Private sector plays greater economic role

The private sector has played an important role in the national economy in recent years, and now contributes 47 per cent of GDP and 54 per cent of jobs.

The private sector has played an important role in the national economy in recent years, and now contributes 47 per cent of GDP and 54 per cent of jobs.

Most private-sector companies have developed from small businesses.

Over the last 20 years, for example, bakery manufacturers, including Kinh Do, Duc Phat and A Chau, invested in modern technologies and began to dominate local markets with high quality goods.

Although the textile and garment sector exports most of its goods, some private companies like Thai Tuan and Phuoc Thinh produce brocade for women that sells locally.

Hanh Fashion is well-known for office dresses, while Foci, Viet Thy and PT2000 are highly recognised by youth.

In addition, Minh Long pottery company has reached a very high level of production.

In the industrial sector, Truong Hai has grown as a reputable automobile manufacturer, and 30 other private enterprises have provided components for FDI enterprises.

Along with fast growth in quantity and awareness about corporate governance, the market vision of private companies has led to changes in the way foreigners are investing in Viet Nam.

Foreign investors have begun to co-operate or develop franchise production rights for local private enterprises.

Successful companies have proven their professional ability in modern management and have shifted from a family-company model.

All have achieved significant economic effectiveness.

“Local businessmen have suffered stiff challenges because of the global financial crisis, but they have successfully adapted as only a small number of enterprises have closed operations,” Pham Chi Lan, senior economic expert, said.

Private enterprises created 4.3 million jobs or 54 per cent of all jobs during the 2000 – 2008 period. The number is four times higher than that of State-owned businesses.

The average yearly income of workers in 2000 is VND8.2 million or 1.4 times higher than GDP per capita, but in 2008 the ratio doubled to reach VND32 million.

Working capacity has also improved. Average yearly turnover for each worker has increased three times, from VND225 million in 2000 to VND710 million in 2008.

Of the 1,000 enterprises that contributed the highest earnings to the State budget, private enterprises and State-owned and FDI companies each contributed 33 per cent.

The rate illustrates the effectiveness of the private sector and its value to the country.

In addition, many ideas to adjust agency policies developed by the private sector have been rec-ognised.

However, at present, the number of large private enterprises is still low because of the lack of capital and qualified human resources.

But in coming years the number will increase as Viet Nam’s membership in the World Trade Organisation provides a trade environment for the development of financially healthy, large businesses.

“Private enterprises have always tried their best to survive and develop,” Lan added.

She noted that when Viet Nam cut import taxes following AFTA and WTO roadmaps, many foreign investors immediately closed their factories and began importing products.

However, many local enterprises continued to invest in modern technology and expand their production because of a more favourable trade environment.-VNS

Tags: Vietnam Private sector