Among the four major driving forces of growth – household economy and agriculture, private, State-owned and foreign invested (FDI) sectors, the FDI sector is the most dynamic. This sector accounts for 70 percent of the country’s exports and 20 percent of the national gross domestic product (GDP), according to statistics of the General Statistics Office.
Chairman of the Vietnam Chamber of Commerce and Industry (VCCI) Vu Tien Loc said while the FDI sector is able to take advantage of the State’s policies for their development, the private sector remains weak with 98% of enterprises being of small and super small scale. Just two percent of them are of medium size and 2% of large scale.
Domestic private businesses are not strong enough to become partners of their FDI counterparts, Loc said, citing as an example the fact that the Samsung group cannot find any Vietnamese supplier of screws.
Vice Director of the Central Institute for Economic Management (CIEM) Vo Tri Thanh shared the view, noting that not only the support industry but the garment industry which contributes a great portion of Vietnam’ s exports also faces great challenges in securing domestic supply of yarns in order to enjoy preferential tariffs brought about by free trade agreements.
The experts are particularly concerned about the agricultural sector, which has few enterprises or brands capable to compete on the regional and global scales.
VCCI’s study shows that even with more than 20 years exporting rice, Vietnam so far has neither built any remarkable rice brands nor entered the high-end segment of the market. The price and quality of the country’s rice still stay in the lower end.
Tra fish and shrimp, other export staples, are losing ground in the European and US markets.
Vietnam’s fresh fruits have never been able to enter the Singaporean market, despite the good relations between the two countries and the absence of import tariff in Singapore. Besides the technical barrier, it is a fact that Vietnamese fruits cannot compete in terms of quality and costs with products of Thailand and Cambodia.
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, modernizing equipment and machinery and enhancing their business administration capacity, the VCCI head suggested.
Loc also urged the private sector to be more active in seeking market and diversifying their products and services, as the demands of markets and customers are increasingly become stricter.