HÀ NỘI — The private economy not only helps expand production, trade and services but also plays a crucial role in improving labour productivity, promoting innovation and enhancing national competitiveness, according to Party General Secretary Tô Lâm.

In a new article on the strategic role of Việt Nam’s private sector in elevating the national economy, the Party chief said that the strong growth of many Vietnamese private enterprises has exceeded the domestic market to establish their brands on a global scale. 

“This proves that with a favourable development environment, Vietnamese businesses can truly thrive and compete fairly with the world,” Lâm wrote. 

After nearly four decades of Đổi Mới (Renewal), Việt Nam has transformed from a centrally planned, inefficient economy with an average income of only US$96 per capita in 1989, to the 24th largest economy in the world in terms of purchasing power parity (PPP). By the end of 2025, the country is expected to enter the group of countries with upper-middle income, equivalent to over $5,000 per person per year. 

Việt Nam’s economic growth rate has always been twice the average of developing countries, despite global economic fluctuations.

Party General Secretary Lâm underscored that this achievement is not only the result of the development policies under the Party’s leadership with bold and decisive reforms in institutions, policies and integration, but also the result of the hard work, creativity, determination and tireless efforts of the entire nation. 

The private economy plays a significant role in these achievements, said the Party chief, adding that the private sector has become one of the key pillars of the national economy and has proven to be the most important driving force for the country’s economic growth.

With nearly one million enterprises and around five million local businesses, the private economy now contributes about 51 per cent of the national gross domestic product (GDP) and more than 30 per cent of the State budget.

The private sector has also created over 40 million jobs, accounting for more than 82 per cent of the total labour force in the economy, and contributes nearly 60 per cent of total social investment.

However, the private economy still faces multiple barriers that hinder its development, preventing it from achieving breakthroughs in terms of scale and competitiveness, Lâm said. He explained that the majority of Vietnamese companies are small and micro-sized, with limited financial capacity, management skills and innovation, as well as limited connections with each other and with foreign direct investment (FDI). 

In addition to internal challenges, private companies also face more obstacles in accessing resources, especially credit capital, land, skilled labour and tax and customs support, compared to state-owned enterprises. 

Furthermore, numerous inconsistencies and overlaps remain in the legal system, in addition to obstacles in the business environment and complex, time-consuming and costly administrative procedures.

In many cases, the right to freedom of business and property rights is violated by incompetent or corrupt officials on duty, wrote the Party chief, adding that unofficial costs and complications are creating an invisible burden on private enterprises, reducing their business efficiency and increasing reluctance when it comes to expanding investments.

Heading towards a vision for the country's growth, the private economy also needs to be conscious of its mission, according to Party General Secretary Lâm.

He wrote: “The private economy must be the pioneering force in the new era, successfully carrying out the mission of industrialising and modernising the economy, enhancing national competitiveness and embracing social responsibilities.

“A prosperous economy cannot rely solely on the public sector or foreign investment, but must be based on the internal strength of a robust private sector, which plays a leading role in innovation and national development.”

The goal is that by 2030, the private economy will account for about 70 per cent of national GDP. 

The Party leader also stressed that the political system must re-position its viewpoint and awareness of the role of the private economy as the leading growth driver for the country. 

This requires a fundamental change in policy-making, overcoming limitations and leveraging the advantages of the market mechanism to support the private sector in improving productivity and fostering innovation, he wrote. 

The State must adopt management methods that suit the market mechanism, ensuring the freedom of business, property rights and fair competition for the private economy by eliminating barriers, making policies transparent and ensuring balanced interests in policy-making and resource allocation, he added.

Positioning the development of the private economy as Việt Nam’s long-term strategy, Party General Secretary Lâm listed seven key measures for effective implementation. 

The first measure is to continue accelerating the completion of a fully integrated market economy in alignment with modern, dynamic and integrated socialism. This is a prerequisite for the private economy to develop rapidly and sustainably, he noted.

This measure requires the State to focus on macroeconomic stability, improving institutions, ensuring the economy operates according to market principles, minimising interference and removing administrative barriers. In particular, there needs to be strict control over monopolies and policy manipulation to ensure fair competition and equal opportunities for private businesses to develop. 

The core of completing the market economy mechanism is clearly defining the role of the state in the economy, the Party chief wrote, adding that the state should focus on macro-management and a favourable business environment, ensuring fairness and the effectiveness of the market mechanism.

The second measure is effectively protecting property rights, ownership rights and freedom of business, as well as ensuring an enforceable contract system for private enterprises.

The State also needs to develop and implement a strict legal framework for protecting property rights, including intellectual property and intangible assets, minimising legal risks and reducing sudden policy changes that could pose harm to businesses, the Party chief wrote. 

In addition to ensuring fair inspection, increasing law compliance and business ethics among companies is also important to promote the healthy development of the private economy.

The third measure is giving priority to large private economic groups at the regional and global levels, actively supporting small and medium-sized enterprises and fostering household and cooperative economies, in addition to the consolidation of state-owned enterprises.

Private enterprises should be encouraged to participate in the country’s strategic sectors such as infrastructure, high-tech industries and energy security, Party chief Lâm wrote. 

He added that the state should have a policy mechanism for the private sector to participate in major national projects, such as high-speed railways and urban railways, energy infrastructure and digital infrastructure, as well as national defence and security industries.

The fourth measure is to promote entrepreneurship, innovation, digital transformation and the application of new technologies, which are considered key factors to create breakthroughs in the private economy and elevate it to the international level. 

The State should adopt regulatory sandboxes for emerging technology sectors, in addition to financial support policies and tax incentives for businesses investing in research and development.

The fifth measure is institutional reform to create a public administration that effectively serves businesses and the country, with digital technologies leveraged to accelerate processing time and reduce compliance costs. Effective policy dialogue mechanisms should also be employed to allow businesses to participate in the policymaking process.

The goal is for Việt Nam’s business environment to rank in the top three in ASEAN in the next three years. 

The sixth measure is to maximise the utilisation of development resources for the private economy. This will facilitate the private sector’s access to important resources such as capital, land, workers and technology.

It is also important to promote the integration of Việt Nam’s private sector into the global economy, which enhances the country’s economic position globally and protects businesses from economic risks.

The seventh measure is to develop the private economy on a sustainable foundation with business ethics and social responsibility.

Party leader Lâm noted that private enterprises should actively embrace social responsibility, not just in terms of financial contributions or charity but also through responsible business policies that improve the living standards of workers, support community development and practice transparent and efficient governance.

This will contribute to enhancing social welfare, reducing wealth gaps and building a civilised, humane and prosperous society where the interests of businesses are aligned with the overall prosperity of the country.

With the right policies and a favourable business environment, the private economy will not only help Việt Nam achieve its high growth targets, but also turn into a high-income economy in the next two decades, the Party chief stated.

“This is the moment to act, to create a prosperous, dynamic Việt Nam that will increasingly elevate its position on the global stage,” he wrote. — VNS