Policies needed to boost private investment
Private investment is improving but remains incommensurate with the potential |
Slow improvement in private sector investment
Private investment accounts for 55-60 percent of all investment capital in the country, and the recovery and development of this sector will drive economic growth. However, in the first quarter (Q1) of this year, according to the General Statistics Office of Vietnam (GSO), the country’s total investment capital reached an estimated VND613.9 trillion, up 5.2 percent year-on-year, while the growth in Q1 of 2023 was 3.7 percent.
Of this, state investment was estimated at VND162.7 trillion, accounting for 26.5 percent of the total and increasing by 4.9 percent year-on-year; the non-state sector reached VND340.7 trillion, accounting for 55.5 percent and increasing by 4.2 percent; and the foreign direct investment (FDI) sector reached VND110.5 trillion, accounting for 18 percent and increasing by 8.9 percent. Thus, the private sector ranked the lowest among the three economic sectors in terms of investment capital growth in Q1 2024.
In Q2, investment capital in the country totaled VND834.3 trillion, up 7.5 percent year-on-year, including VND228.7 trillion worth of state investment, up 4.4 percent year-on-year; VND456.4 trillion worth of non-state capital, up 7.9 percent; and VND149.2 trillion worth of FDI, up 11.4 percent.
These took investment capital in the country to more than VND1.451 quadrillion in the first half of 2024, up 6.8 percent year-on-year, including VND392.1 trillion worth of state investment, accounting for 27 percent of the total and increasing by 4.8 percent year-on-year; VND799.6 trillion worth of non-state capital, accounting for 55.1 percent and increasing by 6.7 percent; and VND259.6 trillion worth of FDI, accounting for 17.9 percent and increasing by 10.3 percent.
In 2023, according to the GSO, investment capital in the country totaled an estimated VND3,423.5 trillion, up 6.2 percent year-on-year, with state investment increasing by 14.6 percent and FDI growing by 5.4 percent. The private sector’s investment increased by only 2.7 percent, the lowest growth rate in recent years. According to economists, this was a key reason why Vietnam’s GDP growth in 2023 did not meet expectations.
The Government should reactivate and unblock private investment, making it become an important long-term growth driver |
Making private investment a growth driver
The Government has recently adjusted the growth target to 6.5-7 percent for 2024, instead of the 6-6.5 percent target set at the beginning of the year. This remains a highly challenging target, given the unpredictable global economic developments impacting supply chains and affecting Vietnam’s growth goals.
Economist, Dr. Le Duy Binh, Director of Economica Vietnam, stated that to achieve a 7 percent growth rate in 2024, Vietnam needs extraordinary efforts to increase domestic private investment by 10-15 percent and maintain this growth rate over a long period.
Binh suggested that the Government, ministries and local authorities generate special efforts to further improve the business environment, enabling Vietnam’s economy to make breakthrough improvements in global business environment rankings, innovation capacity, economic freedom, and other rankings.
Dr. Le Duy Binh also noted that investment activities by both large and small private enterprises are showing signs of stagnation. Large projects face legal issues, while small businesses are affected by an unfavorable business environment.
A safe and favorable business environment with low costs remains crucial and fundamental. Both small investment projects and those worth hundreds of billions of VND depend on the business environment. Thus, improving the investment environment is a fundamental and decisive factor for Vietnam to achieve high growth targets in 2024 and the following years.
Lawyer Bui Van Thanh from the Mat Troi Moi (New Sun) law firm said a transparent and equitable business environment, including equal access to resources, policies, land, and capital, is the most important to boost private sector investment.
Dr. Nguyen Bich Lam, former General Director of the GSO, argued that alongside boosting public investment and attracting FDI, the Government and local authorities need to focus on restoring and promoting non-state investment through specific policies and solutions, given the significant limitations of this sector in terms of capital, management skills, integration capacity, management experience, and skilled human resources.
The Government needs to reactivate and unblock private investment resources, making them become an important long-term growth driver, Dr. Lam said.
