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private sector enterprises.
Fifthly,
abilityof access to landis limited. Procedures
for land clearance and land recovery take time,
affecting business plans of enterprises. The method of
land price calculation, licensing procedures, planning
information also causes many urgent problems,
hindering the speed of land recovery and transfer to
investors. On the other hand, high land rents ... also
limit access to production and business land of many
private sector enterprises.
Sixthly,
high business costs reduce competitiveness.
High cost of transportation (cost of transporting 1
container from Hai Phong port to Hanoi is 3 times
higher than cost fromKorea, China toVietnam). Labor
costs are also a big burden. In addition, the minimum
wage increase rate year to year is from 8% to 12%, but
the growth rate of labor productivity is only 4-5%.
Besides, in the medium and long term, the private
economy is likely to be affected by micro risks
(contract enforcement, taxation, labor, etc.), and other
macroeconomic risks. In particular, the lack of capital,
la bour capacity, weak infrastructure and market
failure due to the lack of innovation, competition will
greatly limit the private economy.
Tomake private economy become
the driving force of economic growth in reality
It can be confirmed that by 2020, vision to 2030-
2035, with a growing role, the private economy
will play a pivotal role in the economy. This will
be the area that receives directly influences from
changes in institutions and policies, and is the best
place to show the development of the economy.
Private economy should be placed in the center of
the factors that influence long-term growth. It is
necessary to synchronously develop other market
economy factors. In addition, enhancing the quality
of basic elements such as resource efficiency,
quality of human resources and institutions will be
an essential task for the private sector to develop in
line with its potential and set target.
To make private economy become the driving
force of Vietnam’s economic growth, solutions
that need to be focused on include:
Firstly,
improve the internal capacity of enterprises.
Improve the quality of training human resources
in enterprises, reform the management model in
accordance with international practices. In addition,
support private sector to improve the level of science
Thirdly,
accessing credit by private enterprises is
difficult. Only 40% of all accessing credit is able to
access loans from banks (Enterprise Development
Agency, 2017). Many enterprises find it difficult
to meet credit regulations of credit institutions
because of their unclear financial situation.
Fourthly,
objective factors from the existing
institutions and policies also hinder the development
of the private economy: (i) administrative procedures
are complex; Inter-communication procedures
for enterprises are still inadequate; There are
inconsistencies between the Law on Investment, the
Law on Land, the Law on Procurement etc. or not
be suitable with reality, making the development of
the private economy slow down. (ii) There are many
barriers in business, investment conditions. According
to preliminary statistics of the Central Institute for
Economic Management (June 2017), there are over
3,500 business conditions corresponding to 243
conditional business investment.Many trades and
conditions of business investment do not meet the
criteria of necessity stipulated in Article 7 of the Law
on Investment. Business investment conditions are
general, unclear. They create barriers to entry into the
market, restrictingcompetitionandaffectingsmall and
mediumenterprises (SMEs)adversely. (iii)Themarket,
investment opportunities do not have mechanisms
to exploit thoroughly. The proportion of competitive
shoping bidding packages and open tenders via
online bidding is only 5.7% and 4.4% while the
minimum requirements are 20% and 10% (Enterprise
Development Agency, 2017). In addition, some trades
are still held by SOEs and the ineffectiveness of quality
control of goods fromabroad has led to both domestic
and foreign pressure on business opportunities for
Newly established
enterprises
(Unit: enterprises)
Capital
(Unit: billion VND)
FIGURE 2: CAPITAL AND NUMBER OF NEWLY
ESTABLISHED ENTERPRISES
Source: Ministry of Planning & Investment
