Private economic development shows human rights in Vietnam’s economy

10/04/2016


As in many values of human rights and democracy, freedom of private sector is one of essential factors which show positively about Vietnam’s human rights record in recent years. However, at time of economic turbulences, there have recently been rumors saying that the Vietnamese Government is unfair to the private economic sector; as a result, the sector has been contracted and many private firms have gone to bankruptcy. Is this true or not? The following is an insight into the situation.
The private sector has been a major force in the economy, contributing greatly to job generation, the budget collection, and economic growth. In 2015, Prime Minister Nguyen Tan Dung said Vietnam will “create favorable conditions” to encourage private and foreign investment in infrastructure projects, adding that projects using the state budget are more prone to corruption.
Viet Nam recognized the private sector as an important economic driver and planned to raise stronger support for private firms to grow in the economy which witnessed disappointing reforms of State-owned enterprises (SOEs), even as the foreign direct investment (FDI) sector proved to be the most dynamic.
In strategic terms, the Party and State plans to provide increasingly favorable conditions for the development of the private economy. In fact, the policy to develop Vietnam’s multi-sector economy was first defined at the 6th Party Congress in 1986. In the 10th Party Congress in 2006, the Party permits Party members, except for those working for the armed forces and the State, to set up their own private businesses. The recognition of the role of the private sector of an important driver at the 12th National Congress of the Communist Party of Viet Nam was expected to promote the institutional reform and power the development of this sector.
During the past three decades since a multi-sector economy was first mentioned in the 6th National Congress' Document, the private sector contributed significantly to the nation's economic growth. There were around 500,000 private firms in Viet Nam, generating 1.2 million jobs and contributing more than 40 per cent to GDP per year, statistics showed. According to the country's five-year blueprint, favorable conditions for the development of private firms would be raised to create an impetus to enhance the economy's competitiveness.
The facts show that the Party has highly valued the contribution by the private economic sector to the country’s economic development, and that developing the private economy is part of the national strategy to build up people’s prosperity and country’s strength in the current stage of the Vietnamese revolution. What is more, it has opened an opportunity for businesspeople to join the Party.
In fact, the Party’s policy on encouragement of the private economic sector has recently been concretized in laws, amendments and other documents passed by the National Assembly. The 2013 Vietnamese Constitution specified the role of the private sector for the first time. The National Assembly has 36 part-time deputies who are businesspeople. Since Vietnam began its renewal process and in the current economic reform period, the role of the private sector in the national economy has been acknowledged and promoted. In 2000 the Enterprise Law legalized the performance of the private sector. These include amended Law on Investment, amended Law on Enterprise, Law on Bankruptcy, Law on Bidding, Law on Public Investment and so on.
The private sector has an increasing importance in the national economy. Before 1986 Vietnam had about 15,000 private enterprises and 10,000 state-owned enterprises. Now, the number of private enterprises has increased to 600,000, while the number of state-owned enterprises has fallen to approximately 1,000. Under its equitization plan until 2015 Vietnam will continue to reduce the number of state-owned enterprises to be consistent with the ASEAN community forming in 2015, certain WTO commitments, and other trade agreements currently being negotiated including the Trans-Pacific Partnership.
According to VnDirect Securities Corporation, an affiliate of a well-known private-owned group, IPA Investments Corporation, as of December 25th, 2014, 80 more US$ millionaires appeared on the Vietnamese securities market. This figure has brought the number of businesspeople with their securities holding valued at over US$ one million up to 395. Among them, President of Vingroup Pham Nhat Vuong has a total securities value of VND 19,722 billion (nearly one US$ billion), President of Hoang Anh-Gia Lai group Doan Nguyen Duc is ranked second with his asset of VND 7,026 billion (roughly US$ 340 million), and they are followed by President of Hoa Phat Group Tran Dinh Long with VND 5,810 billion (US$ 280 million) of total securities value. In 2014, of 100 people who were on the list of the richest on the Vietnamese securities market, at least 53 people enjoyed a rise in their assets. For instance, Tran Dinh Long’s asset rose VND 1,657 billion, Doan Nguyen Duc’s asset increased VND 639 billion, and President of FLC group Trinh Van Quyet’s securities value leapt up 16 times.
It can be said that Vietnam’s business and production environment has now been so good and open with economic institutions favorable for businesspeople. Citizens are permitted to do business in all areas that are not prohibited by law. Many economists believe that in the wake of the above recently-passed laws, there will be a surge in founding new enterprises and private investment in Vietnam in the time to come. 
The Asian Development Bank (ADB) has said that further structural reforms to facilitate private domestic enterprises’ integration into global value chains are needed to fully unlock Vietnam’s economic growth potential. In its annual report on developing economies in Asia, the bank projects Vietnam’s growth to edge up to 6.1% in 2015 and 6.2% in 2016, on the condition that the Vietnamese Government maintains expansionary policies and continue to accelerate structural reforms.
Last year the Vietnamese economy expanded by 5.98% and the Government expects growth to accelerate to 6.2%. The private sector, one of three components of Vietnam’s economy, includes 95% all operating enterprises. If the private sector is not developed properly, Vietnam’s economy cannot generate the momentum for sustainable development increase its self-direction. So, private firms should be more dynamic in developing linkages and production chains to sharpen competitive edges as the country was underway to integrate deeply into the global economy. 
Vietnam has a bright future, thanks to its leadership, private sector entrepreneurs, its people, and its geographic location in East Asia’s vibrant economic neighborhood. If it now unleashes the full power and creativity of the private sector, Vietnam’s successes will only grow, and millions of people will have a better chance of getting good jobs and sharing in the country’s growing prosperity./.
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All comments [ 11 ]


yobro yobro 10/4/16 09:40

Moreover, the government is completing regulations, under which private enterprises are allowed to implement ODA projects. This will be another great opportunity for private enterprises.

Only Solidar 10/4/16 09:41

This is a big difference from a State-subsided economy more than 30 years ago when the private sector was not recognized.

Love Peace 10/4/16 09:42

The private sector should be the base to operate the market economy while the spearheads should be strong economic groups.

Jane smartnic 10/4/16 09:44

Tthe recognition of the private sector's role in the economy should be translated into government's detailed policies and supports.

Pack Cassiopian 10/4/16 09:45

To push the development of the private sector, besides a State policy giving equal treatment to all economic sectors, private enterprises themselves should take the initiative in renovating production technology, modernising equipment and machinery, and enhancing their business administration capacity.

Deck Hero14 10/4/16 09:47

So, it is not hard to understand that Vietnam has a strategy to develop the private economic sector by creating a favorable legal framework and issuing many supporting policies.

Only Solidar 10/4/16 09:48

In the long term, the domestic private sector must the main growth engine, must ensure the autonomy of the economy and must ensure effective connection of FDI and domestic sectors.

LawrenceSamuels 10/4/16 09:49

To enable the domestic private sector to take on this role, the Government must have overall action programmes to boost private sector development in the future.

Gentle Moon 10/4/16 09:50

It is necessary to simplify business conditions and administrative procedures of enterprise establishment and operation, enhance working skills training at all universities and vocational schools, and set up required business start-up training programmes for entrepreneurs.

John Smith 10/4/16 09:51

In strategic terms, the Party and State have planned to provide increasingly favorable conditions for the development of the private economy.

MaskOf Zero 10/4/16 09:52

It is also important to immediately develop and implement an extensive training programs to improve governance capabilities for active businesses and introduce international corporate governance standards.

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