Forum discusses private sector's policy bottlenecks

Forum discusses private sector's policy bottlenecks

Evidence presented by researchers indicates that since 2016 the momentum of expansion has slowed compared with 2011–2015.

Participants say among private businesses, there has been reluctance to scale up, even a trend towards 'miniaturisation', has become more visible. VGP Photo

Nearly four decades into Đổi mới, Việt Nam’s private sector has expanded in both scale and quality, steadily affirming its role in a socialist-oriented market economy.

That was the message from participants at a forum held recently by the National Economics University to discuss policy bottlenecks that have been hindering the sector's development. 

By 2024, it accounted for 53.4 per cent of total social investment capital and 82.07 per cent of the national workforce. Within the enterprise sector, it generated 38.6 per cent of total pre-tax profit and 51 per cent of total employee income. Its macroeconomic footprint is decisive: it contributed 43 per cent of GDP and 57 per cent of 2024 GDP growth - the highest share among all economic components.

Over the period from 2011 to 2024, private-sector output grew on average by 6.3 per cent a year, outpacing the whole-economy average of 5.48 per cent.

Yet the picture is not unambiguously upbeat. Evidence presented by researchers indicates that since 2016, the momentum of expansion, in firm numbers, revenue, investment capital and employment, has slowed compared with 2011–2015, and on several indicators has lagged the foreign-invested sector. 

A reluctance to scale up, even a trend towards 'miniaturisation', has become more visible. On average, private firms remain much smaller than state-owned and foreign-invested peers in capital, headcount and turnover. These are warning signs that a leading engine of growth is, at the margin, “losing steam”, said industry insiders.

The underlying causes are structural and mutually reinforcing. First, recognition of the private sector’s central role is still incomplete in parts of the policy and administrative system.

Second, institutions and policies are not yet fully fair, predictable or inclusive across ownership types, which can distort access to land, credit, inputs and public services.

Third, linkage models within the private sector are underdeveloped: large, medium and small enterprises do not connect deeply enough in domestic value chains, and channels to integrate overseas Vietnamese businesses with domestic firms remain thin.

Fourth, internal capacity is uneven: adoption of science and technology, management capability, and absorptive capacity for new finance and skills are weaker than needed. Finally, the quality and depth of the entrepreneurial cohort, while improved, still limit the ability to professionalise, govern and scale firms.

Addressing these bottlenecks requires a dual track: a clear strategic mandate for the private sector, and practical reforms that lower frictions on the ground. On strategy, Resolution 68-NQ/TW sets out measurable goals for 2030 with a vision to 2045.

By 2030 Việt Nam aims to have 2 million active enterprises, about 20 per 1,000 people, contributing roughly 55–58 per cent of GDP and 35–40 per cent of state budget revenue, generating jobs for 84–85 per cent of the labour force, lifting labour productivity by an average of 8.5–9.5 per cent a year, and placing at least 20 large private firms into global value chains.

By 2045, the target is at least 3 million enterprises, about 60 per cent of GDP from the private sector, and a cohort of firms competitive at regional and global levels. These targets anchor the policy conversation and give businesses a horizon for planning. 

On execution, the priorities are concrete. Institutions should be made more coherent, transparent and stable, particularly in areas where firms face persistent obstacles: investment procedures, land access and conversion, credit allocation, and public-private partnerships.

Administrative reform must be substantive, not just procedural, so that compliance time and cost fall in practice. Level-playing-field competition policy is essential to ensure equal access to inputs and public services and to reduce discretionary barriers throughout a firm’s life cycle, from market entry and licensing to inspection and dispute resolution.

Strengthening enterprise capability is the complementary pillar. Firms will need to invest in technology adoption, data and quality management, and workforce upskilling to raise labour productivity. Deepening domestic supply-chain linkages, between large anchors and SMEs, between manufacturing and supporting industries, and between domestic and foreign-invested firms, can lift local value added and diffuse know-how.

Financial intermediation should evolve to better serve growth companies, with instruments that fit scaling needs and corporate governance improvements that expand access to capital.

A comprehensive view also requires bringing the informal economy into focus. Alongside the formal private sector sits a large informal segment that contributes an estimated 20–25 per cent of GDP but is under-recognised in national policy design. In the digital-economy era, smarter formalisation pathways - simplified registration, tiered compliance, digital invoicing, access to basic finance and social protection - can convert informal dynamism into formal productivity.

Managed well, this transition supports labour mobility, broadens the tax base over time and improves the quality and traceability of output without stifling entrepreneurship.

The growth arithmetic underscores the urgency. To support an economy-wide expansion of 8 per cent, the private sector would need to grow at roughly 10.3 per cent; beyond 2025, achieving sustained double-digit national growth implies private-sector growth in the 11.5–12 per cent range or higher. Meeting that bar is feasible only if long-standing frictions are removed and if scale, productivity and formality all rise together, according to economists. 

The path forward is to support the private sector’s position as a primary engine of development; deliver a genuinely level competitive landscape; knit firms into stronger domestic and international value chains; make administrative reform real in the daily life of businesses; and design inclusive formalisation to harness the full breadth of private economic activity. With these steps, Việt Nam can convert today’s broad base into tomorrow’s deep strength, sustaining faster, more resilient and more inclusive growth. 

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