New policies needed to boost Vietnamese private sector

While foreign-invested enterprises (FIEs) have been growing and prospering, Vietnamese enterprises have been developing inadequately because they lack favorable conditions to thrive.

New policies needed to boost Vietnamese private sector

High export turnover has been one of the mainstays of the national economy at a time when Vietnam is being hit hard by Covid-19. However, most of the export turnover is created by FIEs.

In the first quarter of 2021, FIEs exported $59 billion worth of products, including crude oil, an increase of 28.5 percent over the same period last year, which accounted for 76 percent of total export turnover of the country.

FIEs also made up most of the export turnover in the fields of phone and phone components (99 percent), electronics, computer and computer components (98 percent), equipment and machines (93 percent), footwear (82 percent) and textiles and garments (63 percent).

In fact, the dominance of FIEs can be shown in many reports. The General Statistics Office (GSO), for example, in August 2020, reported that Vietnam’s export turnover reached $26.5 billion, up by 6.5 percent over the previous month, mostly thanks to Samsung’s exports of its Note 20 device.

Not only Samsung, but other FIEs were mentioned in the agency’s reports in recent years as the "growth engine" of the economy.

For many years, the foreign invested sector has made up 70 percent of total export turnover, 50 percent of industrial production value, and 20 percent of GDP (gross domestic product) .

According to the 2019 White Book on Vietnamese Businesses, the state-owned sector created VND200.9 trillion worth of profit, accounting for 22.9 percent, while the non-state owned sector created VND291.6 trillion, or 33.3 percent.

The foreign invested sector created VND384.1 trillion, or 43.8 percent in 2017 compared with 2016.

A report from Fulbright University released in 2013 said of the four driving forces, state-owned enterprises, private enterprises, farm produce business households and FIEs, only FIEs have thrived.

FIEs have risen strongly to become dominant in the economy.

Vietnam needs to improve the quantity, quality, efficiency and sustainability of the private sector so as to turn it into an important driving force for national economic growth.

Vietnam attracted over $28.5 billion of foreign direct investment (FDI) in 2020, equivalent to 75 percent of the amount of the year before.

Vietnamese enterprises

A wooden furniture enterprise told VietNamNet that Vietnamese enterprises bear discriminatory treatment in comparison with FIEs. They have to pay a lot of unofficial fees and under-the-table fees.

The official expenditures they have to pay are higher than FIEs, including land rent and corporate income tax. They also are subject to regular inspection tours, which leads to higher production and business costs. Their lending interest rates are the highest in the region, they say.

 

In the first quarter of the year, a GSO  report showed that, of Vietnamese exports, coffee exports decreased by 11 percent, cashew nuts 6 percent, and rice 17 percent. However, vegetables and fruits increased by 6.1 percent, rubber 117 percent and cassava 53 percent.

Meanwhile, only 29,300 Vietnamese businesses were set up in the first quarter, while 40,323 businesses left the market.

A Vietnam Chamber of Commerce and Industry (VCCI) report found that 87 percent of businesses had suffered a ‘big’ or ‘completely negative impact’ from Covid-19.

Vietnam has 800,000 private businesses, but most of them are small.

Self-reliance needed

Experts all point out that no country can be prosperous if it lacks powerful enterprises.

Resolution No 10 clearly shows the direction for private Vietnamese enterprise development. The 13th Party Congress Report also emphasizes the need to develop the private sector.

In a bid to accelerate economic restructuring, it is a must to restructure the system of enterprises in the economy, develop the Vietnamese business community, and boost the link between FIEs and domestic enterprises.

Vietnam needs to improve the quantity, quality, efficiency and sustainability of the private sector so as to turn it into an important driving force for national economic growth.

It is necessary to create favorable conditions for private economic development, and support the private sector to innovate and modernize technology, develop human resources, and improve labor productivity.

Vietnam has encouraged the formation of large private economic groups with strong potential and capable of competing equally with foreign corporations in the region and the world.

It is expected that by 2030, Vietnam would have at least 2 million enterprises, with the Vietnamese private sector's contribution to GDP reaching 60-65 percent. 

Tu Giang

FIEs retain pole position in bolstering trade surplus

FIEs retain pole position in bolstering trade surplus

While many developed countries have been struggling with the pandemic, Vietnam has maintained a trade surplus of nearly $1.29 billion in the first two months of 2021.

FIEs in Vietnam: big enterprises incur big losses, electronics manufacturers thrive

FIEs in Vietnam: big enterprises incur big losses, electronics manufacturers thrive

The Ministry of Finance (MOF), after analyzing the 2019 finance reports of foreign invested enterprises (FIEs), has found a contrast in the business performance of the enterprises.

 
 

Other News

.
Vaccine passport: key for tourism during pandemic
Vaccine passport: key for tourism during pandemic
FEATUREicon  11/07/2021 

A vaccine passport is a new concept mentioned by many countries to open borders.

Industrial development needs State’s long-term vision
Industrial development needs State’s long-term vision
FEATUREicon  10/07/2021 

To develop the processing and manufacturing industry, the State needs to have stronger policies that focus on domestic enterprises. To have strong policies, it needs strong resources.

