Currently, there are about 940,000 enterprises, and five million individual and household businesses, contributing around half of GDP. This creates about 40 million jobs, contributing 30 per cent of budget revenue and 60 per cent of social investment capital.

Dau Anh Tuan, deputy secretary general, Vietnam Chamber of Commerce and Industry

The private economy includes two sectors: private enterprises officially registered under the Law on Enterprises with the above figures; and the household business sector, which also includes registered and unregistered households. Some individual businesses do business based on the internet and e-commerce platforms.

Some of them can earn as much as $1 million in a livestream session, equivalent to or higher than the sales of a medium-sized company. However, these individual businesses are not yet within the scope of the Law on Enterprises.

The private sector struggles with weaknesses such as poor governance, much less professional than international standards; a lack of supply chain linkages; and weak connections with foreign-invested enterprises. The rate of Vietnamese enterprises becoming vendors for foreign-invested enterprises is too small.

The private sector participating in the supporting industry is also lacking. They are all struggling with many difficulties in capital, land, personnel, disadvantages in the digital economy, and inappropriate regulations, as well as need more support for free trade agreement integration.

Policies to support the private sector in countries in the region are very different. South Korea raises some chaebols, supports credit, export, research and development (R&D), and exploits the domestic market. In Taiwan, small- and medium-sized enterprises (SMEs) thrive thanks to financial policies for R&D, startups, and industrial clusters. The common point is the proactive role of the government in choosing key industries and providing long-term support.

The Vietnam Chamber of Commerce and Industry has proposed six major solutions to help the private sector develop rapidly. The most important are institutional reform, including an overhaul in administrative procedure reform towards transparency; applying post-inspection instead of pre-inspection; ending legal overlap; and deregulation. The legal system should be friendly to business households and small enterprises, while policies should support businesses, along with a sandbox for new business models. Institutions should be an advantage of the competitiveness of Vietnam.

However, currently, the private economy is facing numerous difficulties with administrative procedures. For example, Hoa Phat Group needs raw materials for production, while Vietnam has a very large-scale iron ore mine, but the mining licence is being revoked. However, the regulations related to bidding are not enough for implementation.

Some businesses in road infrastructure construction said that they could build 100km of highway within six months, but due to issues and delays in administrative procedures, it often takes up to three years. Some corporations plan to build R&D centres but it is estimated to take three years to complete land procedures.

To fix it all, Resolution 68 covers regulations on inspections, no more than once a year, conducted on an online platform, or even no inspection for businesses with a good business history. It abolishes lump-sum tax for business households, which is causing budget losses and creating inequality for the formal business sector; and stipulates tax exemption for the first three years for newly established businesses. This is excellent content for the development of the private economic sector.

More capital access solutions are needed for businesses, in addition to capital from bank loans. For example, it is required to encourage corporate bonds, pre-initial public offering enterprise support funds, national startup funds, and establish separate stock exchanges for SMEs.

The private sector struggles with more disadvantages in terms of capital than foreign-led and state-owned enterprises. Therefore, investing in supporting industries is not feasible. With the current capital cost, Vietnamese businesses cannot compete with South Korean, Japanese, and Chinese businesses.

That is also the reason why less ventures for innovative startups prefer Vietnam’s market, because there are too many strict regulations. Therefore, in startups and innovation, very few businesses can list on the stock exchange.

Domestic private enterprises need to have their policies. For example, policies for the group of foundational industrial products, supporting industries related to some industries like mechanical engineering, chemicals, and energy. In addition, Vietnam is facing US reciprocal tariffs, but this is also an opportunity for domestic enterprises to participate more deeply and substantially in the global production chain.

To connect to the global market, enterprises need to take advantage of free trade, expand export markets, and develop domestic distribution chains. The government should provide more policies for SMEs to participate in international fairs, position their brands, and accompany the development of national brands. Currently, Vietnamese brands are still weak and small.

To accelerate the application of technology and develop people, private enterprises need policies to support the application of AI, big data, and smart manufacturing; more tax incentives for R&D centres; and to strengthen the linkage of businesses, universities, and institutes.