Becoming a key economic sector
|Many cities and provinces in Vietnam are getting a facelift thanks to new high-rise buildings invested by Vingroup
Comprised of over 700,000 businesses of various sizes, the private economic sector last year ultimately made up approximately 42% of the country’s gross domestic product and employed up to 80% of the national labour force. Indeed, many private investors such as Sungroup, Vingroup, and BRG have been able to develop well-known brands in a market that is largely associated with large projects through utilising modern technology in both production and business.
According to Nguyen Dinh Cung, former Director of the Central Institute for Economic Management, facilitating the private economic sector’s development remains an inevitable trend for the national economy. The number of newly established enterprises has been steadily annually, while the sector in general has been able to successfully mobilise huge amounts of capital for production and business, developing into an important part of the national economy in the process.
Championing this point of view, Alwaleed Fareed Alatanani, an economist at the World Bank in Vietnam, believes that about US$60 billion of idle money is being kept by local citizens, which could represent a great source of investment for the economy if it is utilised in an effective manner.
Most notably, the increasingly improved investment and business environment can be considered to be an effective support platform for enterprises to organise production, boost business, and attract investment from the private economic sector. At present, relevant authorities have reduced and simplified more than 3,807 out of 6,191 business conditions, along with removing some 7,000 lines of goods subject to inspection, thereby saving VND6,300 billion for firms.
In addition, the median score of the newly released Provincial Competitiveness Index reached 63, a 15-year record high, indicating the outstanding efforts put in by localities as they seek administrative reform.
Solutions to mobilise private capital
With the country effectively bringing the novel coronavirus epidemic under control it is now striving to reboot the economy to reflect moving into a ‘new normal’. Therefore, attracting private investment can be considered one of the key solutions for promoting economic growth.
Representing the business community, Vu Tien Loc, President of the Vietnam Chamber of Commerce and Industry, believes the reform of administrative procedures and investment environment should be an absolute requirement for each locality as they try to attract private capital. In line with this, the Government has asked ministries to cut down at least 20% of the number of documents under their authority between 2020 and 2025.
In addition, the Government plans to disburse VND700 trillion worth of public investment capital over the course of the year which will be considered to be a ‘strong push’ to attract capital from the private sector. Pham Dinh Thuy, Director of the Department of Industrial Statistics under the General Statistics Office, notes that promoting public investment will ultimately create positive conditions for private enterprises to provide plenty of services, as well as work, in their role as contractors and investors.
The current ongoing session of the National Assembly is debating a bill on Public-Private Partnership. If it is granted approval, economic expert Nguyen Duc Kien says that the bill will pave the way for private businesses to engage in a range of large projects, therefore becoming the driving force behind national economic development. The Asian Development Bank has also forecast that the country’s infrastructure investment demand will stand at roughly US$480 billion in the 2017 to 2030 period.
With an array of investment opportunities lying ahead, creating a safe business environment along with a transparent and fair legal corridor appears to be the key factor in attracting private investment.