Brian Jeffrey
EDITOR’S NOTE
The 20th anniversary of Vietnam Entrepreneurs’ Day is celebrated on October 13, 2024, marking two decades of significant growth in the private business sector, characterized by ambition and a drive to benefit the nation’s economy.
Previously seen with skepticism, entrepreneurs now receive acknowledgment similar to other professions. Many current business owners began with limited resources and have since created wealth and job opportunities. Unfortunately, recent challenges, including COVID-19 lockdowns, have dampened the spirit of entrepreneurship, with a growing reluctance to take risks within government frameworks.
There is a need to revive the entrepreneurial spirit, spread the desire for wealth, and eliminate fears. Over recent decades, Vietnamese entrepreneurs have shown resilience and adaptability, asserting their role as crucial to the economy.
They are vital to the country’s journey towards prosperity by 2045.
In this spirit, VietNamNet is launching a series of articles to motivate entrepreneurship and discuss the current obstacles entrepreneurs face, with the vision of achieving a swift and sustainable “New Era of National Advancement.”
Vietnam embarked on building its private sector from the ground up following the initiation of Doi Moi (economic reforms). This transformation has unfolded over 38 years (1986-2024).
In the same timeframe, Japan has developed a strong global presence with major corporations whose names are widely recognized, like Sony, Panasonic, and Toyota.
South Korea has also crafted formidable conglomerates under its Chaebol model, giving rise to global giants such as Samsung and Hyundai. In contrast, after four decades post-Doi Moi, Vietnam boasts over 930,000 businesses, 98% of which are small and medium enterprises (SMEs), and around five million family-run businesses, alongside a handful of billion-dollar firms like Vingroup and Vinamilk.
While Japan and South Korea evolved into strong economies in 38 years post-war, Vietnam’s growth has been hampered by a decade-long embargo (1986-1995) and subsequent economic challenges, preventing it from achieving similar status. The private sector contributes 46% of GDP, 30% of the state budget, and provides 85% of jobs but remains predominantly small to medium-sized.
The obstacles facing Vietnam’s private sector extend beyond the embargo, rooted in persistent internal barriers since the Doi Moi reforms.
Initially, there was a conceptual hurdle regarding the private sector. Before 1986, Vietnam had no private sector or entrepreneurs due to the predominance of state-owned enterprises. It took years of reform to gain public trust and integrate the private sector as a key player in economic and social development.
Secondly, institutional obstacles, particularly related to the Land Law, have hindered progress. Initial iterations of the Land Law restricted land sales, and while reforms later acknowledged public ownership, land-related issues remain a primary challenge for the private sector over the past 38 years.
Thirdly, there are governance and leadership issues in the operational framework which hampers efficiency. Although the Party has initiated important reforms, discrepancies persist, particularly at local levels, affecting administrative processes and contributing to corruption.
The majority of the over five million family businesses and two million private firms are small largely due to gaps in the decentralization system between central and local authorities.
Provinces call for tailored policies to facilitate development, yet without adequate measures, small firms struggle to grow. A reduction in provincial administrative units could improve conditions, empowering local authorities to foster business development effectively.
Additionally, enhancing provincial resources will allow local governments to better support private sector growth, recognizing that the dedication of Central Committee members is crucial for decentralizing economic responsibilities.
Finally, barriers exist that prevent private enterprises from reaching the scale of prominent South Korean or Japanese firms. Developing significant private enterprises in Vietnam requires a strategic focus from high leadership, akin to what transformed South Korea’s economy.
Vietnamese enterprises have demonstrated their essential role in the country’s historical triumphs—spanning the eras of Independence, Doi Moi, and beyond.
As articulated by the late General Secretary Nguyen Phu Trong, “Our country has never had the position, potential, and international standing it enjoys today,” symbolizing the private sector’s pivotal role in Vietnam’s advancement.
Now, Vietnam is ready to harness the spirit and resilience needed to thrive in this “New Era of National Advancement,” as recently highlighted by General Secretary and President To Lam at the United Nations. It is time for Vietnam’s private sector to overcome past challenges and step into this new chapter.
