return icon Vietnamnet.vn

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.

{keywords}

 

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.

MORE NEWS

18,000 tourists spend $18.3 million on foreign tours during Lunar New Year

The number of tourists choosing foreign tours accounted for 55 to 65 per cent of the total domestic and foreign tours.

Vietnam posts trade surplus of US$3.6 billion in January

Despite decreases in both imports and exports, the country still enjoyed a trade surplus of 3.6 billion USD in the first month of 2023, according to the General Statistics Office (GSO).

VIETNAM NEWS HEADLINES JANUARY 30

NA leader launches emulation drive, tree planting festival in Tuyen Quang

Nearly 43,900 businesses pull out of market in January

Some 43,900 businesses have withdrawn from the local market in the year to date, up 14.4% year-on-year, according to the Agency for Business Registration under the Ministry of Planning and Investment.

VIETNAM BUSINESS NEWS JANUARY 30

Retail sales of goods, services up 20% in January

Vietnam to send 20 teams to VEX Robotics World Championship 2023

Vietnam is allowed to send 20 teams to the VEX Robotics World Championship 2023 (VEX Worlds), scheduled to be held in May this year in Dallas city in the US state of Texas.

Transport Ministry backs Binh Phuoc’s airport plan

The Ministry of Transport has thrown its weight behind Binh Phuoc Province’s proposal to convert its military airfield in Hon Quan District into a specialized airport.

120-year-old stone church in Da Nang still open to visitors

Built of stone and nearly 120 years old, Tung Son church has retained its special features.

Border gates in Lang Son, Quang Ninh reopen after Tet holiday

The border gates in Quang Ninh and Lang Son provinces have resumed operation after a week-long suspension of customs clearance for the Lunar New Year holiday (Tet).

Foreign investors remain optimistic about VN stock market

Foreign investors' confidence in the Vietnamese stock market is reflected in net buying activities, especially in the last months of 2022.

Tax and land-use fee reductions should continue in 2023: Finance Ministry

The Ministry of Finance (MoF) said tax support policies and land-use fee reductions for businesses should be continued throughout 2023 despite shortfalls in state budget collection.

State-owned banks under capital increase pressure

Vietnam’s four biggest State-owned banks have an urgent need for capital increase in 2023 as their charter capital is too low, with some unable to ensure the regulated minimum capital adequacy ratio (CAR), according to industry insiders.

Foreign suppliers pay US$76.7 million in taxes via online portal

On the first working day after the 2023 Lunar New Year, foreign suppliers such as Facebook, Google and Apple declared and paid taxes worth US$76.7 million.

VN in need of huge amounts of soil, sand, stone for expressway projects

The Transport Ministry has just proposed that Deputy PM Tran Hong Ha direct localities to urgently increase the exploitation capacity of stone, soil, and sand mines to serve the needs of North – South Expressway project in the 2021-2025 period.

HCM City to get cracking on key transport projects in 2023

HCM City will focus on speeding up major transport works this year.
back_to_top