Obstructions swept up for private sector

August 02, 2022 | 16:28
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Serving as the key mainstay of the economy, the Vietnamese private sector is expected to witness a more favourable business and investment environment soon, with obstructions to be eradicated so that enterprises can flourish further.

Thai Huong felt quite moved when she and all staff at TH Group, where Huong acts as founder and chairwoman of the Strategic Council, were praised by Prime Minister Pham Minh Chinh during his visit on July 23 to some of the group’s far-reaching projects in the central province of Nghe An.

“I have listened to your comments on our projects and efforts with high concentration. I see that the government is pinning high hopes on our further successes and contributions to national development, especially to Vietnam’s agricultural development,” Huong told PM Chinh.

Prime Minister Pham Minh Chinh paid a visit to TH Group’s dairy farm and met with employees
Prime Minister Pham Minh Chinh paid a visit to TH Group’s dairy farm and met with employees

Initiated in 2009, the $1.2-billion, 37,000-hectare hi-tech concentrated dairy and fresh milk production project in Nghe An’s Nghia Dan district uses state-of-the-art technologies and currently has nearly 70,000 dairy cows, and has been recognised as “The world’s largest high-tech centralised dairy farming and processing complex” by the World Records Union – Worldkings.

All stages, from caring for the dairy cows and food processing to milking and product packaging are automatically implemented. Currently, TH Group occupies 45 per cent of Vietnam’s fresh milk market share.

Vo Tien Sy, Chairman of Nghia Dan People’s Committee, reported that before the project appeared in the locality, the poverty rate was 23 per cent, but now it is only 6.4 per cent. “It is expected that the rate will continue to reduce to 2-3 per cent over the next few years thanks to the project’s positive impacts,” Sy said.

TH has so far been implementing more than 20 projects covering many sectors, largely in high-tech agriculture and foodstuffs, employing tens of thousands of labourers directly and indirectly.

PM Chinh’s visit to TH Group was an opportunity for him to collect more information and further strengthen his confidence that the Party and the government’s policy to develop the private economic sector is correct. This will also help the government to devise more sound policies to support privately-owned enterprises (POEs) in Vietnam.

Nurturing enterprises

“When I asked labourers at the project about how their life has changed, they happily replied that their life has been remarkably improved year after year. This has made me quite happy,” PM Chinh said, “It is not easy to do business, and more difficult to do business in the agricultural sector as TH Group and Thai Huong have been doing.”

TH Group is among POEs in Vietnam with effective investment and business activities, he continued. “This is an exemplary model which should be multiplied in many other localities as it creates high value for the economy.”

He said that Vietnamese enterprises have been making great contributions to national development. In the existing self-reliant economy, it is a must to develop both state-owned enterprises and POEs. Currently, these two types of enterprises have almost the same contribution to GDP, at around 40 per cent. However, POEs are generating over 80 per cent of the economy’s employment.

“According to the mindset and policy of the Party and the government, there is no discrimination against the private sector. This sector has been flourishing strongly with increasing contributions to the state budget and employment generation. I would reiterate that we don’t have any discrimination against the private sector, both in thinking and action, and also in formulating policies and laws,” PM Chinh added.

According to the resolution of the government cabinet’s June meeting, PM Chinh ordered that all obstructions against businesses must be removed for enterprises to develop, with ministries, agencies, and localities requested to review all legal regulations.

Under the resolution of the 13th National Party Congress held early last year, the Party has specified a number of strategic breakthroughs for the country to become a developing nation with modernity-oriented industrial development by 2025. Per capita GDP will be $4,700-5,000; a developing country by 2030 with modern industrial development and upper middle income; and a developed economy with high income by 2045 – meaning a GDP of about $2.5 trillion with per capita income of about $18,000 a year.

To this end, the first strategic breakthrough will be “to create a good and synchronous system of laws, mechanisms, and policies, and to offer a favourable, healthy, and fair investment and business environment to all economic sectors, with the advancement of innovation and the mobilisation, management, and effective use of all national resources for development”.

The Party’s strong will in developing the private sector has also been mirrored in its adoption last year of a report summarising the implementation of the 2011-2020 Socioeconomic Development Strategy, and formulating the same version for 2021-2030. In which, the Party stressed that the private sector “must be strongly developed both qualitatively and quantitatively, and effectively and sustainably. All impediments and prejudice have to be eradicated, while all favourable conditions have to be offered for the private sector to develop.”

In Vietnam, the private sector is now responsible for 43 per cent of GDP, 49 per cent of total development investment, 15.4 per cent of the state budget, and 85 per cent of total labourers, according to the Ministry of Planning and Investment (MPI).

Vietnam currently has nearly 800,000 businesses in operation, with about 98 per cent being small- and –medium-sized ones. In the 2016-2019 period, there were nearly 126,600 newly established enterprises annually, registered at about $58.7 billion in total, up 49.3 per cent in the number of enterprises and 24.8 per cent in capital as compared to those in the 2010-2015 period. The country also boasts many big POEs such as Vingroup, TH Group, Truong Hai Auto Corporation, Vietjet, and Minh Phu Seafood Corporation.

Further assistance

Thai Huong of TH Group suggested that for the private sector to grow further, more support from the state is needed.

“Specifically, it is necessary to re-assess the country’s land resources so that suitable policies can be applied. The government should encourage the shift of plants so that farmers can have more suitable production models,” said Huong, who is also chairwoman of the Vietnam Association of High-tech Agriculture. “In an example, acacia is used to help the government in poverty alleviation and hunger reduction, but it is not suitable now as its economic values are lower than those of other plants such as fruit trees and herbs which are now cultivated by TH Group.”

The MPI is now drafting a hallmark scheme for comprehensive renewal of state management for private sector development in Vietnam. Currently, the scheme is under discussion and will be submitted to the government and then the Politburo. It is expected that the scheme will embrace many specific solutions to fuel the private sector.

According to Minister Nguyen Chi Dung, for the private sector to further flourish, with bigger contributions to the economy, “all obstructions must be removed, and all the best conditions must be created.”

“If the private sector fails to receive further support, the nation won’t be able to hit high economic growth sustainably, and materialise the goals set out in the Party’s resolution. Even the economy won’t be able to overcome the middle-income trap without more contributions from the private sector, especially in the context that the state budget remains limited,” Minister Dung said.

PM Chinh said that to develop the country’s private sector, the government will “boost public-private partnerships, with the sector’s resources being promoted to a maximum level.”

“In the coming time, we will have new mechanisms to attract more private resources, creating the best conditions for them to flourish and implement innovation, digital transformation, production, distribution, and market expansion,” he stressed. “I would reiterate that the private sector will be developed into a really important impetus of the national economy.”

By Nguyen Dat

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