Vietnam puts higher expectation on private economic sector

VietNamNet Bridge – Vietnam expects to have 350,000 more private businesses by the end of 2015 in order to develop the national economy which has been relying on state owned enterprises (SOEs).

The plan to have 350.000 more private businesses has just got the nod from the government based on a proposal by the Ministry of Planning and Investment (MPI).

Well-known Vietnamese economists, while pointing out a lot of problems of state owned enterprises, have repeatedly urged to develop the private economic sector to ease the reliance on the state economic sector.

To date, the state economic sector has always been defined in all important documents as the most important driving force and the backbone of the national economy.

MPI’s Minister Bui Quang Vinh, when asked about the targeted number of 350,000 businesses, cited the statistics as saying that 70,000 new businesses are set up in Vietnam every year, while 70 percent of them would survive.

By April 30, 2012, Vietnam had had 463,801 businesses kept operational out of the total 647,627 newly registered businesses.

If considering the number of newly set up businesses every year and the percentage of businesses surviving, it is estimated that Vietnam would have some 600,000 operational businesses by 2015.

Also according to Vinh, by 2015, the total export turnover of small and medium enterprises would account for 25 percent of the total export turnover of the whole

The conclusion has been made after considering the statistics by the General Statistics Office (GSO) which says that the contribution of private businesses to the export growth rate of the country increased steadily in 2006-2010, from 21.74 percent in 2006 to 29.04 percent in 2010.

The private economy is expected to account for 35 percent of the total investment capital of the whole society by 2015.

Also according to GSO, the investment proportion of the non-state economic sector decreased from 38 percent in 2006 to 33.9 percent in 2009, but then increased again in 2010 and 2011 by 36.1 and 35.2 percent, respectively.

MPI has calculated that small and medium enterprises would make up 40 percent of GDP by 2015.

Meanwhile, in 2007-2010, the contribution proportions were always higher than 46 percent.

MPI believes that the tax collection from the private economic sector would account for 30 percent of the total receipts of the state budget.

Meanwhile, according to GSO, the non-state economic sector contributed 17.7 percent of the state budget, while the figure rose to 30.9 percent.

Private enterprises are expected to generate 3.5-4 million more jobs in 2011-2015, after they created 3.2 million jobs in 2006-2010.

This is for the second time the government approves the plan to develop the private economic sector. The first plan was approved in 2005 under which, Vietnam expected to have 500,000 private businesses by 2010.

Economists recently have asked to reconsider the role of the state economic sector in the national economy. For the last many years, it has been used by the State as a tool to stabilize the macro economy.

However, Dr Le Dang Doanh, a well-known economist, who was once the Head of the Central Institute for Economic Management CIEM, pointed out that if state owned conglomerates and general corporations were really useful to help stabilize the macro economy, Vietnam would not witness such a macroeconomic stability for a long time.

He said it’s necessary to change the viewpoint that the state economic sector should play the key role in the national economy.

Compiled by Thanh Mai