domestic private sector investment in Vietnam
consistently rated poorly in global measures of domestic private sector
development, a key to the country’s future economic success, said experts at
a recent forum in Hanoi.
A report last year by the World
Bank, they noted, showed that Vietnam ranked 78th out of 189 countries in the
ease of doing business index with poor-quality infrastructure and business
environment cited as the two major constraints to growth.
is an infrastructure backlog, particularly in the remote and rural areas, and
the investment needed to cure the problem is far beyond the Vietnam
government’s resources, said the World Bank report.
far too many Vietnamese still live in remote and rural areas that have
severely restricted access to commercial markets and services that many
people around the globe take for granted.
infrastructure and continuing economic reform to build the domestic private
sector are needed for the Government to reduce poverty and reach its
ambitious goal of becoming an industrialized country by the year 2020.
fastest growing region in Vietnam is the Mekong Delta, which is bound to be
the future agricultural and industrial hub of the country. But for that to
happen, better infrastructure need be constructed.
of the country is also plagued by critical supply-side constraints linking
producers and consumers, whether that connectivity lie with connecting people
to essential services such as hospitals and schools or to commercial
of the most direct and practical solutions is through the expansion of the
domestic sector and finding innovative ways to encourage them to fund the
construction of badly needed infrastructure, said Nguyen Duc Thanh at the
Thanh, who is the director of the Vietnam Centre for Economic and Policy
Research, said there has been for far too long an overreliance on the foreign
sector for economic growth and too little evolution of the domestic sector.
foreign sector, said Mr Thanh, currently accounts for two-thirds of exports
and one-quarter of the country’s employment.
a result, the domestic sector, once the major driver of the country’s
economic growth, has been stymied— constrained by lack of competitiveness
with foreigners, limited access to finances and a slackening of consumer
demand by Vietnamese, who increasingly prefer to purchase foreign goods to
those made locally.
practical solution, according to Mr Thanh is straightforward.
suggests that all state-owned companies be sold off to the domestic sector
and let private sector ingenuity operate them profitably and use those
earnings to invest in and solve the country’s infrastructure and connectivity
Thanh believes state owned enterprises are bloated with bureaucracy and
inefficiency and are a drain on the country’s limited resources rather than a
contributor to them.
faster the Government enables and engages the domestic private sector to
invest in infrastructure throughout the remote and rural areas of the country
and build a national supply chain the better, said Mr Thanh.
Dinh Tuyen, the former minister of the Ministry of Industry and Trade agreed.
There are many obstacles to overcome in development of the domestic private
sector, however, transferring state owned enterprises to the private sector
is a good first step to prosperity.
addition, domestic companies can benefit tremendously from identifying good
examples of how foreign companies operate their businesses, and copy those policies
and practices that are appropriate for Vietnam.
domestic companies work closely with their foreign counterparts to share
experiences, they will reap tremendous benefits by increasing their
competitiveness that will pay off over the long-term by improving
productivity and in turn prosperity.