The comments were made in reference to Standing Deputy Prime Minister Nguyen Sinh Hung’s presence at a conference last week to discuss measures to enhance the private sector’s performance.

Hung chaired the conference which saw the participation of 500 representatives from ministries, private firms, associations and research institutes.

Hung remarked that although the number of private firms had grown over the past decade and contributed to the nation’s economic development, most were operating on a small scale and were experiencing serious shortages of bank loans, land, labour sources and other services.

He said that ministries and local authorities should think seriously of the difficulties that private enterprises were facing and quickly map out measures to help them overcome issues.

“We must think of the firms’ capacity to attract financial resources and land as well as how we can create favourable conditions for their operation,” Hung said.

He also required a comprehensive evaluation of private firms’ management skill as well as their capability to compete in both local and international markets.

Around 230,000 private firms are operating across the country with 90 per cent of them being small- and medium-sized enterprises.

According to a recent Vietnam Chamber of Commerce and Industry study (VCCI), private firms had recognised the great efforts made by the government and local authorities over the past months to build a more favourable business environment for their operations.

“However, there remain a lot of constrains to their performance that the central and local authorities must try harder to remove,” said VCCI chairman Vu Tien Loc.

The VCCI’s study showed that nearly 30 per cent of the 7,000 questioned firms said they wasted 10 per cent of their time on administrative procedures, while 68.7 per cent of them had to pay unofficial fees, which accounted for 10 per cent of their total revenue.

Another survey carried out by the General Statistics Office (GSO) and the World Bank last year also reported that enterprises suffered a cut of 121.6 hours of electricity and 175 hours of water resources each year, which cost them about 2.3-2.7 per cent in revenue.

“There remains a big gap between local business conditions and the requirement of the private sector even though those conditions have been considerably improved in recent years,” said president of the Association for Small and Medium Enterprises Cao Sy Kiem.
Vu Quoc Tuan, president of the Vietnam Handicraft Village Association, said firms’ biggest concern was how the government would change and improve institutions, legal framework and other service conditions.

“The performance of the business community is completely reflected through their government’s policies and institutions,” Kiem said.

Nguyen Dinh Cung, head of the Central Institute for Economic Management’s Macro-Economic Policy Research Department, said Deputy PM Hung’s participation at the conference was proof that the government had radically changed its mind about the role of the private sector.

“The role of the private sector has grown to such a scale that the government must recognise and encourage its operation. The government has realised the sector’s potential and its great role in the country’s economic development in the years to come,” Cung said.
However, he observed that it would take time for the Vietnamese Government to go from thinking to policy-making and actual action to bolster the private sector’s performance.

According to the Ministry of Planning and Investment, private firms have so far contributed 40 per cent to the country’s Gross Domestic Product and 29 per cent of total export revenue and employed three million workers across the country.

Source: VIR.