In order to develop the private economy into an important motivation of the economy, many experts believe that it is necessary to create a truly equal competitive environment, the state resource allocation system needs to be reformed to concentrate resources for businesses and projects that have the highest socio-economic efficiency

Account for 42-43% of GDP

On March 12, in Hanoi, the Ministry of Planning and Investment held a workshop to collect comments from the business community, experts and managers to complete the project "Comprehensive reform of state management in individual economic development in Vietnam”.

The main objective of the project is to propose a comprehensive innovative state management system to promote the private economic sector to develop into an important motivation of a socialist-oriented market economy.

In fact, the role and position of the private sector is increasingly confirmed and clearly demonstrated through its contributions to socio-economic development. The private sector has continuously maintained a fairly good growth rate, accounting for 42-43% of GDP, attracting about 85% of the labor force of the economy, making an important contribution to mobilizing social resources for investment in production and business development, economic growth, economic restructuring, increasing budget revenue, improving people's lives and ensuring social security.

In particular, the private enterprises have contributed to the implementation of the goal of industrialization, modernization, changing the image of the country, creating a mark, enhancing the position and prestige of Vietnam in the national arena; as well as forming many brands with regional and international competitiveness.

Speaking at the seminar, the Minister of Planning and Investment said that it is necessary to make people and investors feel secure to invest capital because there are still many difficulties. Firms are very small, have limited access to capital and land and, importantly, the private sector is not yet ready. Therefore, it is necessary to make the environment and institutions increasingly friendly and secure for investors.

"State management needs to change towards the tectonic direction, creating conditions for enterprises to develop, not just in terms of strict management," Minister Nguyen Chi Dung said.

The ASEAN corporate governance scorecard report also showed that our country's
enterprises had the lowest governance scores among
the six countries. Illustration: Internet.

Affiliate culture is very weak

However, besides the achieved results, it can be easily seen that the quality of development of the private sector is still limited in many aspects, not really an important motivation of the economy.

Accordingly, the productivity growth rate of the private sector remains low. According to statistics, the average labor productivity of the individual enterprise sector is only about 34% of the labor productivity of the SOE sector and about 69% of the labor productivity of foreign-invested enterprises.

The scientific and technological capacity of enterprises is still limited, in some places, it is still backward; enterprises have not invested in the application and development of science and technology, especially core and pioneering technologies.

According to the Ministry of Planning and Investment, currently, only 10% of businesses have registered a patent within three consecutive years. Enterprise investment in technology innovation only accounts for about 0.3% of revenue, much lower than countries such as India (5%), South Korea (10%); while only about 10.2% of businesses have invested in some research and development (R&D) activities.

The ASEAN corporate governance scorecard report also showed that our country's businesses had the lowest governance scores among the six countries. Especially, economic expert Pham Chi Lan said that the linkage and cooperation between Vietnamese enterprises is still weak. Vietnamese enterprises have not focused on improving linkages and competitiveness to participate in the regional and global value chains.

Currently, only about 21% of small and medium enterprises participate in a part of the global value chain, 14% are successful in associating with foreign partners, while there were numerous FDI enterprises investing in Vietnam.

According to Mr. Phan Duc Hieu, Deputy Director of the Central Institute for Economic Management (CIEM), in recent years, the State is gradually narrowing the role and scope of operations as an investor, broadening investment opportunities for all economic sectors such as policies on socialization in education, vocational training, health, culture; SOE equitization and divestment; policy of socialization of public administrative services.

However, according to the Deputy Director of CIEM Institute, in order to overcome the above situation, it is necessary to correctly define the role of the state in the market economy, promote business participation in investment, and provision of executive services, public justice, reducing administrative interference incorporate internal governance.

Regarding resource allocation, it is necessary to focus on improving the quality and feasibility of preferential policies, supporting enterprises on market principles, competition, equality, promoting the formation of value chains and links.

"It is necessary to apply the principle that is most beneficial to the enterprise in case the provisions of the law are not clear and there are many different interpretations," Mr. Phan Duc Hieu proposed.