REVIEW
of
FINANCE -
Apr. 2018
31
regulations on the business operation conditions
such as “affiliated certificates”. Among 5,826
business conditions applied to 267 business types
stipulated in the Law on Investment, there have
been 2,833 criteria which are being regulated in the
wrong authority documents including documents
which were promulgated before or after the Law
on Investment.
Fifthly,
the obstacles related to the inequality in
policy mechanism for private sector in comparison
with public sector and FDI sector. The state
enterprises usually have better incentives from the
State. These incentives have caused distortion to
the market and resulted in the wrong placement of
investment capital. Public enterprises, in addition
to the advantage of state-funding, are benefiting in
accessing loans from credit organizations or banks,
therefore, having better accessibility to lands or
business establishments. Public enterprises of
exclusive industries such as electricity, petroleum,
public essential services have not applied rational
prices by the rules of market mechanism, thus their
transparency has been low.
Meanwhile, the private sector is being suffered
from fierce competition from foreign enterprises in
the context of intensive international integration.
There has been a quantitative study conducted by
the lecturers of the National University of Hanoi
concluding that competition pressure made by
the commodities imported from China causing
Vietnam’s SMEs go to bankruptcy or shifting to the
industries of intensive labor and low productivity.
Sixthly,
the obstacles related to the operation of
public management system.
The public management system toward the
operation of private sector has been performed
weakly and dependent on the apply-granting
mechanism. According to a set of national
administration ranking criteria made by the
World Bank, the indicator of public management
effectiveness of Vietnam is ranked under average
level.On thewhole, Vietnamis still among the lowe-
ranked countries in terms of public management.
Seventhly,
the obstacles related to the low
capacity, an in many cases, the weakness in
business culture.
During the development process, private
enterprises of Vietnamhave also shown limitations;
the SMEs with limited financial resources and
low competitiveness, non-public enterprises and
individuals are doing business in the manner of
short-termwithout longer strategic vision and their
sense of law compliance has also been limited.
Solutions to overcome the obstacles of
development of private sector
To remove the obstacles of development of
private sector in the coming time, it is essential to
implement the following solutions:
First,
the solutions of improving theories and
consolidating perception
Initially, it is essential to perceive the functions
of the State and the market in the socialist-
orientation. To improve the socialist-oriented
market mechanism is the preliminary requirement
to establish the favorable environment for the
private sector. The role of the State toward socio-
economic development is not the dispute with
the market but facilitating the market by means
of constructing “hard” and “soft” economic-
technical infrastructures for the economy enabling
the market to operate more effectively. The best
measure of the State’s role is the health of the
market.
In addition, it is also necessary to define the
functions and the role between public and private
sectors. The view that “public sector holds the
lead role, private sector holds the role as an
important drive of the economy” does not indicate
the discrimination between the “lead role” and
“important drive” but depend on each function to
Total
registered
capital
26.2%
increase
2017
Registered
capital rate
15.2%
increase
Newly
registered
business
15.2%
increase
FUGURE 1. BUSINESS REGISTRATION STATUS
Source: National Business Registration portal
