General Secretary To Lam calls for raising private sector's GDP share to 70% by 2030

It has been nearly 40 years since the introduction of the Doi moi (Renewal) policy, Viet Nam has emerged strongly from a centrally-planned economy with low efficiency and per capita income of just US$96 in 1989, and is projected to become a upper middle-income country with per capita income of over US$5,000 by the end of this year. This miracle came as a result of the Party's sound leadership and the entire nation's hard work, creativity, determination and ceaseless efforts.

It is proud to note that Viet Nam's economic growth rate has always been twice as high as the average of developing countries, despite global economic fluctuations. From a poor economy dependent on international aid, Viet Nam has made strong breakthroughs to become the 24^th largest economy based on purchasing power parity. Viet Nam has not only gained achievements in economic field but also made immense social progress, contributing to build an increasingly prosperous and happy life for the people.

Private economic sector has made important contributions to the above success. If the private sector only played a minor role in the economy in the early days of renewal process, it has emerged strongly as one of the top pillars of the economy over the last two decades and increasingly become the most important driving force for national growth. With nearly one million enterprises and around five million household businesses, the private sector currently accounts for 51 percent of the nation's GDP and more than 30 percent of State budget revenue, creating more than 40 million jobs, or 82 percent of the workforce, and making up approximately 60 percent of the total social investment capital.

The private sector has not only helped expand production, trade and service but also contributed significantly to improving labor productivity, promoting innovation and sharpening national competitiveness. Many of Vietnamese private enterprises have risen up to dominate domestic market and affirm their brands in international market. This proves that if there is a favorable environment, Vietnamese enterprises are capable of reaching out and competing fairly in the global playground.

However, the private economic sector is still facing numerous hurdles that hinder development and prevent it from achieving breakthroughs in terms of scale and competitiveness. Many household businesses lack growth momentum, or even do not want to grow. The majority of private enterprises are micro and small ones with limited financial and governance capacity. Many of them are slow in digital transformation and lack partnership with foreign-invested enterprises. Few of them invest in research and development and pay attention to innovating technology or creating new products, thus it is difficult to improve added values, enhance competitiveness, and reach international levels.

A part from internal shortcomings, private enterprises also faces hurdles in acquiring resources including credit loans, land, natural resources and high-quality human workforce, especially in high-tech, technical and financial areas. In addition, there are many shortcomings and overlaps in the legal system, obstacles in the business environment, complex administrative procedures, leading to waste of time and costs and potential risks. In many cases, the right to freedom of business and property rights are still violated due to the weaknesses or abuse of power of some civil servants.

On the other hand, preferential and support policies adopted by the Government have not proved to be really effective and fair among economic sectors and they are not easy for them to access. It is easier for State-owned enterprises to access land, capital, credit loans; foreign-invested enterprises are better supported in terms of tax, customs procedures, and even land access. Harassments and informal costs remain, creating an invisible burden on private enterprises, reducing production and business efficiency, and causing hesitation in expanding investment.

Clearly, private enterprises' limitations partly stem from the shortcomings of the institutional system, economic policies and business environment. These bottlenecks not only put brake on the growth pace of the private sector whose GDP share remains almost unchanged in the past more than a decade, but also hinder the economy from increasing added values, escaping the middle-income trap, and slowing down the process of turning Viet Nam into a developed country with high income by 2045.

Looking forward to the future, the private economic sector must be the pioneering force in the new era, strive to become the main force, and take the lead in applying technology and innovation in order to achieve the goal of contributing around 70 percent to the nation's GDP by 2030.

To realize the above goal, first of all, it is necessary to speed up the perfection of socialist-oriented market economy institutions. This is the prerequisite for the private economic sector to achieve rapid and sustainable development. Accordingly, the State should focus on creating a favorable business environment and ensuring the social equality and consider the development of the private economic sector as a central task.

Secondly, the State needs to build a legal corridor to protect property rights, reduce legal risks, create mechanisms to support and protect private investors, especially startups and innovation enterprises.

Thirdly, it is necessary to prioritize the building of regional and global-level private economic groups and encourage private enterprises to invest in strategic areas.

Fourthly, it is necessary to promote the wave of entrepreneurship, innovation, digital transformation and application of new technologies; adopt and implement preferential financial and tax policies to support private enterprises to invest in research and development; and formulate a strong entrepreneurial ecosystem.

Fifthly, it is necessary to drastically reform institutions in favor of businesses and citizens, and strive for Viet Nam's business environment to be in the top 3 ASEAN within the next three years.

Sixthly, it is necessary to fully unlock resources for the development of the private economic sector, creating favorable conditions for private enterprises to get access to important resources such as capital, land, workforce and technology. Accordingly, more effective policies should be put in place to support private enterprises' access to resources in a favorable, fair, transparent and effective manner.