(Mr): Phung Xuan Minh. [Chairman of the Board of Directors of PT Group & Saigon Ratings]
In this era of national development, Vietnam faces a new development requirement: not only faster growth, but growth based on productivity, innovation, endogenous capacity, and the strength of Vietnamese businesses. After nearly 40 years of reform, the private sector has become one of the most important forces in the economy, making a significant contribution to GDP, creating jobs, expanding markets, and forming many Vietnamese brands capable of competing in the region.
However, for Vietnam to achieve its goal of becoming a high-income country by 2045, the private sector cannot simply develop extensively, relying on real estate, short-term trade, or low-value processing. The central issue is to build a strategy for the development of Vietnam’s private sector that is modern, transparent, technologically capable, able to participate deeply in global value chains, and aspires to expand internationally.
From the perspective of experts such asProfessor Tran Van Tho(Waseda University, Japan) andProfessor Vu Minh Khuong(Lee Kuan Yew School of Public Policy, Singapore), Vietnam’s development path must begin with strengthening national internal capabilities. Internal capabilities here are not just capital, labor, or resources, but also encompass the quality of institutions, the level of business expertise, management capacity, human resources, labor productivity, innovation capabilities, and trust between the State and businesses.
The article consists of three parts:
Part One: Vietnam’s Private Economic Development Strategy in the Era of National Advancement;
Part Two: Practical lessons learned from international economies that have successfully fostered the private sector as a driving force for national development.
Part Three: The Private Economy – The Key to National Prosperity and Strength in the New Era.
Part 1: Vietnam’s Private Economic Development Strategy in the Era of National Advancement
The private sector must become the leading driver of growth.
In this new stage of development, the private sector needs to be viewed not just as an economic component, but as a central force in building national prosperity. While previously the private sector was primarily encouraged to create jobs and supplement social resources, now it needs to be given a greater role: leading innovation, participating in strategic projects, developing foundational industries, expanding domestic supply chains, and reaching international markets.
Vietnam’s private sector development strategy should aim to form three tiers of businesses. The first tier consists of large private corporations capable of leading industries, investing in technology, research and development, infrastructure, energy, processing industries, semiconductors, logistics, finance, and strategic sectors. The second tier comprises small and medium-sized enterprises (SMEs), acting as satellites in the supply chain, providing components, services, digital solutions, supporting industries, and specialized products. The third tier consists of household businesses and individual production facilities that need support to transform into formal enterprises, operating transparently and having access to capital, technology, and markets.
The core issue is not chasing the number of businesses, but improving their quality. An economy with many small businesses but few that are globally competitive will struggle to achieve breakthroughs in productivity. Therefore, Vietnam needs separate policies for each group: large businesses need to be encouraged to invest long-term and lead the supply chain; small and medium-sized enterprises need support in management, capital, technology, and quality standards; and household businesses need a suitable transformation roadmap that does not cause a shock in compliance costs.
Institutional breakthrough: from management to creation and service.
One of the biggest bottlenecks for the private sector is institutional cost. Businesses may accept intense market competition, but it is difficult to thrive if they face unpredictable legal risks, overlapping procedures, redundant inspections, difficulties in accessing land, or a lack of transparency in the business environment.
Therefore, the strategy for developing the private economy must first and foremost be a strategy for institutional reform. The State needs to shift strongly from a mindset of “managing businesses” to one of “serving businesses,” from heavy pre-approval to intelligent post-approval, and from a system of granting and receiving permits to a system where business rights are guaranteed. Citizens and businesses should be allowed to do what the law does not prohibit; regulatory agencies should only restrict business rights in cases where it is truly necessary for national defense, security, the environment, public health, or social order.
Institutional reforms also need to be targeted at specific sectors. According to Professor Vu Minh Khuong’s approach, to unlock the potential of the private sector, it’s necessary to correctly identify the “bottlenecks” in each field, such as logistics, maritime transport, supporting industries, software technology, real estate, mechanical engineering, and high-tech agriculture. If reforms are only general, businesses will find it difficult to perceive real change. However, if each sector reviews procedures, removes legal bottlenecks, digitizes processes, and ensures transparency in standards, production capacity can be unleashed very quickly.
Enhancing the internal capacity of Vietnamese businesses.
Vietnam is deeply integrated into the global economy, but the internal strength of domestic businesses remains weak. This is a strategic issue. An economy with large export turnover but where most of the added value is in the FDI sector, while domestic businesses mainly engage in processing, trade, or low-value services, cannot yet be called a self-reliant economy.
Strengthening the internal capacity of Vietnamese businesses must begin with management capabilities. Many private enterprises are developing rapidly but still operate under a family-run model, lacking internal control systems, financial transparency, human resource strategies, and adequate investment in technology. As their scale increases, these outdated management methods become obstacles. Therefore, businesses need to professionalize their management, standardize financial reporting, develop long-term strategies, enhance risk management capabilities, and gradually access capital markets.
Internal strength also lies in the capacity for innovation. Vietnamese businesses cannot compete sustainably on low costs alone. The advantage of cheap labor will gradually diminish as wages rise, the population ages, and automation becomes widespread. Therefore, businesses must shift from “doing more” to “doing smarter”: investing in data, automation, product design, branding, ESG standards, green technology, and customer experience.
In particular, it is necessary to develop intangible assets such as management capabilities, software, data, brands, patents, processes, designs, corporate culture, and high-quality human resources. In the modern economy, intangible assets are increasingly more decisive than tangible assets in determining competitiveness.
Connecting private enterprises with FDI, state-owned enterprises, and global value chains.
A successful integrated economy is not just about attracting a lot of FDI, but also about leveraging FDI to upgrade domestic businesses. If FDI enterprises export heavily but buy little from Vietnamese businesses, transfer little technology, and have few links with domestic suppliers, then the spillover effect will be limited.
Vietnam needs to develop supply chain connectivity policies that are both conditional and targeted. Large FDI projects should be encouraged to develop plans to utilize domestic suppliers from the initial investment phase. Simultaneously, the government needs to support Vietnamese businesses in achieving technical standards, quality certifications, delivery capabilities, production management, and financial capacity to qualify as suppliers.
Large domestic enterprises also need to play a “leading role.” As large private corporations develop, they should not grow as isolated enclaves, but rather lead the network of small and medium-sized enterprises. Incentive policies should be linked to a ripple effect: large enterprises should be supported through supplier training programs, technology transfer, ordering of domestic products, standardization support, and market data sharing.
The development of the private economy is linked to the aspiration for national prosperity and strength.
The private sector in this era of growth is not just about profit. It’s also about the aspiration to build Vietnamese brands, national self-reliance, and the social responsibility of entrepreneurs. Entrepreneurs need to be recognized as a pioneering force on the economic front, but at the same time, they must build a business culture of integrity, respect for the law, healthy competition, and sustainable development.
To achieve this, mutual trust needs to be built. The State trusts businesses, protecting their property rights and legitimate business operations. Businesses trust the State, complying with the law, maintaining financial transparency, contributing to society, and investing for the long term. When trust is strengthened, resources within the population will be more effectively activated, from capital and knowledge to initiatives and entrepreneurial spirit.
