Q: In your opinion, what are the institutional barriers preventing the private economic sector from scaling up and improving its competitiveness?
A: There are many reasons why Vietnam’s private sector has not developed as expected, but the biggest bottleneck is institutional. Here, “institution” refers not only to laws on paper but also to how those laws are enforced, the governance environment, and the surrounding political-economic culture.
Firstly, Vietnam’s institutional framework still leans more toward “management” than “service and facilitation”. This creates challenges for private enterprises in accessing land, credit, markets, and even equal investment opportunities.
The prevalent “ask-give” mechanism and subjective approval processes place many businesses at a disadvantage, lacking the legal assurance necessary to operate with long-term confidence.
Secondly, the mindset regarding private sector development remains inconsistent and insufficiently robust. Although the Party has issued progressive guidelines, such as recognising the private sector as a "key driver of the economy", the translation of these ideas into concrete policies and actions still lags. In some areas, private enterprises are not treated on par with state-owned or foreign-invested firms.
Thirdly, the institutional space for the private sector to grow sustainably remains limited. We lack policies that support enterprise scaling, improved governance, technological innovation, and brand development. Many businesses remain stuck in low value-added segments, unable to move up the supply chain.
Lastly, trust must be addressed. Institutions are not just about legal frameworks, they also reflect the state’s trust in businesses. When entrepreneurs feel uncertain about the investment environment, policy stability, or fear “criminalisation of economic relations”, they are unlikely to invest boldly, innovate, or integrate deeply into international markets.
To overcome these obstacles, it is crucial to conduct a comprehensive institutional reform in which the private sector is not only recognised rhetorically but also supported and protected through tangible actions.
Q: One persistent issue is that many household businesses still follow traditional models and lack the drive to evolve into formal enterprises, with some even deliberately choosing to stay small. What are your thoughts on this?
A: The phenomenon of many household businesses “not wanting to grow” is no coincidence. It reflects institutional and economic realities that deserve serious reflection.
The official and unofficial costs of transitioning into formal enterprises remain too high. As household businesses, operators can work more simply with fewer procedures, inspections, and interactions with authorities. But once they become formal businesses, they face increased obligations related to taxes, insurance, accounting, and the risk of inspections or bureaucratic obstacles.
Moreover, the institutional environment does not genuinely encourage formal entrepreneurship and structured business development. The business environment lacks stability, policies are inconsistent, and more importantly, there is a lack of practical support, such as access to credit, land, legal advice, or management training. In such context, it becomes a rational choice to “stay small”.
Risk aversion and a lack of trust in the system are also significant barriers. Many people are not afraid of doing business; they are afraid of the complications that come with being “official”. As long as there is a mindset that “being in the light invites scrutiny”, motivation to scale up will remain stifled.
Q: To address these bottlenecks and drive private sector development, breakthrough reforms in institutions, policy, and the business environment are essential, aren’t they?
A: To help private economic sector become a key engine of the economy, institutional reform is the place to start. Institutions form the “mould” in which all economic activity takes shape. If the mould is distorted, the private sector cannot grow in a healthy or sustainable way.
I think three breakthrough solutions should be prioritised. Firstly, it is essential to ensure a fair, transparent, and stable business environment. This includes administrative reform, preventing abuse of power, eliminating the “ask-give” system, and, critically, protecting property rights and business freedom through substantive legal safeguards, not just slogans.
Secondly, it is essential to design policies that support private enterprises scaling and improve their competitiveness. This is a crucial step toward creating leading enterprises with global capabilities, mastering technology and value chains. Policies should focus on supporting innovation, digital transformation, access to long-term credit, and expanding domestic and international markets.
Businesses cannot grow if they are left to a risky and unsupportive environment. Therefore, a comprehensive support ecosystem must be built for private sector development, including startup education, legal services, logistics, and links with research institutes and universities.
The State must shift from being an “interventionist actor” to an “institutional architect and development facilitator”. When the state plays its proper role effectively, the private sector will have the space to grow, contribute more, and help the country reach greater prosperity.
Q: By 2030, the private economic sector is expected to lead in technology application and innovation, contributing about 70% of GDP. What is your view of this expectation?
A: I believe that this is both a correct and necessary expectation. No dynamic, modern, independent, and self-reliant economy can thrive without a strong private sector at its core.
However, realising this expectation cannot rely solely on the individual efforts of private businesses. The prerequisite is an enabling institutional environment that is transparent, stable, and conducive to private sector development.
In my opinion, to achieve a 70% GDP contribution from the private economic sector by 2030, we must focus on three key areas. The first of which is the removal of institutional barriers that hinder the growth of private enterprises, such as unequal access to resources, dual-track policies favouring state-owned enterprises, and arbitrary administrative interventions. The second is to strongly incentivise innovation and technology adoption by supporting research, promoting digital transformation, establishing venture capital funds, and rigorously protecting intellectual property rights. At the same time, it is essential to ensure legal and asset security for businesses, so entrepreneurs feel confident to think big, invest long-term, and innovate. Only when they no longer fear “non-market risks” can global competitiveness truly flourish.
Achieving this vision requires a profound and coordinated institutional transformation, where the state genuinely becomes a midwife for private economic sector’s growth, innovation, and integration. When the private sector takes off, Vietnam can rightfully claim its place on the world stage as a developed nation built on endogenous strength and the aspirations of its own people.
