Dr. Dang Xuan Thanh, Vice President of the Vietnam Academy of Social Sciences

Vietnam’s economy posted a growth rate of 7.09 per cent in 2024, surpassing the target and continuing to be a bright spot in the Asian region. However, since the beginning of 2025, Vietnam’s economy has faced many significant challenges, such as the global economic slowdown, the rise of protectionism, the risk of supply chain disruptions, and the increasingly urgent need for digital transformation and green growth.

If the growth model is not reformed in a timely manner and if the economy is not restructured, Vietnam will face a high risk of falling into the middle-income trap. This requires that we create substantial breakthroughs and implement decisive changes in mindset and development measures.

Vietnam’s current growth model still relies heavily on resource extraction and increased public investment, while the potential from cheap labor is gradually diminishing. Moreover, the growth model based on horizontal expansion no longer meets expectations for a dynamic and innovative economy and reduces Vietnam’s global competitiveness.

Double-digit economic growth can no longer solely depend upon increasing labor supply, investment capital, and resource exploitation. It must be tied to breakthroughs in institutional reform. Therefore, Vietnam needs to build a modern, transparent institutional framework with accountability and promote healthy competition, which will support businesses in innovation and attract effective social resources.

At the same time, human resources are a decisive factor in the new era. In the context of a rapidly-aging population, Vietnam needs to develop a new human resources development strategy. This not only requires improving workplace skills but also training individuals in independent thinking, creativity, and adaptability to a continually-changing technological environment.

Vietnam also needs to establish a “fair institutional foundation” for private enterprises, simplify administrative procedures, remove market barriers, and strengthen support for research, development, market connectivity, and the protection of legal rights.

In the context of Vietnam’s economy facing significant investment demand but with limited domestic resources, it is necessary to diversify financial instruments, develop the domestic capital market, expand the scale and quality of the corporate bond market, and develop innovation investment funds, green financial funds, and effective public-private partnership capital mobilization mechanisms.

In this economic picture, the role of localities is becoming increasingly important. Local governments need to be given more autonomy in budget management, development planning, and investor selection, linked to local governance capacity.

 

Mr. Dau Anh Tuan, Vice Secretary-General and Director of the Legal Department at the Vietnam Chamber of Commerce and Industry (VCCI)

Vietnam’s private sector is divided into two areas: the officially-registered private sector operating under the Law on Enterprises, and the household business sector. The private economic sector currently boasts some 960,000 enterprises, while numbers in the household business sector remain rather hard to gauge. According to figures, about 2.8 million household businesses have been registered, but there is no precise data on the number of unregistered household businesses, which could range from 5 to 6 million.

Notably, in recent times, a new group of “individual businesses” has emerged. In Vietnam, the revenue of individual businesses on online platforms amounts to tens of billions of VND, or much higher than that of some medium-sized enterprises. However, these entities do not fall within the scope of the Law on Enterprises, even though they have become a popular business form in recent years.

While the importance of the private sector cannot be denied, there are still four main barriers within the sector.

First, high informality coupled with low productivity. For example, in the Mekong Delta, workplace productivity is modest, but when directly working with provinces, it can be observed that revenue is very high but not reflected in statistical tables, making measurement difficult.

Second, aside from weak management and a lack of professionalism, the private sector has yet to establish solid supply chain connections. Many reports indicate that the private sector’s connections with FDI remain limited, with the percentage of enterprises participating as contractors for international corporations in Vietnam being quite modest.

Third, support industries are underdeveloped. Figures from key industries in Vietnam show that private sector participation in support industries is rare.

Fourth, there is a lack of assistance for businesses to leverage free trade agreements (FTAs). While the export growth of private enterprises has been high, they still face many difficulties in penetrating into large markets.

Looking at South Korea and Taiwan, supportive policies are extremely important for promoting private sector growth.

In light of these realities, from a business perspective, one of the most important reforms would be to reduce legal overlap and conflicts. Institutional reform is a prerequisite to support the private sector by alleviating administrative burdens. Additionally, the current management methods are quite heavy and costly, while their effectiveness does not meet expectations. Therefore, renewing management methods with “post-inspection instead of pre-inspection” or risk-based governance is necessary.

Moreover, encouraging household businesses to transition into officially operating enterprises requires reforms in the tax system, accounting standards, and environmental standards.

Regarding capital issues, private enterprises often face significant disadvantages in terms of capital costs due to a heavy reliance on bank loans with high interest rates, which reduces their competitive advantage compared to other countries. This challenge calls for solutions regarding non-bank funding sources for businesses, such as developing bonds, establishing business support funds, or creating stock exchanges specifically for small and medium-sized enterprises.

Next, it is essential to develop specific policies for private enterprises. In the context of Vietnam facing US tariff policies, the domestic content of products exported to the US is crucial. This opens up opportunities for Vietnamese businesses to participate more deeply in the global production chain. In addition to leveraging FTAs, expanding export markets, supporting small businesses to attend international trade fairs, positioning brands, and developing domestic distribution networks are also necessary.

Politburo Resolution No. 68-NQ/TW on private sector development shows a more open and clear mindset. However, in the time to come, there will still be a need for action programs that are decisive and long-term, so they can complement each other.

Ms. Pham Chi Lan, Economic Expert

One of the major barriers for private enterprises in the current context is their relatively weak position and voice. According to figures, private enterprises in Vietnam contributed consistently below 10 per cent of GDP up to 2022.

Though it diminishes the power of the private sector, this figure does not receive any feedback from businesses. On the contrary, barriers in the private sector have continually been highlighted over the years.

While the government has added the private sector as a key driver of the economy, if this indifferent attitude persists, the situation will not change. However, I am more hopeful for change this time, as Politburo Resolution No. 68-NQ/TW addresses the role of business associations in enhancing their influence, allowing them to participate in and build new legal systems and policies. Additionally, the Resolution must be converted into legal documents, but it cannot retain the traditional format; a drafting committee needs to be established to ensure the spirit of Resolution No. 68 is upheld in supporting private enterprises. If anyone strips away the benefits of businesses, there must be sanctions to prevent unreasonable conditions from arising.

Therefore, if we want to implement this, I suggest that we clearly define the specific rights of regulatory agencies in the context of eliminating district and commune levels. These areas account for a large number of private enterprises, especially small and medium-sized enterprises and household businesses. I hope that after decentralization, the highest decision-making power for legal policies will rest with the central government, while the provincial level should focus on adhering to general laws and policies rather than proposing new legal initiatives. The commune level should only implement administrative procedures to enforce State policies. This approach will help prevent multiple areas from making conflicting decisions.

Finally, regarding international integration and cooperation, it is necessary to remove barriers quickly so that businesses and organizations can easily access foreign experts. Specifically for FDI, efforts should be made to limit the form of 100 per cent foreign-owned capital, to leave space for the private sector to develop.