Pham Thi Ngoc Thuy, director of the Office of the Private Economic Development Research Board (Board IV) under the Prime Minister’s Administrative Procedure Reform Advisory Council, talked to VietNamNet about the conditions needed to turn these goals into reality.

Vietnam now still lacks enterprises powerful enough to have regional and international stature, while other regional countries such as Thailand and Malaysia can do this. What are the reasons behind this?

To turn the goal of developing Vietnam into a country with high income by 2045, the development models like Thailand’s and Malaysia’s will not be enough. Vietnam should strive for the East Asian models such as Japan, South Korea and Taiwan (China). However, we now have to make every effort to catch up with Thailand and Malaysia.

Vietnam is still lacking enterprises which are competitive enough in the region. Among the top 50 Southeast Asian enterprises in 2024 ranked by Fortune, only five have Vietnamese nationality. Vingroup, which is one of the largest Vietnamese enterprises, just ranks 43rd on Fortune’s list.

There are some major reasons behind this. First, Vietnam’s enterprises have faced more barriers during the integration and development process. In 1986, the Party and the State initiated doi moi (renovation), but Vietnam’s economy could only begin integrating into the global economy 20 years later.

In 1995, Thailand and Malaysia became members of the World Trade Organization (WTO). By that time, the trade embargo had just been lifted by the US one year before, and only in 2006 could Vietnam join WTO.

In order to have large corporations and strong brands, Vietnam needs to have a large market. Vietnam has been lagging behind other regional countries for nearly one decade. Vietnamese businesses and businesspeople have to make serious efforts to be able to compete with regional enterprises before they think of international stature.

Second, the private economic sector, which is an important driving force of the national economy, is still facing big barriers during their development, including their way of thinking, their support ecosystem, their inner strength, and their business culture.

Vietnam’s private economic sector has experienced a lot of uphevals in history. In the centrally planned economy, private enterprises were not officially recognized. After doi moi, they were officially recognized as part of the socialism-oriented market economy with multiple ownership. 

The promulgation of the 1999 Enterprise Law was considered a turning point in history as it helped activate the development of domestic private enterprises.

As such, the private economic sector has had just 25 years to develop. Therefore, it needs time to accumulate capital, and experience for corporate governance, as well as research capability and innovation.

Third, policies on supporting enterprises are not long-term and comprehensive enough. These are needed for the development of enterprises.

Thailand, a neighboring country, launched the Thailand 4.0 strategy very early with an aim of shifting from an industrial economy to an innovation- and high tech-based economy. The policy has been applied for many years, with high investments in information technology, renewables, and manufacturing.

Malaysia has also taken similar steps. And not only regional countries, the success stories of many other countries show that consistency and a long-term vision are  necessary when designing policies.

The Politburo’s Resolution No41 released October 10, 2023 on building and promoting the role of Vietnamese businesspeople in the new development period says that Vietnam aims to have more and more enterprises of regional stature and some enterprises of global stature. What policies do you think Vietnam needs to have multi-billion worth businesses and businesspeople and to obtain the goals set in the resolution?

Resolution 41 has set a very strong mindset and viewpoint on building and developing Vietnamese enterprises with a large operation scale and strong capacity that could cooperate and compete on par in the global market as well as master some value chains.

This is a prerequisite to enhance the country's position, increase the internal strength of the economy, and help the country escape the middle-income trap and become a high-middle-income country by 2030 and high-income country by 2045.

International practice shows that in order to avoid the middle-income trap, countries need to have powerful enterprises with international competitiveness that act as the backbone of the economies.

... to be continued

Binh Minh