See also
Bac Giang prioritises high-tech FDI projects, services industry
17:04 | 12/11/2024 FDI
Vietnam draws new wave of high-value investments: Savills
19:30 | 10/11/2024 Investment
Hanoi attracts 1.6 billion USD in FDI in ten months
15:18 | 07/11/2024 Investment
Foxconn to invest US$80 million in Bắc Giang for chip manufacturing expansion
16:16 | 04/11/2024 Investment
Da Nang to invest additional 16 million USD into software park
17:19 | 03/11/2024 Investment
PM receives heads of leading investment firm, authority of Qatar
09:07 | 01/11/2024 Investment
See more news
Forum suggests suitable orientations for green development strategy in Lam Dong
15:44 | 31/10/2024 Investment
Hung Yen promotes trade, investment in Germany for first time
09:17 | 30/10/2024 Investment
Dong Nai Province attracts green investment projects
16:42 | 28/10/2024 Investment
Long An Province working hard to improve investment environment
18:43 | 27/10/2024 Investment
Accelerating the disbursement of public investment capital
11:10 | 27/10/2024 Investment
Investors upbeat about Vietnam’s industrial property market
10:31 | 27/10/2024 Investment
Real estate segments benefit from surging FDI inflow in production
13:31 | 26/10/2024 Investment
Dong Nai rolls out red carpet for investment in "100-year development strategy"
16:40 | 24/10/2024 Investment
Binh Duong needs 300 million USD to upgrade urban infrastructure
09:15 | 22/10/2024 Investment
Vinh Phuc Province, destination for global corporations
11:05 | 21/10/2024 Investment
Việt Nam solidifies its global position through WTO integration
14:35 | 14/11/2024 Economy
Vietnamese, Peruvian Presidents seek measures to deepen relations
10:36 | 14/11/2024 Cooperation
Vietnam, Peru issue joint declaration
10:31 | 14/11/2024 Cooperation
Vietnamese, Peruvian Presidents hold talks in Lima
10:25 | 14/11/2024 News and Events
Vietnam, India enhance comprehensive strategic partnership
09:08 | 14/11/2024 Cooperation
Multimedia
Vietnam actively contributes to APEC
08:59 | 14/11/2024 Infographic
Vietnam’s national brand value reaches 507 billion USD in 2024
17:06 | 11/11/2024 Infographic
Vietnam-Chile Comprehensive Partnership
09:51 | 10/11/2024 Infographic
Vietnam manufacturing returns to expansion
13:31 | 09/11/2024 Infographic
Vietnam's key contributions to ACMECS
11:02 | 07/11/2024 Infographic
PM urged parliament to pass legislation to ensure sufficient electricity, restart nuclear projects
09:47 | 13/11/2024 Policy
New policy drafted to help non-bank credit institutions develop further
17:13 | 12/11/2024 Policy
Việt Nam to stiffen regulations on violating social network platforms
16:23 | 12/11/2024 Policy
Party leader of Việt Nam holds phone talks with President-elect of US
08:55 | 12/11/2024 Policy
Construction material industry's revenue to reach 47 billion USD
11:40 | 13/11/2024 Industry
Footwear industry eyes UKVFTA to bolster exports
10:00 | 11/11/2024 Industry
North-South express railway – driving force to spawn new support industries
17:09 | 08/11/2024 Support industries
Automotive support industry strives to become spare part supplier
09:34 | 08/11/2024 Support industries
Bac Giang prioritises high-tech FDI projects, services industry
17:04 | 12/11/2024 FDI
Vietnam draws new wave of high-value investments: Savills
19:30 | 10/11/2024 Investment
Hanoi attracts 1.6 billion USD in FDI in ten months
15:18 | 07/11/2024 Investment
Foxconn to invest US$80 million in Bắc Giang for chip manufacturing expansion
16:16 | 04/11/2024 Investment
UK stands ready to help Vietnam build international financial hub
17:13 | 13/11/2024 Finance-Banking
S&P affirms Techcombank’s BB- rating
10:10 | 11/11/2024 Finance-Banking
Tax sector fulfils nearly 95% of state budget collection target
15:38 | 09/11/2024 Finance-Banking
Việt Nam's stock market moves closer to emerging market status amid key policy changes
18:05 | 06/11/2024 Stock Market
Vietnam looks towards Net Zero goal in agriculture
17:25 | 12/11/2024 Environment
Holistic approach needed to improve glass recycling
11:31 | 12/11/2024 Environment
Storm Toraji intensifies and moves northwest in East Sea
08:58 | 12/11/2024 Environment
Typhoon Yinxing weakens as it moves southwest
10:04 | 11/11/2024 Environment
4G mobile network coverage reaches 99% of Vietnamese population: Minister
16:51 | 13/11/2024 Science - Technology
Quang Ninh to host 3rd Vietnam Int'l Digital Week next week
17:11 | 12/11/2024 Science - Technology
Việt Nam's new fast track policies to boost high-tech investment environment set for approval
09:33 | 09/11/2024 Science - Technology
Practical innovations
09:15 | 06/11/2024 Science - Technology
Vietnamese universities strive to attract international students
11:43 | 13/11/2024 Society
Social network users must authenticate accounts from December 25
17:10 | 12/11/2024 Society
Long Thanh Airport’s runways expected to be completed three months ahead of schedule
15:57 | 12/11/2024 Society
Specific policies proposed for North-South high-speed railway project
11:38 | 12/11/2024 Society
Hà Nội to host large-scale international fair for key industrial products in 2025
16:54 | 12/11/2024 Vietnamese Brands
Agriculture, craft village festival to be held in Hà Nội
16:49 | 12/11/2024 Vietnamese Brands
Vietnamese Goods Week brings vibrant showcase to Thai province
10:16 | 08/11/2024 Vietnamese Brands
Sóc Trăng’s ST25 fragrant rice awarded 5-star OCOP rating
11:05 | 07/11/2024 Vietnamese Brands
Kiên Giang to host Khmer cultural festival
16:45 | 13/11/2024 Culture
Two Vietnamese artists nominated for Grammy Awards
17:02 | 12/11/2024 Culture
Great Solidarity of Ethnic Groups Week to take place next week
09:55 | 08/11/2024 Culture
Famous musical star Philip Quast to perform and share experiences in Hà Nội
09:40 | 06/11/2024 Culture
2025 Nha Trang – Khanh Hoa Sea Festival to spotlight cultural heritage space
17:04 | 13/11/2024 Tourism
Việt Nam to welcome more international cruise ship tourists
16:36 | 13/11/2024 Tourism
Bình Thuận tourism aims for green, sustainable development
17:06 | 12/11/2024 Tourism
Tuyen Quang Province promotes tourism in ethnic minority, mountainous areas
17:15 | 11/11/2024 Tourism