The government should pressingly map out a national strategy on developing private conglomerates as the businesses are expected to be the key driver to boost the country’s economic restructuring the most effectively and rapidly, experts suggested.
Auto plant of Vingroup, Vietnam’s largest private conglomerate
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After nearly ten years, the model hasn’t been realized, but the country has several billionaires, who are owners of private conglomerates with international recognition.
According to Forbes’s rankings released in early December, Vietnam had three billionaires, including Pham Nhat Vuong, chairman of multi-sector conglomerate Vingroup, with a net worth of US$6.7 billion (ranking 220th); Nguyen Thi Phuong Thao, CEO of low-cost carrier Vietjet with a net worth of US$2.6 billion (ranking 879th); and Tran Ba Duong, founder of Truong Hai Auto, with a net worth of US$1.7 billion (ranking 1,332nd).
Reports of Top 500 largest Vietnamese enterprises (VNR500) in 2018 released recently by Vietnam Report also showed that Vietnam’s private sector continued to show strong growth with the compounded annual growth rate (CAGR) rising significantly, reaching 21.8 percent in the 2014-17 period.
Recent statistics from the General Statistics Office also recognized a significant contribution by the private sector. The figures calculated at the end of 2016 showed that private enterprises generated VND9,760 trillion (US$420.3 billion) in revenue, accounting for 56 percent of the economy’s total revenue, while state-owned enterprises generated only VND2,880 trillion (US$124 billion), accounting for 16 percent of the total.
More incentives needed
With the rising contribution, experts said it is urgent to set up a national strategy for the development of private conglomerates, in which more resources and supports should be given to the businesses to help them become a driving force, leading the development of the entire private sector.
Economist Tran Dinh Thien said that this is the time when Vietnam needs to utilize and develop private businesses, considering them the souls of the economy.
The government has also determined to make private enterprise the main engine behind the country's economy. According to Prime Minister Nguyen Xuan Phuc, Vietnam is planning on generating half of its economic output from the private sector in the next two years.
After gaining a ten-year high GDP growth rate of 7.08 percent last year, Vietnam targets to maintain this momentum for many years to come and the private sector is an important impetus for the nation’s economy, PM Phuc said.
Vu Tien Loc, chairman of the Vietnam Chamber of Commerce and Industry, also believed that in the future the private sector will become the backbone of the economy. However, he said, though the private sector has so far received more attention from the government than ever before, it is still not enough.
Private enterprises make up nearly half of gross domestic product, but nearly 60 percent of them are unable to make a profit, Loc said, adding private enterprises still need more supports from the government to help them to cash in on opportunities during the country’s international integration process.
According to experts, despite many reforms from the government over the past years, administrative procedures are still a big obstacle to business performance.
To ease the business performance, especially private ones, right at the first day of 2019, the government issued a resolution setting targets for improving business environment and national competitiveness for 2019 through to 2021, of which it requested a stronger commitment and responsibility of assigned ministries in supervising the implementation of solutions to help the country among ASEAN 4 with the best business environment by 2021.