Vietnam needs more private corporations
Vietnam needs more private corporations
FEATUREicon  10/07/2021 

After over 30 years of Doi Moi (reform), Vietnam has had large private groups operating in many industries with international stature. There are also Vietnamese USD billionaires, but only a handful.

Cyberattacks are similar to terrorism
Cyberattacks are similar to terrorism
FEATUREicon  11/07/2021 

Many hackers conduct cyberattacks just to show their abilities and do not think that the cyberattacks will put them behind bars.

Civil servants go to office to work, not to show off fashion
Civil servants go to office to work, not to show off fashion
FEATUREicon  10/07/2021 

Dinh Van Minh, Director of the Legal Department under the Government Inspectorate supports the Ministry of Home Affairs' decision on banning civil servants from going to the office in jeans, T-shirts without lapels, shorts and high-cut skirts.

Vietnam should not be slow in opening its door: economists
Vietnam should not be slow in opening its door: economists
FEATUREicon  10/07/2021 

Prime Minister Pham Minh Chinh has said that Vietnam should not adjust the development goals and agrees with the two GDP growth scenarios designed by the Ministry of Planning and Investment (MPI).

Three enchanting beauty spots on the coastal road of Ca Na
Three enchanting beauty spots on the coastal road of Ca Na
FEATUREicon  11/07/2021 

To travel from Ninh Thuan to Binh Thuan, drivers usually choose to go on National Highway No 1. But travel enthusiasts choose another way - the coastal road connecting the city of Phan Rang and Ca Na Port.

Lychees and the agricultural revolution in Vietnam
Lychees and the agricultural revolution in Vietnam
FEATUREicon  09/07/2021 

Farmers in the northern province of Hai Duong have earned revenue of VND1,600 billion in the lychee season this year, the highest ever. 

Minister, officers run against time to bring VND26 trillion support package to people
Minister, officers run against time to bring VND26 trillion support package to people
FEATUREicon  09/07/2021 

Minister of Labor, War Invalids and Social Affairs Dao Ngoc Dung said agencies and localities cannot be slow in disbursing the VND26 trillion support package.

Exports increase sharply, but concerns persist about trade deficit
Exports increase sharply, but concerns persist about trade deficit
FEATUREicon  09/07/2021 

Vietnam’s merchandise trade balance in the first half of the year resulted in a trade deficit. Last year, it had a trade surplus for the same period.

Zero Covid and the new quarantine strategy
Zero Covid and the new quarantine strategy
FEATUREicon  08/07/2021 

The Prime Minister’s approval to pilot home quarantine for F1 cases instead of concentrated quarantine is considered a turning point in Covid-19 prevention in Vietnam.

Unemployment in the time of Covid-19
Unemployment in the time of Covid-19
FEATUREicon  08/07/2021 

The unemployment statistics in Vietnam are always controversial.

Opening the huge market for e-sports
Opening the huge market for e-sports
FEATUREicon  08/07/2021 

Along with the development of the game market and digital entertainment platform, eSports has potential for development in a diverse and highly globalized ecosystem.

Vietnam takes a big step forward in international publications in social sciences
Vietnam takes a big step forward in international publications in social sciences
FEATUREicon  08/07/2021 

About 10 years ago, a mathematician said that Vietnam did not yet have social science study works. The comment seemed to be a bit harsh, but it did make sense, especially when it comes to international publications.

Vietnam needs to cure ‘stagnation disease’ to 'take off'
Vietnam needs to cure ‘stagnation disease’ to 'take off'
FEATUREicon  11/07/2021 

Prime Minister Pham Minh Chinh, after taking office, has been paying high attention to fostering the public apparatus’ proper implementation of their functions and tasks, especially the fulfillment of the great responsibilities assigned to them.

Vietnamese children need safer environment in cyberspace
Vietnamese children need safer environment in cyberspace
FEATUREicon  07/07/2021 

Children often spend a lot of time learning, playing and exploring on the internet. Besides the undeniable benefits, unseen threats are also part of cyberspace.

Vietnam’s retail market: global giants unexpectedly fall short
Vietnam’s retail market: global giants unexpectedly fall short
FEATUREicon  09/07/2021 

Vietnamese have turned the tables to become dominant in the retail market, while many foreign giants have had to leave.

Farm produce exports: specialties reach new markets
Farm produce exports: specialties reach new markets
FEATUREicon  08/07/2021 

Despite Covid-19, Vietnam’s farm produce exports still achieved impressive results, especially litchis.

Newspapers and social media: cooperation or confrontation?
Newspapers and social media: cooperation or confrontation?
FEATUREicon  07/07/2021 

VietNamNet spoke with Nguyen Ngoc Chu, a respected mathematician, who is a well-known Facebooker whose posts on his page attract at least 1,000 likes each.

Is Vietnam’s Covid-19 treatment Favipiravir drug effective?
Is Vietnam’s Covid-19 treatment Favipiravir drug effective?
FEATUREicon  07/07/2021 

Vietnam has never included any antiviral drugs in its Covid-19 treatment regimen because of unclear and unproved effectiveness of the drugs in clinical trial results.

 
 
 
Leave your comment on an article

OR QUICK LOGIN