‘Investing millions to reap billions’ in the private sector

According to Professor Tran Hoang Ngan, future policies should recognize the diverse contributions of businesses. (Photo: baochinhphu.vn)

Policies must facilitate, not restrict growth

Speaking at the seminar "Solutions to Promote Private Economic Development" on March 20, Associate Professor Tran Hoang Ngan, Ph.D., a representative of the Ho Chi Minh City National Assembly delegation, highlighted that the private sector currently employs around 28% of the workforce and contributes approximately 60% of total social investment capital.

In Ho Chi Minh City, achieving a 10% growth rate would bring the city's GDP to about VND 2 quadrillion, requiring approximately VND 660 trillion in social investment capital. Of this, the private sector must contribute between VND 420-450 trillion.

"Vietnamese entrepreneurs are highly ambitious and passionate. Therefore, future policies supporting the private sector should recognize the diverse contributions of businesses—not only in terms of state budget revenue but also in export turnover and job creation," Ngan emphasized.

Meanwhile, Professor Vu Minh Khuong from the Lee Kuan Yew School of Public Policy, National University of Singapore, believes that while existing regulations allow private enterprises to operate, they do not necessarily foster growth, preventing economic breakthroughs.

To drive private sector development, he proposed a long-term strategic vision extending from now until 2030-2045 to ensure sustainable progress. Current regulatory management is overly focused on compliance rather than fostering growth, with many regulations failing to provide sufficient incentives for future expansion.

"Vietnam is prioritizing growth over evolution. Evolution is what transforms economic structures, integrates new technologies, and fosters innovation. Mere growth, on the other hand, is just a multiplication of the old model, without a qualitative leap forward," Khuong stated.

He suggested that Ho Chi Minh City should map out industrial transformations, focus on high-potential sectors, enhance productivity, and drive technological innovation and international integration. Additionally, the Professor recommended forming a task force to collaborate with central agencies and study Singapore’s management model.

"If executed well, 400,000 household businesses in Ho Chi Minh City could transition into registered enterprises, unlocking benefits and development opportunities. By adopting Singapore’s model, the city could invest just a few million USD in supporting private enterprises and generate billions in return", Khuong added.

What do businesses need?

Ly Kim Chi, President of the Ho Chi Minh City Food and Foodstuff Association, affirmed that the private sector has responded enthusiastically to the government’s commitment to its development. However, she stressed that effective policy implementation is crucial.

"Policies play a vital role in promoting private economic growth. But for them to be truly effective, businesses must feel tangible support from authorities, rather than just seeing policies written on paper," Chi stated.

Despite the Prime Minister’s directive to cut administrative procedures by 30%, some draft regulations from various ministries still impose additional costs and paperwork on businesses.

"Just last week, six industry associations, representing tens of thousands of enterprises, petitioned the Prime Minister to remove a burdensome administrative procedure. If government agencies continue the mindset of ‘if we can’t regulate it, we ban it,’ economic development will remain stifled," Chi warned.

She stressed the need for policies that directly impact businesses in production, operations, and daily economic activities.

In Ho Chi Minh City alone, approximately 400,000 household businesses operate, with over 20,000 of them thriving for decades. If provided with the right support and mechanisms, these businesses could transition into formal enterprises, significantly strengthening the city's economic landscape.

In other provinces where household businesses are not as robust, local governments should focus on forming cooperatives and partnerships to reduce fragmented, small-scale production and enhance participation in supply chains.

"The government should entrust major infrastructure projects such as urban railways and digital infrastructure to the private sector. When given trust and opportunities, private enterprises can grow and contribute more to the economy," Chi suggested.

Similarly, Le Tri Thong, CEO of Phu Nhuan Jewelry (PNJ), emphasized the need for the state to create an open path for businesses, improve investment flows, and accelerate capital mobilization. "We need to transition from regular highways to expressways, allowing private enterprises to break through and contribute more significantly to the economy."

He advocated for the development of national enterprises capable of leading and supporting smaller businesses in the modern era.

"To enable the private sector to thrive, we need advanced training programs that help businesses scale up. Even Vietnam’s largest enterprises today are only at the global mid-tier level. Breaking out of the ‘middle-income trap’ requires an economic system upgrade beyond past reforms and liberalization," Thong said.

The PNJ CEO proposed establishing joint investment funds between the public and private sectors, emphasizing that public-private partnerships should follow market mechanisms, with investment decisions driven by market principles.

He also underscored the need for mechanisms that enable enterprises to collaborate and share resources, fostering a sustainable private-sector ecosystem.

Meanwhile, Phan Dinh Tue, Chairman of Bamboo Airways, stressed that private businesses should not merely seek policies but demand them.

"Private enterprises are stakeholders, just like state-owned businesses. When entrepreneurs invest capital to build companies, they contribute to national development. In return, they expect fair treatment," Tue argued.

"The relationship between the state and private enterprises should mirror that of businesses and customers. To sell products, businesses must understand customer needs and preferences. Similarly, the government must clearly define what businesses need, expect, and will contribute to the economy," he concluded.