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Private economic development shows human rights in Vietnam’s economy
Private economic development shows human rights in Vietnam’s economy
10/4/16
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 ]
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.
This is a big difference from a State-subsided economy more than 30 years ago when the private sector was not recognized.
The private sector should be the base to operate the market economy while the spearheads should be strong economic groups.
Tthe recognition of the private sector's role in the economy should be translated into government's detailed policies and supports.
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.
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.
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.
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.
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.
In strategic terms, the Party and State have planned to provide increasingly favorable conditions for the development of the private economy.
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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