New Resolution Puts the Private Sector at the Heart of Economic Growth
On 4 May, General Secretary of the Communist Party of Vietnam, To Lam, signed a historic new resolution to put the private sector at the heart of the country’s future economic growth.
Resolution 68/NQ-TW (Resolution 68) refers to the private sector as: “…the most important driving force of the national economy, leading growth, employment, productivity, competitiveness, industrialisation, modernisation, and the transition to a green, circular, and sustainable economy.” In doing so, it sets a bold new direction for the next decade of Vietnam’s development.
To fulfill its role as the engine of socio-economic growth, Resolution 68 introduces a series of ambitious targets for the private sector:
- It targets two million private enterprises operating in the market in 2030, up from less than a million today. This will rise to three million in 2045.
- Resolution 68 aims for a ratio of 20 companies per thousand people and for the private sector to account for around 85 per cent of total jobs.
- It envisages a private sector annual growth rate of between 10 and 12 per cent in 2030 – outpacing that of national economic growth – with an 8.5 to 9.5 per cent annual uplift in productivity.
- The private sector will contribute between 55 and 58 per cent of national gross domestic product (GDP) in 2030, rising to 60 per cent of GDP in 2045, and from 35 to 40 per cent of the state budget.
- Vietnam will be among the top three countries in ASEAN and the top five in Asia for innovation and digital transformation.
Empowering private enterprise
To help the private sector achieve these ambitious targets, Resolution 68 promises to reduce the administrative burden on businesses and remove outdated or overlapping regulations.
In particular, it proposes to eliminate 30 per cent of business licensing and operating conditions and ensure a 30 per cent fall in compliance costs and the time required to complete administrative procedures. Meanwhile, the Business License Tax will be abolished, and the national land database will be digitised to speed up and streamline land registration.
Over and above specific targets, Resolution 68 aims to embed a change in mindset across the government in how it perceives and treats the private sector, tackling misconceptions about private enterprise, encouraging entrepreneurs, and seeing business leaders as “warriors” of economic development.
In short, Resolution 68 aims to transform the government-private enterprise relationship from one of control to one of empowerment.
More support for MSMEs
For the first time, “household businesses” are mentioned in a Vietnamese resolution, with 10 separate citations in Resolution 68. This represents a move to increase support for micro, small, and medium-sized enterprises (MSMEs) and recognise their role in national economic growth.
Resolution 68 aims to support MSMEs and household businesses with legal consultation, management training, and access to digital platforms and accounting programmes. It also outlines plans to improve access to finance for MSMEs, with a particular focus on those that are female-led or located in ethnic or remote regions.
Meanwhile, at least five per cent of land in industrial parks will be reserved for start-ups and SMEs, with a 30 per cent rent reduction for the first five years.
Resolution 68 should provide a boost to the estimated five million “household businesses” operating in Vietnam. These (often informal and unregistered) enterprises account for an estimated 8.5 million jobs – more than foreign-invested companies (22 per cent) or state-owned enterprises (4.3 per cent).
What’s next?
Resolution 68 sets a clear direction of travel from the government. However, the challenge now will be to reform the legal framework and align it with this pro-business vision, creating a predictable trade and investment environment that will allow private enterprise to flourish.
The team at APFL Partners will monitor this process and keep our clients updated as it unfolds. For more information about doing business in Vietnam, just contact us on: contact@apflpartners.com
Disclaimer: This article and its content are for information only and are not given as legal or professional advice. they do not necessarily reflect all relevant legal provisions with respect to the subject matter. Readers should seek legal or professional advice before taking or refraining to take any action.
