Improving the business environment

Experts believe that improving the business environment is essential for the private sector to thrive.

“It is necessary to continue improving the business environment, encouraging investment, and fostering an entrepreneurial spirit to lay the foundation for a sustainable and prosperous economy,” says Dr. Nguyen Si Dung, former deputy dead of the National Assembly Office.

In his view, despite contributing 42-45% of Vietnam's GDP, the private sector has yet to reach its full potential due to complex administrative procedures, high unofficial costs, and limited access to credit. More than 50% of private enterprises report they face multiple inspections and audits annually, which wastes time and resources.

Currently, small businesses make up 96% of the private sector, while the number of large enterprises capable of competing globally remains low. If Vietnam does not quickly create a transparent and business-friendly environment, the emergence of leading private conglomerates will be limited.

The legislator points to lessons from the Republic of Korea and other developed nations, saying the RoK’s rise was driven by the rapid growth of private conglomerates, and Vietnam can achieve similar success by fostering a more favourable business environment for the private sector.

“If institutional, financial, and technological barriers are effectively removed, the private sector could drive Vietnam’s economic growth beyond 10% per year,” he asserts.

Professor Vu Minh Khuong from Lee Kuan Yew School of Public Policy also emphasizes that private enterprises are awaiting significant legal and administrative reforms. He cites the shipping industry as an example, where many Vietnamese firms own millions of tonnes of cargo but register their ships abroad due to simpler procedures.

“If we implement a unified digital system like Singapore, we could unlock massive production potential. Similarly, in the logistics sector, current regulations allow only one domestic transshipment, forcing companies to reroute goods through Hong Kong or Singapore instead of optimizing routes within Vietnam. Removing such bottlenecks could boost industry growth by 10-20%,” he analyzes.

However, experts remain optimistic, that the upcoming resolution from the Politburo on private-sector development will expand opportunities for this sector.

Among the key tasks for private-sector growth, General Secretary To Lam in his recently issued article emphasized the need to “improve the socialist-oriented market economy institutions, making them modern, dynamic, and globally integrated.” He stressed that this is a prerequisite for rapid and sustainable private-sector development.

“The core of improving market economy institutions is clearly defining the state’s role in the economy focusing on macroeconomic regulations, ensuring a conducive business environment, and enabling efficient market operations while maintaining social fairness. Promoting private-sector development must be a top priority,” he declared.

Institutional reforms to support enterprises

Dr. Le Dang Doanh, former director of the Central Institute for Economic Management (CIEM), notes that legal and institutional barriers remain the “biggest bottleneck” hindering private-sector growth, and without urgent reforms, these challenges could stifle its progress.

He agrees with the Party leader’s directive on aggressively reforming institutions, particularly by overhauling administrative procedures to serve businesses and citizens better. He also emphasizes that businesses must strive for rapid growth, and to strengthen their market position, Vietnamese companies must collaborate, form supply chains, and build vertically integrated business models.

He cites Vingroup as an example, highlighting its comprehensive value chain, from manufacturing to retail, allowing broad participation in economic activities. Vingroup has also established a university to attract both domestic and international students.

“This model is highly effective that showcases the potential of private enterprises in the economy. Besides Vingroup, Vietnam already has other private companies capable of expanding regionally and globally. This proves that the private sector can confidently grow stronger,” states Dr. Doanh.

Dr. Vo Tri Thanh, director of the Institute for Brand and Competitiveness Strategy, echoes this view, arguing that breakthrough solutions are needed in policies, infrastructure, human resources, technology, and capital.

In addition, the Politburo resolution on private-sector development should support start-ups and facilitate the quality-driven transformation of small and medium-sized enterprises (SMEs), enabling them to scale up and become industry leaders.

National Assembly deputy Nguyen Thi Viet Nga also underscores the importance of reviewing the current policy system to identify obstacles affecting the private sector.

“Perhaps what businesses need most is not preferential interest rates but streamlined administrative procedures. Therefore, we must listen to businesses, thoroughly assess the situation, and promptly amend policies to provide the best support for this sector,” she recommends.

Ma Thi Thanh, vice president of the Soc Trang Provincial Business Association, points out that many businesses struggle with cumbersome procedures, incurring significant costs. New regulations have created restrictions that discourage businesses from taking action or making necessary adjustments, making operations more challenging.

She expressed optimism about Party chief To Lam’s strong directive to support private-sector development.

“We hope that local authorities will swiftly change their mindset and take action to resolve difficulties and obstacles, to ensure that businesses do not become discouraged or exhausted by administrative procedures, ultimately losing their motivation to invest,” states Thanh.

Equal treatment for private enterprises

In his article, Party leader To Lam candidly acknowledged that government incentives and support policies have not been equally effective across economic sectors, making it difficult for private enterprises to access them. In many cases, state-owned enterprises (SOEs) and foreign firms receive more benefits than the private sector.

Indeed, SOEs generally have easier access to land, capital, and credit, while foreign enterprises often receive better tax incentives, customs support, and land access. Moreover, issues such as bureaucratic inefficiencies and unofficial costs continue to burden private enterprises, reducing business efficiency and discouraging investment expansion.

Economic expert Dr. Nguyen Minh Phong described the Party leader’s directive as a “breakthrough vision.”

“We must eliminate the mindset that prioritizes the public sector over the private sector. Only by changing perceptions and achieving a high level of consensus in both thought and action can we establish truly effective mechanisms and policies to drive private-sector growth,” he suggests.

Dr. Phong also emphasizes that private enterprises must be given equal opportunities to engage in all legally permitted industries.

“Government agencies should serve and support businesses rather than act as regulators that impose unnecessary hurdles, excessive fees, or focus on penalizing enterprises,” he says.

National Assembly deputy Nguyen Thi Viet Nga echoes this view, noting that for a long time, Vietnam had not fully recognized the importance of the private sector. However, since the country’s economic reforms, this perception has gradually changed, leading to numerous policies aimed at supporting private enterprise growth.

To further private-sector development, she says, this mindset must continue to evolve, and for SMEs, ongoing support through preferential policies is essential.

“Before becoming large corporations, businesses must start as SMEs. Not all companies are successful from the beginning. If we fail to support and nurture new enterprises, we cannot expect them to grow into large corporations,” analyses the legislator.

Nga stresses that even within the private sector, fairness is needed between large and small businesses.

“We should not impose a one-size-fits-all policy. Instead, policies should be tailored to different business sizes and industries to ensure targeted and effective support, especially for startups and newly established enterprises,” she suggests.

Private enterprises struggle to access development resources

VOV.VN - Private firms in Vietnam continue to face challenges in accessing development resources, prompting calls for more equitable policies across business sectors, according to industry insiders.