A prosperous, thriving, and economically self-reliant Vietnam will become more achievable and closer to reality with the active participation of the private economic sector.

Private sector creates jobs for over 80% of the workforce

According to the General Statistics Office, the private sector currently contributes nearly 50% of GDP. Among this, officially registered businesses account for over 10% of GDP, while household businesses and other individual enterprises make up about 40% of GDP.

Dr. Le Duy Binh, Director of Economica Vietnam, emphasized that the private sector plays a decisive role in GDP growth. Of the projected $174 billion in total social investment in 2025, private investment will contribute around $96 billion (56%). Meanwhile, public investment will account for $36 billion, FDI about $28 billion, and other investments approximately $14 billion.

"An increase of just 1% in private sector investment can result in an absolute increase in value equivalent to a 2.5% increase in public investment or a 3.5% increase in foreign investment," said Dr. Binh.

Systemic barriers hindering private sector growth

However, Dr. Nguyen Dinh Cung, former Director of the Central Institute for Economic Management (CIEM), pointed out that private enterprises (DNTN) continue to develop passively and face many institutional barriers.

"In the new context, a clear strategy for developing the private sector is essential. This strategy must define the mission of the private sector as the pioneer force in industrialization and modernization, contributing to increasing competitiveness and economic resilience," Dr. Cung stated.

He emphasized two key pillars for private sector development:

Institutional Reform: Transitioning from a restrictive legal system to a liberal and business-friendly legal framework, where freedom of business and innovation is guaranteed with minimal compliance costs and legal risks.

Access to Resources: Creating a favorable environment for private enterprises to access capital, land, technology, and data promptly and at a sufficient scale to grow from micro to medium and large enterprises.

The challenge of business size and formalization

Currently, 97% of active businesses are small and micro-enterprises, while medium and large enterprises only account for 1.5% each. The lack of mid-sized businesses shows the limited growth of small enterprises, affecting competitiveness and the overall economy.

Furthermore, the informal nature of the private sector remains high, with over 5 million individual household businesses and countless small-scale operations without business registration.

To stimulate private sector development, policies must encourage these entities to formalize as businesses, enabling small and medium-sized enterprises (SMEs) to grow into larger corporations, becoming the growth nucleus of industries and regions.

Bold decisions needed to unlock potential

To activate the private sector's vast potential, Economica Vietnam’s director suggested bold decisions to nurture entrepreneurial spirit, reinforcing freedom of business and ensuring that enterprises are genuinely free to pursue lawful activities.

Such decisions will lay the foundation for property rights and business freedom, shifting administrative management toward market-oriented principles rather than administrative orders.

Laws should incentivize businesses to invest in research and development (R&D) and technological innovation. This includes establishing legal mechanisms to support high-risk, high-reward activities that promise breakthroughs in productivity and technology.

Moreover, the legal framework should foster venture capital and risk-taking, creating an ecosystem to support daring business ideas and innovative investment projects.

"Positioning the private sector as a key pillar and driving force will enhance endogenous capacity, fortifying the self-reliance of the economy. The vision of a prosperous, self-sufficient Vietnam will become more tangible with the collective effort of the domestic private sector," Dr. Le Duy Binh concluded.

Tuan Nguyen