Professor Vũ Minh Khương shares his insights on the obstacles, opportunities, and directions to enable private sector development to become a driving force for the country’s growth – Photo: VGP
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– Professor, how do you assess the directions of the General Secretary and the strong involvement of the Government and the Prime Minister in promoting the development of the private sector? What are your thoughts on the determination of the high-level leaders in promoting the private sector to become an important driving force of the economy?
Professor Vũ Minh Khương: I perceive a strong shift in the Vietnamese political system, demonstrated by the efforts to achieve remarkable economic growth in the coming years and a particular focus on the crucial issues of private sector development, capturing the trends of the times. General Secretary Tô Lâm and Prime Minister Phạm Minh Chính have provided decisive directions, reflecting their broad vision and steadfast determination in making the private sector a crucial pillar of the country’s economy.
The overarching orientations set by the high-level leaders not only demonstrate a profound understanding of the role of the private sector but also embody a spirit of innovation and creativity in managing and governing the economy. However, to turn this vision into reality, we need to design specific and synchronized policies, creating a conducive environment for the private sector to make a breakthrough in the coming years.
– In your opinion, what role is the private sector playing in the Vietnamese economy? Can you compare the contributions of the private sector with other economic sectors such as state-owned enterprises or foreign investment?
Professor Vũ Minh Khương: The private sector has been and continues to affirm its increasingly important position in Vietnam’s economy. While it used to be modest in scale and competitive capacity, it has now formed private enterprises with a significant presence, capable of reaching regional and global markets. Industries such as steel production, automobile manufacturing, and high technology have witnessed the strong emergence of Vietnamese private enterprises.
Compared to state-owned enterprises and foreign investment sectors, the private sector has not yet become the dominant pillar of the economy, but this is only a matter of time. Ten or twenty years ago, this sector was still in its infancy, but today, there are large and robust private corporations, making significant contributions to GDP growth, job creation, and enhancing national competitiveness.
The core issue now is how to guide the private sector to develop in the right direction, firmly and break through. This requires not only removing obstacles and reducing hassles but also providing strong supportive policies, especially eliminating the “brakes” hindering business development. When provided with favorable conditions, I believe that the private sector will play an increasingly significant role, becoming a crucial driving force for Vietnam’s economy to make a breakthrough in the future.\
 Vietnam’s private sector is on the cusp of robust development – Illustrative image
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3 Core Issues
– In your opinion, what are the biggest obstacles that Vietnamese private enterprises are facing? What specific solutions should the Government have to support the robust development of the private sector?
Professor Vũ Minh Khương: Vietnam’s private sector is on the cusp of robust development, but it still faces some fundamental barriers. I believe there are three core issues that need to be addressed: institutions, innovation, and human resources.
First, regarding institutions, the crucial point is not to focus on general obstacles but to identify specific “brakes” in each industry. We have about 35 sectors in which the private sector operates, and each has its own set of challenges that need to be thoroughly addressed. Just as “Khoán 10” brought about a turning point in agriculture, a similar reform is needed for each critical economic sector. Private enterprises are awaiting a breakthrough in legal and administrative procedures and better interconnection between industry clusters. To achieve this, the Government needs to listen directly to industry associations – from real estate, mechanics to software technology – to make accurate and timely decisions.
A concrete example is the maritime transport industry. Currently, many enterprises own millions of tons of cargo but have to go through inspections abroad due to more convenient procedures. The customs system in some major ports like Cái Mép remains fragmented and lacks synchronization. By adopting a unified digitalization model like Singapore, we can unleash a massive productive force. In the field of logistics, the current regulations only allow for transshipment of goods once domestically, leading to some transport routes going through Hong Kong or Singapore instead of optimizing routes within Vietnam. Removing these bottlenecks could easily bring about 10-20% growth in multiple sectors.
Second, regarding innovation, this is a key factor in helping private enterprises break through. In many countries, when businesses invest in research and innovation, they receive financial support and are even granted tax deductions. In Vietnam, this mechanism is not yet clear, making businesses cautious due to potential inspections and audits. The Government needs to establish a system of policies that encourage innovation, such as providing capital support and tax exemptions for businesses investing in technology and digital transformation. Some countries like Thailand and Singapore have excelled in this regard, and we can learn from their experiences to boost the development of domestic enterprises.
Third, concerning human resources, this is the foundation for the private sector to soar. Currently, we lack a flexible training mechanism that aligns with the practical needs of businesses. In Singapore, the Government can support enterprises in training twice the required workforce, immediately providing them with a qualified workforce and facilitating new investment attraction. In Vietnam, the surveys of business needs are not thorough enough and are sometimes perfunctory. A well-structured and practical training strategy will enable private enterprises to have a suitable workforce, ready to meet the demands of the economy.
I highly appreciate the vision and determination of the high-level leaders in promoting the private sector as the main driving force of the economy. However, to realize this goal, we need a flexible institutional system that encourages innovation and provides substantive training for human resources. If we can accomplish these tasks, Vietnam’s private sector is poised to make a breakthrough, achieving resounding progress in the coming years.
 In the context of international integration and digital transformation, in addition to partial support from the State, private enterprises also need to proactively renew their thinking, invest in governance capacity and long-term strategies
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– For development, what should Vietnamese private enterprises do to enhance their competitiveness, especially in the context of international integration and digital transformation?
Professor Vũ Minh Khương: In my opinion, to truly break through, Vietnamese private enterprises need to change their development mindset. Currently, many businesses tend to pursue short-term opportunities, focusing on areas that bring quick profits, such as real estate and exports, but lack a long-term strategy for sustainable development. In a volatile global economic environment, a short-term mindset can leave businesses vulnerable and even turn opportunities into pitfalls.
One of the most significant weaknesses of private enterprises is their failure to grasp the trends of the times and invest sufficiently in governance capacity. Being preoccupied with short-term gains without a long-term strategy can trap businesses in a vicious cycle, preventing them from reaching greater heights. What matters most for an economy to take off is not just growth but elevating the level of development. When businesses have an efficient operating model, investing one dollar can create higher value, thereby sustainably enhancing competitiveness.
Additionally, the Government should also have appropriate supportive policies to guide businesses in the right direction. A commendable model is Singapore, where private enterprises can access well-structured strategic consulting, technology support, and digital transformation programs. For instance, if a business needs to hire experts for technology or digitalization consulting, the Government can partially subsidize the cost, such as 50% depending on the priority of the industry.
In the context of international integration and digital transformation, in addition to partial support from the State, private enterprises also need to proactively renew their thinking, invest in governance capacity and long-term strategies. Only when businesses truly achieve sustainable development can the private sector become the main driving force of the country.
– Thank you very much, Professor!
Anh Thơ (Interview)
– 10:00 16/03/2025
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