Professor Vũ Minh Khương of the Lee Kuan Yew School of Public Policy in Singapore, talks about the challenges, opportunities and solutions needed for the private sector to become a driving force for the country’s development.The private sector is increasingly asserting itself as a crucial pillar of Việt Nam’s economy. Where it once lagged in scale and competitiveness. Industries such as steel, automotive manufacturing and high technology have all experienced remarkable growth, fueled by dynamic Vietnamese private firms.While the private sector has yet to eclipse state-owned enterprises or foreign direct investment as the leading force in the economy, this shift appears inevitable. Just ten or twenty years ago, private businesses were still finding their footing. Today, big private groups are making significant contributions to GDP growth, employment and the country’s overall competitiveness.The key challenge now is ensuring that this sector develops in a sustainable and strategic manner. This will require more than simply cutting red tape and reducing obstacles. It demands robust and well-aligned policies, particularly aimed at eliminating the bottlenecks still hampering private sector progress.Việt Nam’s private sector stands on the point of a significant growth trajectory, yet it continues to grapple with several deep-rooted challenges. In my view, three critical issues must be urgently addressed, including institutional bottlenecks, limited innovation capacity and shortcomings in workforce quality.Firstly, on the institutional front, the task is not simply to identify broad obstacles but to zero in on the specific bottlenecks within each industry. Currently, private enterprises are active across some 35 sectors and each faces its own unique regulatory and structural hurdles.Resolution No. 10-NQ/TW, widely known as Khoán 10, was issued by the Politburo in 1988 and marked a turning point in Việt Nam’s agricultural management reform, today’s private sector requires sector-specific reforms of equal magnitude. Businesses are calling for a fundamental shift in the legal and administrative landscape, with simplified procedures and stronger inter-sector linkages.For example, the maritime transport industry. Despite handling millions of tonnes of cargo, many Vietnamese companies are compelled to register vessels overseas where procedures are more efficient. At home, customs clearance at major ports such as Cái Mép remains fragmented and uncoordinated. Adopting a unified digital system akin to that of Singapore could unlock substantial production capacity.In logistics, outdated regulations allow for only a single instance of domestic transhipment, forcing many routes to divert via Hong Kong or Singapore instead of fully optimising Việt Nam’s own transport corridors. Addressing these inefficiencies could lead to immediate growth of between 10 and 20 per cent in certain industries.Secondly, innovation is a decisive factor in enabling private-sector breakthroughs. In many advanced economies, businesses investing in research and innovation benefit from financial support or tax incentives. In Việt Nam, however, these mechanisms remain unclear, causing firms to hesitate out of concern for potential audits and regulatory scrutiny.The Government needs to implement a robust framework that promotes innovation, such as offering preferential financing and tax breaks for enterprises pursuing technology upgrades and digital transformation.Thirdly, human capital is a basic pillar for the private sector’s success. Việt Nam currently lacks a flexible and responsive training system closely aligned with the real-world demands of businesses. Việt Nam’s efforts to assess business needs, meanwhile, often lack depth and remain largely formalistic. A more targeted and practice-oriented training strategy is needed to ensure that private firms can access a workforce with the necessary skills to meet the demands of a modern economy.A key limitation of the private sector lies in its insufficient grasp of global trends and a notable underinvestment in modern management practices. Without a long-term vision, many firms risk stagnation, falling short of their potential. For an economy to advance, it is not enough to pursue growth alone; it must aim for qualitative development. An enterprise with an effective business model can generate far greater value from initial investment, ultimately building more durable competitiveness.— VNS (ICE HO CHI MINH CITY)

Fonte notizia: Vietnam News