Role of private sector in economic development promoted

The private sector provides jobs for 50% of workers and contributes to the overall economic growth. A suitable business environment for private enterprises therefore enhances the potential and competitiveness of the economy.

According to the General Statistics Office, as of the end of 2015, the private sector provided jobs for 7.5 million workers, twice as many as that in foreign investment enterprises and 3 times for the number of workers of the state-owned enterprises. The private sector contributed 30% of state budget and 40% of the country’s GDP.

However, the scale of the private sector remains small. According to Vietnam Chamber of Commerce and Industry VCCI, of the private sector, 96% are small and super small sized, 2% are medium sized and only 2% are big firms. This explains why the private sector is currently incapable of joining the global manufacturing network.

"Small sized private companies like us can hardly win against big firms in the contract bidding for big projects. Many times we had to target another market segment." - Vuong Cong Van, Chairman, Board of Directors, Thien Bang Investment and Trading Joint Stock Company.

"There is still inequality in access to information, finance, land and other resources, which causes difficulties for private enterprises. Their competitiveness is therefore limited." - Pham Dinh Vu, Vietnam Chamber of Commerce and Industry.

With such difficulties of private enterprises, the Vietnam Private Economic Forum was held for the first time to create opportunities for private enterprises and policy makers to discuss creating a transparent business environment.

"The government need to implement institutional reform, transferring from the mode of management to the mode of assistance and consultancy. This helps to reduce costs, create an effective business environment to the development of private enterprises." - Pham Dinh Vu, Vietnam Chamber of Commerce and Industry.

"The government is able to better set clear rules how long does it take to start business, and rules on taxation. In Australia, we heavily focus on deregulation which means less rules, less regulations. It is easier for companies to set up simple taxation and it enables company to focus on what they bring to the economy rather than rules or regulation." - Layton Pike, Deputy Head of Mission, Australian Embassy.

According to the Vietnam Economics Institute, the country has more than 500,000 private enterprises. The government has set a target that this figure will have doubled by 2020. Deputy Prime Minister Vuong Dinh Hue said that encouraging the formation and development of start-up enterprises is one of the important goals to help achieve the target of 1 million businesses in the next 5 years.