Charting the course to 2045 via private sector advances

The vision of the Party and state leadership to elevate Vietnam to a developed, high-income nation by 2045 is a powerful call for strategic realignment. This audacious goal demands a fundamental transformation of the national economy from a resource-based model to one powered by innovation and a robust private sector.

Dr. Sven David, general director and CEO at VIET Transformation Advisors

To realise this goal, the private sector is a primary catalyst for innovation, productivity, and sustainable growth. This strategic recalibration is fundamental to securing Vietnam’s long-term economic fortitude and sovereign resilience, all within the visionary framework established by the Party. In an era of intense global competition, this strategic shift is critical for building a resilient economy that can adapt to challenges.

Vietnam’s remarkable progress is demonstrated by the exponential rise in per capita income since the late 1980s, a testament to successful development policies. This journey has not only transformed the lives of millions but has also established Vietnam as a dynamic and respected player on the world stage, navigating complex global shifts with pragmatism and foresight.

Despite these triumphs, Vietnam is poised at a critical juncture. The path to 2045 requires not just sustaining but accelerating momentum, a task made urgent by a global landscape where the standards for a developed economy continually rise. A closer examination reveals that many Vietnamese enterprises, particularly the small and medium-sized ones, continue to grapple with structural impediments.

These challenges, including constrained access to capital, skills gaps, and a complex regulatory environment, hinder their ability to scale and ascend global value chains. Addressing these issues is not merely an economic necessity, but a strategic imperative. While foreign investment has been crucial, over-reliance can create dependencies.

To mitigate these and fortify economic autonomy, nurturing the private sector and cultivating a robust, indigenous industrial base is imperative. This requires a concerted effort to address capital allocation, streamline administrative procedures, and invest in the human capital necessary for a knowledge-based economy.

The developmental journeys of nations that have transitioned to high-income status offer invaluable lessons. South Korea, for instance, strategically fostered its large conglomerates by ensuring access to international finance and steering technological advancement. Malaysia implemented targeted incentives to integrate its smaller businesses into sophisticated supply chains, thereby enhancing their technical capabilities. Germany’s “Mittelstand” boasted a cohort of highly specialised, family-owned businesses acting as the backbone of innovation and stability..

Resilient and prosperous

To truly empower the private sector as the principal driver of Vietnam’s national ascent, a coherent, forward-looking policy framework is essential, aligned with the strategic objectives of the Party and state. These pillars are not isolated initiatives. They form a cohesive strategy for unlocking the nation’s immense economic potential.

Four interconnected pillars stand out as the most crucial levers for this transformation. Firstly, a predictable business environment is fundamental to investment and innovation. A steadfast, transparent legal framework that safeguards property rights and ensures contract enforcement is the cornerstone of long-term trust.

The government can enhance investor confidence by ensuring consistency of its legislative and regulatory pronouncements. Concrete measures could include regular, high-level dialogues between government ministries and business associations.

These forums would ensure that policy formulation is grounded in practical realities and that hurdles are systematically dismantled.

Establishing robust, independent commercial arbitration mechanisms could also provide businesses with reliable dispute resolution. Such a stable and trustworthy environment is the bedrock of sovereign economic power.

Secondly, Vietnamese enterprises require enhanced access to diverse capital to fuel growth and invest in technology, moving beyond the limitations of traditional banking. To ignite a dynamic innovation culture, state programmes can provide targeted support to promising young ventures, streamlining access to crucial venture capital. The government can also deploy strategic incentives to encourage robust research and development funding.

Tech transfer from multinationals to the private sector should also be encouraged to disseminate knowledge and build local expertise. Vietnam’s public administration has already demonstrated commendable progress in digitalisation. The next step is to support the broader economy’s digital transformation. This will not only drive substantial productivity gains but also contribute to building a knowledge-based economy.

The third aspect is elevating leadership and championing modern corporate governance. The ultimate success of any enterprise hinges on the vision, capability, and integrity of its leadership. Fostering leadership excellence is a strategic necessity. This entails a focused commitment to enhancing the strategic acumen, risk management, and ethical standards of business leaders.

And lastly, embracing modern corporate governance frameworks, characterised by robust transparency and stringent accountability, is a fundamental prerequisite for building enduring trust with both domestic and international partners. This embrace of global best practices is a powerful affirmation of strength and maturity, accelerating Vietnam’s deeper integration into the global economy.

Global integration

To fully capitalise on global trade and enhance supply chain resilience, a proactive stance towards international engagement is essential for Vietnam’s private sector. This ensures domestic firms are not only participants but also drivers in a globalised economy.

The government can play a crucial role by assisting domestic enterprises in navigating complex regulatory landscapes and by providing comprehensive guidance on leveraging the benefits of free trade agreements. Moreover, deepening engagement in international knowledge-sharing networks offers a vital pathway for Vietnamese companies to access global best practices and secure long-term competitiveness.

The transformation of Vietnam’s private sector is a shared responsibility, demanding a synergistic partnership between government, the business community, and civil society. The government, guided by the Party’s long-term vision, should continue to act as a far-sighted enabler, establishing framework conditions for sustainable growth. Simultaneously, business associations, forward-thinking research institutions, and educational establishments are poised to evolve into indispensable partners, equipping enterprises with the knowledge needed to thrive.

While the vision is ambitious, its realisation is grounded in clear economic targets. To achieve the Party’s goal of becoming a high-income nation by 2045, an average annual nominal gross national income growth rate of 9.75 per cent is required, according to a recalculation using more recent macroeconomic data and the robust model and methodology developed by Dr. Pham Minh Thuy of the Academy of Finance. The calculations are grounded in the long-term assumption of an annual increase in the World Bank’s threshold by 3.47 per cent.

It is, however, crucial to understand that these are projections. Recent data shows that the World Bank’s threshold is growing at a significantly higher rate of 4.85 per cent. This makes achieving the goal an even greater challenge, as the target value is shifting faster than the original long-term assumption suggests.

The transformation is not guaranteed success; it requires extraordinary effort from every part of the national economy. The path is clearly defined, and the resolve of the nation will be the ultimate guarantor of its prosperous and sovereign future.