Big space for private businesses over the next 10 years

Vietnam will continue adjusting and improving its business climate with a new socioeconomic development strategy for the next 10 years, in which full protection of business and investment activities will be ensured.

Private Vietnamese enterprises will have a larger space to perform well, contributing to making Vietnam a more affluent nation
Private Vietnamese enterprises will have a larger space to perform well, contributing to making Vietnam a more affluent nation

The recent 13th National Party Congress adopted a hallmark political report, which sets out the overall goals for the country's development orientations until 2045. Specifically, the country will become a developing nation with a modern-oriented industrial sector, exceeding the level of lower middle income by 2025. In 2030 when the country will be celebrating the centenary of the Party, it will become a modern industrial developing nation, with a high income level. By 2045, when Vietnam will be celebrating the centenary of its independence, it will have become a developed nation with a high income level.

The 13th National Party Congress also adopted the Party Central Committee's wrap-up report of the 10-year Socioeconomic Development Strategy (2011-2020) and the building of the next 10-year Socioeconomic Development Strategy (2021-2030), shaping Vietnam's future development path over the next 10 years.

The country has set the target that the economy will grow 6.5-7 percent per year between 2021-2025. By 2025, the per capita GDP will be around US$4,700 - 5,000, with the ratio of the total-factor productivity (TFP) in the economy's growth at 45%. TFP is a measure of the efficiency of all input into a production process. Increases in TFP usually result from technological innovation or improvement. Also, the rate of urbanisation will reach 45%, and the proportion of manufacturing and processing in GDP will hit more than 25%, while that of the digital economy in GDP will be about 20%.

Under the new strategy, Vietnam is set to grow about 7% a year in the 2021-2030 period. Among the measures to be implemented, Vietnam will ensure full rights for enterprises to conduct business and investment activities, and will also effectively ultilise all national resources based on market principles. This would mean that the private economic sector will have a bigger space to perform and the state will narrow down its role as a trader and increase its role as a facilitator for the market to operate in an effective manner.

"Enterprises' rights and safety will be ensured in conducting business, while all resources will be effectively mobilised, allocated, and utilised based on market principles. Legal frameworks have to be bettered and implemented on a pilot basis, firstly focusing on the law regarding enterprises, startups, intellectual property, trade, and investment so as to enable the national digital transformation and development of new products, services, economic models, and digital economy under the market principles," the report stated.

According to the report, the state will perform its function as the builder of strategy planning, mechanisms, and policies, and distributor of national resources under the market mechanisms. Enterprises' and people's rights to possess legal assets and their freedom in doing business and carrying out contracts have to be ensured in accordance with the law.

The private economic sector will also be encouraged to develop across all sectors not banned by the law, especially in the sectors of production and business, and services. It will also be supported to grow strong companies and groups with high competitiveness. In addition, it will also be encouraged to forge co-operation with state-owned enterprises, co-operatives, and business households, and to develop joint stock companies engaged in by all entities in the society, especially labourers.

Meanwhile, foreign-invested enterprises are considered an important part of the national economy, and will play a major role in mobilising investment capital sources, technology, modern management methods, and the expansion of export markets.

Two months ago, Prime Minister Nguyen Xuan Phuc released a letter to the Vietnamese business community.

He underscored the significant contributions of Vietnamese businesses to the country's socioeconomic development achievements over the past 35 years of economic reform.

"In the new period, with both massive opportunities and challenges, Vietnamese businesses and entrepreneurs need to enhance patriotism, national pride and the aspiration to rise up, while continuing to make great strides and undertake proactive reform," PM Phuc said.

He expected the business community will further bolster its social responsibility by supporting the disadvantaged, protecting the environment, complying with the law and saying no to corruption and irregularities in business activities.

"The Party and the state will continue accelerating administrative reforms as steadfast assistance for Vietnamese enterprises' sustainable development," the prime minister stressed.

Recently he called for the consolidation of confidence among people and enterprises, via a healthy, fair and transparent business environment.

"We will continue offering the best conditions, space, resources, and opportunities to the private economic sector to develop further, with the keywords of 'creating equality', 'be protected', 'be encouraged', and 'offering opportunities'," he stressed.

According to him, 'creating equality' means the private sector is to be equally treated before the law and in competition and the allocation of resources with the other economic sectors.

Meanwhile, 'be protected' means private enterprises' assets will be protected, with freedom in business given to them under the law.

'Be encouraged' means private enterprises, especially those with a sense of social responsibility, are to be extolled by the state, while 'offering opportunities' means that private enterprises are to be offered opportunities in access to resources, technologies, and markets with lower costs.

According to the Party Central Committee, in the time to come, Vietnam will continue conducting "drastic and effective reform of administrative procedures, with the removal of all impediments to the freedom to conduct business", and "healthy, fair, and transparent competition will be ensured."

It is expected that by 2030, Vietnam's business climate will be ranked in the world's top 30 nations with the best corporate environment, and the Vietnamese private sector will be strongly developed quantitatively and qualitatively as an impetus for national economic development.

According to the Ministry of Planning and Investment, the number of active Vietnamese private enterprises increased from about 324,700 in 2011 to 346,800 in 2012, 373,200 in 2013, 402,300 in 2014, 442,500 in 2015, 477,800 in 2016, 561,000 in 2017, and about nearly 800,000 at the end of last year.

In 2020, as many as 135,000 enterprises were newly established with a total registered capital of about US$97.2 billion, down 2.3% in the number of enterprises but up 29.2% in capital, as compared to the previous year. In addition, operating businesses also raised their levels of capital by an additional US$145.3 billion. Furthermore, more than 44,100 firms resumed operation, representing a 11.9% increase as compared to 2019.