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Implementing Party’s Resolution on promoting the private sector
Implementing Party’s Resolution on promoting the private sector
10/8/17
A resolution of the 5th plenum of the 12th Party Central Committee mentioned the need to promote the private sector into driving force of Vietnam’s socialist-oriented market economy. The resolution aims to sustainably develop the private sector, focusing on quality and business efficiency. It targets the private sector contributing 50% of GDP in 2020, 55% in 2025, and 60-65% in 2030.
The private sector’s contributions to national development, including the state budget and job generation, have been acknowledged. At Monday’s Private Sector Forum, businesses talked with the Prime Minister and leaders of ministries, sectors, and localities about how to promote the potential of the private sector to effectively contribute to national growth.
The CEO Confidence Index (CEO.CI) survey, conducted for the first time at the second Vietnam Private Sector Forum 2017, reported 58% confidence overall. Investors and enterprises confidence in the business environment was 46% and in business efficiency was 64%.
The growing role of the private sector
One of Vietnam’s important achievements during 30 years of renewal has been the policy to develop the private sector. Policies and mechanisms have been created to encourage entrepreneurship. The private sector has contributed sizably to the state budget, job generation, and settlement of social issues. Since 2010, the private sector has contributed approximately 43% of GDP, while the state sector has contributed 29% and the foreign direct investment sector 18%. The number of private businesses has increased sharply. There were over 110,000 private businesses in 2016.
Private economic groups and large-scale businesses have been established in the processing, manufacturing, electronics, finance, and banking sectors, which require big capital and advanced technology. Major names include Vinamilk, Truong Hai Automobile Joint Stock Company, Massan Group, Hoa Phat Group, FPT, and Mobile World Company.
The Party’s resolution has identified the position of the private sector as the key to Vietnam’s economic growth.
The government’s actions
The goal of developing the private economic sector into an important driver of the national economy requires tremendous effort on multiple sides. The government has vowed to improve the business environment to ensure fairness, transparency, and safety, and to offer the best possible conditions for businesses to flourish. The government has revised policies and organized hundreds of trade promotion programs and meetings with businesses at all levels.
Prime Minister Phuc said: “We know there are a lot of pending issues related to production costs, such as warehouse fees, bank loan interest, transportation costs, and other expenses. The government will help businesses reduce those costs to boost investment efficiency.”
Prime Minister Phuc said the Party’s resolution has removed all barriers for the private sector to develop on the right track. “Vietnam has launched a new investment program to engage private businesses in all important sectors where the state is lacking resources and is calling for social investment in hospitals, schools, and power plants. We expect an active response from businesses and hope they will contribute 50-60% of GDP”.
The Prime Minister asked ministries, sectors and localities to hold regular meetings with private businesses, promptly resolve pressing issues, and create roadmaps to deal with long-term issues. Localities should review and cancel poor-performing projects and transfer the resources. Prime Minister Phuc urged the private sector to reform and improve its competitiveness. “Businesses should adopt an ambitious vision of the world markets and focus on sectors of global demand such as agriculture, food, consumer goods, and tourism. They should expand international cooperation in technology, production, and global distribution.”
The government’s activities to support private businesses conform to the Party and state’s view and businesses’ aspirations./.
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All comments [ 11 ]
After 30 years of Doi moi (renovation process launched in 1986), one of the most remarkable achievements of Vietnam’s economic reforms is the emergence of a dynamic private sector.
We can now see the image of a dynamic and prominent private sector with a large number of entrepreneurs covering three to four generations, struggling to succeed, as well as a powerful start-up movement. In 2016, the country saw a record number of newly-established enterprises, over 110,000, bringing the total number of private enterprises to 610,000.
Stronger institutional reforms are needed to move forward, relaxing bureaucratic scrutiny on doing business, while securing fair competition by improving access to land, capital, information and other production factors for private firms.
Having a dynamic and competitive private sector is a solid guarantee for Vietnam’s development and prosperity. Its success will depend on how we bring into reality the right institutions and support policies.
Many new mechanisms and preferential policies were put in place to facilitate the growth of the private sector, promoting the business spirit of Vietnamese people and enterprises.
The private sector has made numerous important contributions to the progress of Vietnam, from contributing to the national budget, creating jobs, to helping reduce social problems.
The private sector has also seen the emergence of large-scale enterprises and private corporations in capital and technology-intensive fields, such as manufacturing, electronics, and financial services, among others, such as Vinamilk, Truong Hai Auto Corporation, Masan Group, Hoa Phat Group, FPT JSC, and Mobile World Investment Corporation.
The first and most important task is to create and perfect the market mechanisms to truly play the main role in the mobilisation and allocation of resources, including state resources. Resolution No.11-NQ/TW on completing the mechanisms of the socialist-oriented market economy has addressed this issue very clearly.
Completing the mechanism will promote business freedom, ensuring a safe and predictable business environment, encouraging businesses to innovate.
The private sector will have to do business responsibly as well as build credibility and confidence for the market. Particularly, the business community needs to work together and create a stronger, more responsible common voice and for reform of state management agencies.
To encourage and motivate the entrepreneurial spirit and startup and innovation will nationwide, particularly in the business community. To boost the dissemination of and education about business startup knowledge among the population.
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