A factory in HCM City. The private sector plays an important role but in Vietnam they are still subject to many risks and difficulties. (Photo: VNA)

HCM City (VNS/VNA) - The private sector, despite being considered the driving force of the economy, has yet to achieve a breakthrough due to many reasons, experts said.

They were speaking at the Vietnam Economic Conference held in Ho Chi Minh City recently and attended by executives representing more than 300 local and foreign businesses.

Asked about the reasons, 54 percent of attendees said cumbersome administrative procedures, 26 percent said inability to access capital and 21 per cent blame difficulty in accessing the market.

Vu Tien Loc, Chairman of the Vietnam Chamber of Commerce and Industry, said administrative procedures are such a major obstacle that most business households do not want to become companies.

Dr Huynh The Du, public policy lecturer at Fulbright University, said the private sector receives the least priority, with policies prioritising State-owned and foreign firms over it.

The private sector, excluding household and individual businesses, only accounts for 10 percent of the GDP.

There are more than 700,000 private companies in the country, of which 96 per cent are small and medium-sized enterprises and 2 percent each are super-small and large enterprises.

Loc said it is time to include household and individual businesses and foreign-owned companies in which case the private sector accounts for 61 percent of GDP.

Even for developed economies such as the US, Japan and Europe, small and micro enterprises are the backbone, and Vietnam is not an exception, he pointed out.

To strengthen the role of the private sector in the economy, institutional reform is needed to safeguard companies’ rights and ensure the consistency of the system, he said.

Le Thi Nam Phuong, Deputy Chairwoman of the Vietnamese Young Entrepreneurs Council, said many regulations are interpreted differently in each locality, causing difficulties for businesses.  

So the Government also needs to be transparent in the decentralisation of the functions of ministries and localities, she said.
Du said policies need to minimise risks and create a better business environment to motivate the private sector to develop. — VNS/VNA