REVIEW
of
FINANCE -
November, 2018
51
higher than average revenue growth rate. Over
the past 15 years, private sector’s employment
effectiveness has not improved, with a downward
trend, especially for private enterprises, limited
liability companies.
Although the solvency of the private sector
in the period 2002 - 2014 is in good condition,
higher than state - owned and FDI, but was on the
downward trend. The capacity of private sector
payments is decreasing due to the impact of the
global financial crisis. The ability to pay interest
is low (4.6 times) than the rest of the economy.
Cause is due to weak financial resources, capital
need but business efficiency is not high. This
reflects the reality of the Government’s policy
governing policies when issuing corporate
support policies.
The financial leverage of the private sector
is always large, the debt ratio is always greater
than 1, while the capital turnover has fallen from
3 times in 2002 to 1.4 times in 2014. Therefore,
the efficiency of private sector using capital is
not really good. This may be the reason for the
difficulty in raising private sector capital.
Profits generated by equity and revenue are
always the lowest in the three economic sectors
and tend to decrease. This reflects the poor
performance of the private sector.
Taxes and payments to the state budget of
the private sector have increased significantly
in the period 2005-2014, from 18.56% in 2005
ENHANCING COMPETITIVENESS
FOR THE PRIVATE SECTOR
PHAM THI TUONG VAN, PhD.
- National Institute for Finance*
During the 15years of implementation the Resolution No.14-NQ/TW issued on March 18
th
, 2002 by
the Central Committee, the private sector has gradually developed, the number and scale have been
increased, the quality of enterprises has initially been improved. The average growth rate of the number
of enterprises has reached about 18% per year during the whole period (from 55,237 enterprises in 2002
to 388,232 enterprises in 2014). However, for the reason of small and medium size, even small and micro,
low technological level, private enterprises are limited in management level, financial capacity, labor
productivity, business efficiency, product quality and competitiveness. Private enterprises are mainly
involved in the low value-added market segment and limited international integration capacity.
Keywords: SMEs, private sector, performance of the business, difficult, competitiveness
Received: August 22
nd
, 2018
Revised: September 28
th
, 2018
Accepted for publication: October 5
th
, 2018
Efficiency of private enterprises
in the past 15 years
The total capital of private sector has increased
47 times, fromVND 202,396 billion in 2002 to VND
9,613,800 billion in 2014 with an average growth
rate of 39% in the period 2002 - 2014. The capital
size of private sector has been increased about 7
times (from VND 3.7 billion in 2002 to VND 24.8
billion in 2014), due to the average growth rate of
total capital was larger than the average growth
rate in the number of enterprises. Therefore, the
capital size of the overall economy also increased.
However, the scale of labor has slowly increased.
This has created a contradiction: Vietnam has
labor advantages but economic growth is heavily
dependent on capital growth, while capital is not
strong.
The total turnover of private sector enterprises
has increased 19 times, from VND 362.6 billion in
2002 to VND 7,039.5 billion in 2014. The average
revenue growth rate of this period is about 29%
per year which is higher than the enterprises
growth rate of enterprises and the labor growth
rate, but it is lower than capital growth rate.
The growth rate of average revenue per
employee was kept relatively stable, rising by 4.63
times (in 2014). Meanwhile, wage growth rate is
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