The government has tasked the Ministry of Planning and Investment with building specific plans to achieve this target as part of its strategy to develop the private sector.

With the country having 810,000 businesses at the end of lat year, an annual growth of 12-14 percent would be needed over the next five years, exceeding the 10.5 percent average achieved in the 2016-2019 period.

Also included in the private sector development plan is the target of having 15-20 private companies with a market cap of over $1 billion each. There were 13 such firms at the end of last year.

In 2016, Vietnam had set a target of having one million businesses by 2020, but failed to achieve it. The Ministry of Planning and Investment said one of the reasons for the failure was the surge in number of closed businesses, especially in the last year, because of Covid-19 impacts.

As many as 101,700 businesses suspended operations last year, up 13.9 percent year-on-year, according to the General Statistics Office.

Experts say that a lot of effort would be needed to achieve the new target.

To Hoai Nam, deputy chairman of the Vietnam Association of Small and Medium Enterprises (VINASME), said that in order to have 500,000-700,000 new businesses in the next five years, the government needs to improve the business environment and further simplify administrative procedures.

"We need to lower the burden of unofficial fees and encourage individuals to open businesses," he told local media.

Vu Tien Loc, chairman of the Vietnam Chamber of Commerce and Industry (VCCI), said that many countries consider individuals who engage in any business activity to earn profit as legitimate businesses. These countries have a simple registration process for any individual to register as a business, he said.

Vietnam already has around 5.4 million unregistered household businesses that match the above definition, he said, adding that this far exceeds the 810,000 figure of the government.

The official 810,000 businesses only contribute about 10 percent of GDP, while unregistered household businesses contribute 30 percent, he noted.

The problem, Loc said, lies in the quality, not quantity of business. The lack of transparency, low competitiveness and failing to meet basic business standards are challenges that unregistered household businesses face, he added.

Echoing him, Nam added surveys by VINASME show that unregistered household businesses are reluctant to register because they fear the burdens of fees, taxes, social insurance and the inspection and examination of authorities.

"If we can remove these burdens, many household businesses will want to register," he said.