On May 15th, the Vietnam Chamber of Commerce and Industry (VCCI) announced the Vietnam Private Sector Report 2025 and the Provincial Competitiveness Index 2025 (PCI 2025). Simultaneously, VCCI introduced the Business Performance Index (BPI) for the first time, aiming to measure the health and performance of the private sector at the local level.
Shift from rankings to driving substantive reforms.
After 21 years of implementation, the PCI has been upgraded to version PCI 2.0 with 9 component indicators and 98 evaluation criteria. The new set of indicators focuses on areas such as market entry, access to resources, transparency, administrative procedure costs, informal costs, fair competition, business support, legal institutions, and a proactive government.
This year's report is the first survey conducted in the new administrative space comprising 34 provinces and cities following the restructuring of the administrative apparatus and the operation of the two-tiered local government model. The survey was conducted with more than 3,500 domestic private enterprises, 586 FDI enterprises, and more than 1,000 business households nationwide.
However, unlike previous years, the PCI 2025 no longer publishes rankings of localities but instead categorizes them by governance quality into groups: very good, good, fair, average, relatively low, and low. According to VCCI, abandoning the absolute "better - worse" ranking system between localities aims to curb the mentality of chasing rankings, instead focusing on more substantive and sustainable reforms.
The national median PCI score this year reached 63.9/100 points. Five localities in the "good" governance group are Bac Ninh , Da Nang, Hai Phong, Phu Tho, and Quang Ninh. A common characteristic of this leading group is maintaining a balance in governance, from reducing compliance costs and increasing transparency to strengthening legal confidence for businesses.
The BPI 2025 pilot results show three localities leading: Ho Chi Minh City (5.67 points), Hanoi (5.41 points), and Quang Ninh (5.33 points). The national median is 4.20 points.
Notably, VCCI's analysis shows that the quality of governance according to the PCI in 2022 has a statistical correlation with the performance of the private sector according to the BPI in 2025. This indicates that institutional reforms often have a time lag of about three years before clearly reflecting on the business performance of enterprises.
The private sector's internal strength is still weak.
Presenting the 2025 Private Sector Economic Report, Mr. Dau Anh Tuan, Deputy Secretary General and Head of the Legal Department, stated that while the private business sector is currently large, it is not yet truly strong.
The private sector currently accounts for 96.6% of all active businesses in Vietnam. With over 1 million businesses, it plays a crucial role in the economy. However, despite its overwhelming number, the internal strength of this sector remains relatively weak.
Over 80% of businesses have fewer than 50 employees, and over 70% have registered capital of less than 10 billion VND. Their small and micro-sized scale limits their resilience to market fluctuations. This partly explains the cautious sentiment among businesses today, with only 30.9% planning to expand, while 54.8% choose to maintain their current operations to observe market developments further.
This hesitation stems from three major challenges: market access, access to capital, and the predictability of the policy and legal environment.
For the first time in many years, capital constraints are no longer the biggest concern for businesses. Instead, 60.2% of businesses reported that their biggest challenge is finding customers. The decline in market demand is directly impacting production and business operations, especially in the manufacturing and agriculture, forestry, and fisheries sectors.
Although no longer at the top of the list of most difficult challenges, access to capital remains a major problem for private businesses. As many as 75.5% of businesses reported being unable to borrow capital without collateral. This indicates that credit flows still heavily rely on collateral, while the ability to assess business plans and actual cash flow remains limited.
The report also highlighted two notable weaknesses in the private sector: innovation and management capacity. Only 8.8% of businesses engaged in product innovation, while the majority still operated under a family-owned and managed model, lacking the professionalism needed for scaling up and enhancing competitiveness.
Regarding the household business sector, the report shows that it remains a crucial "buffer" for the economy, with approximately 6.1 million households providing livelihoods for around 10 million workers. However, this sector is also facing many difficulties. Up to 81.5% of household businesses reported a decrease in revenue over the past year, and 73.7% only achieved profits sufficient to maintain operations. Despite this, the motivation to transition to a corporate model remains quite low, with only 15.6% of household businesses intending to formalize their operations. The main reasons stem from concerns about tax obligations, accounting procedures, and pressure from inspections and audits.
Based on this factual data, Mr. Dau Anh Tuan believes that stronger solutions are needed to promote the sustainable development of the private sector and truly make it a crucial driving force of the economy. Key solutions include unlocking capital through diverse financial channels, enhancing transparency and stability in the policy environment to build investor confidence. In addition, promoting innovation, supporting digital transformation, and creating a favorable environment for sustainable transformation of household businesses are crucial factors.
According to Associate Professor Dr. Ho Sy Hung, Chairman of VCCI, Vietnam's private sector has overcome the defensive phase, is accumulating internal strength, and is ready to break through if bottlenecks in markets, capital, and policy transparency are decisively addressed in the next 12 to 18 months.
Source: https://daibieunhandan.vn/cai-cach-de-nuoi-duong-khu-vuc-tu-nhan-10417114.html
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