In reality, Vietnam began developing its private sector from scratch when the Doi Moi (economic reforms) were initiated. Today, that journey has spanned 38 years (1986-2024).

In the same 38-year period, Japan developed a global economy driven by powerful private corporations operating in multiple countries. Even ordinary citizens can name ten major Japanese corporations such as Sony, Panasonic, Canon, Toyota, Hitachi, Sumitomo, Mitsubishi, and Fujitsu.

Similarly, South Korea, within 38 years, created powerful economic conglomerates through its Chaebol model, establishing global businesses such as Samsung, Hyundai, Posco, Kia, and LG. Meanwhile, Vietnam, after 40 years of Doi Moi, now has over 930,000 businesses, of which 98% are small and medium enterprises (SMEs), around five million household businesses, several dozen companies worth hundreds of millions of dollars, and about a dozen billion-dollar corporations like Vingroup, FPT, Thaco, Hoa Phat, and Vinamilk.

In total, Japan and South Korea transformed into "dragons" in 38 years after the war, while Vietnam, due to the hardship of a 10-year embargo (1986-1995) and an additional decade of economic difficulties (1975-1986), has not yet become a "tiger." The private sector, though contributing 46% of GDP, 30% of the state budget, and 85% of social employment, remains largely small and medium-sized.

The struggles of Vietnam’s private sector stem not only from the embargo but also from internal barriers that have yet to be fully overcome since the Doi Moi reforms.

First, there is a conceptual barrier regarding the private sector. Before Doi Moi (1986), Vietnam had no private sector, and consequently, no entrepreneurs, as the economy was dominated by state-owned enterprises and cooperatives. Starting from this disadvantageous position, Vietnam took many years of reform to win public confidence and gain the full participation of the political system, eventually recognizing the private sector as an essential part of the economy and a driving force for national economic and social development.

Second, institutional barriers to the private sector remain, particularly the Land Law. The first version of the Land Law, passed during Doi Moi in 1987, prohibited the sale of land (Article 5). The 1993 Land Law first introduced the concept of all land being owned by the people, and by the 2003 Land Law, the state was officially made the representative of the people’s ownership of land. The 2013 Constitution formally institutionalized these principles.

Land is the "mother" of all real estate, and the private sector has struggled with land-related issues throughout the past 38 years. Many private businesses in real estate have thrived, but many have left behind unresolved challenges that continue to this day.

Land-related institutions have been the weakest link in Vietnam’s entire Doi Moi system over the past 38 years. The law has been amended multiple times, yet further reforms are still needed.

Third, there is a leadership and governance barrier within the overall mechanism of "Party leadership, state management, and people's ownership." While the Party's leadership over the private sector has seen consistent, critical reforms in terms of policy and political-social institutions, state management has not yet achieved full synchronization.

This gap is most evident in the four-tier administrative system, where the closer to the grassroots level, the more discrepancies arise. Administrative procedures, for example, have evolved into "people's burdens," with an increasing number of minor permits required. Corruption and degradation have emerged most prominently at the local level, and this has trickled up to affect higher levels of government.

The fact that over five million household businesses and two million private enterprises remain small is largely due to flaws in the decentralized system between central and local authorities.

At the provincial and city levels, there are currently 63 administrative units, most of which call for special mechanisms and policies to facilitate development. Yet, without meeting these demands, it is difficult for small businesses to grow into medium-sized ones, and for medium-sized businesses to expand further.

To address this barrier, the number of provincial administrative units should be reduced. Simultaneously, provincial authorities must be empowered with the functions, duties, rights, and responsibilities necessary to develop private enterprises and help them break out of their small-and-medium scale.

In this decentralization process, the central government should provide additional public investment resources to provinces, enabling them to leverage local budgets to guide investment in private small and medium enterprises (SMEs). If provincial leaders are members of the Central Committee of the Communist Party, then decentralizing political and economic power should be regarded as a reasonable measure.

Fourth, there is a barrier preventing private enterprises from reaching the scale of South Korean Chaebols or Japanese conglomerates. South Koreans believe that without a leader like Park Chung Hee, South Korea would not have its Chaebols.

In Vietnam’s case, with its collective leadership model and personal responsibility mechanism, developing private enterprises to the highest levels seen in Japan or South Korea requires direct oversight by the Prime Minister, with support from relevant ministers and provincial chairpersons. This is not solely the responsibility of individual entrepreneurs but a national issue of the highest importance, akin to the establishment and development of state-owned corporations.

From the triumphs and challenges faced along the way, Vietnamese private enterprises have proven to be an indispensable force in the nation's unity, contributing significantly to the great successes of Vietnam’s revolutionary history across different eras—Independence, Doi Moi, and now.

As the late General Secretary Nguyen Phu Trong once said, "Our country has never had the position, potential, and international standing it enjoys today." In this regard, the private sector has been and continues to be an important and proud driving force behind Vietnam’s remarkable progress.

Vietnam is now preparing its spirit, determination, will, and strength to enter the "New Era of National Advancement," as General Secretary and President To Lam announced before the United Nations recently. Now, more than ever, Vietnam’s private sector will cast off the burdens of the past and rise in this new era.

Dinh Duc Sinh