In a report of the 11th Party Central Committee presented to the 12th Party Congress, the private sector has been determined as a key driver of the economy.
A measure of growth
The growth of Vietnam’s business community has come along with the gradual refinement of the socialist-oriented market mechanism, which includes the introduction of and improvements made on a wide range of laws such as those on enterprises, investment, land and bankruptcy to facilitate enterprises to do business. Other laws on ownership, tax and the environment have also been updated on the basis of the 2013 Constitution to gradually phase out monopolisation and attract all resources for development.
From the one subject to regulation, the business community has become a participant in the process of law making as evidenced by the attendance of representatives from the Vietnam Chamber of Commerce and Industry and the Central Institute of Economic Management in a recent law-making government meeting, something which had never happened before. Also never before have the business community’s contributions to law formulation been extended through to the final round, equal with those contributed by government ministries and agencies.
These examples illustrate the government’s determination to realise its commitment to act for the sake of enterprises. The formation of the relationship between the state, enterprises and employees, in which the state’s role as a referee who determines the rules is both clearer and achieving greater consensus. Trade associations have also participated in policy consultation and strategy formulation in a more effective manner.
At the same time, the army of enterprises has also seen significant growth to meet the demand of international economic integration. National pride has become a major factor in the running of businesses.
Continued reform efforts
In recent years Vietnam has secured free trade agreements with numerous countries and economic unions under which the tariffs will be reduced to 0% on transactions with 80% of the world market, opening up greater opportunities for Vietnam to participate in global value and supply chains. Advantages aside, deeper integration means tougher competition and stricter technical and environmental standards, which pose great challenges to Vietnamese enterprises. How should businesspeople - the captains of their companies - steer their ships in the face of giant waves?
Along with the rapid advances of science and technology, which has sharply reduced the time from research to application, Vietnam’s once highly valued advantages such as cheap labour and non-renewable energy are being eroded. The country now has to compete with its peers within ASEAN in terms of cheap labour and advanced economies in attracting high-end manufacturing companies.
Therefore, in order to prepare for successful integration, enterprises, particularly their leaders must attach importance to enhancing corporate management. Moreover, entrepreneurs should be proactive in learning about international economic integration issues including free trade agreements and technical requirements so that Vietnamese products can penetrate new markets. The government, for its part, should establish trade promotion centres in promising markets and operate them with state funds for two to three years, after which such centres will be run with funding from enterprises.
Entrepreneurs should carry out their social responsibilities by complying with the laws, protecting the environment, ensuring food safety and improving the living standards of their direct employees. They should also uphold national pride to support one another and form value chains that benefit the Vietnamese business community. This is a way that can help them to foster sustainable development and increase their value.
On the path of development, the business community also needs support from government agencies in removing difficulties in capital, technology and market access. The government’s commitments should be realised by refining relevant laws designed to provide maximum support for small and medium-sized enterprises, which make up 97% of Vietnam’s total enterprises, and which are also the factors that help to create flexibility and diversity in the business community.
For the private sector to be an important driver of the economy, Vietnam needs not only political determination, but more importantly the involvement of all players: the state, enterprises and employees.
