QUICK LOGIN