Any growth scenario requires strong businesses

There are many scenarios proposed by economic experts for 2025, with many different assumptions. However, the common point is that all scenarios rely on the growth engine being the business sector.

Economy 2025: Any growth scenario requires strong businesses

There are many scenarios proposed by economic experts for 2025, with many different assumptions. However, the common point is that all scenarios rely on the growth engine being the business sector.

In 2024, the private investment growth rate will be only about 7%, less than half of the pre-Covid-19 level (17%). Photo: D.T

What is the driving force for growth?

In the 2025 economic growth scenario of the research team at BIDV , Vietnam can reach 7.5% in the average scenario and 8% in the best scenario. The double-digit growth target will start from 2026.

The above information was shared by Dr. Can Van Luc, Chief Economist of BIDV at the Vietnam Macroeconomic Conference: Looking back at 2024 and Prospects for 2025 held last weekend. However, he also said that Vietnam's desire to achieve breakthrough growth at this time is a challenge.

Forecasts show that the global economy is entering a period of slowing growth, with growth at 3.2% by the end of 2024, a slight decrease compared to 3.3% in 2023 and 3.5% in the 2011-2019 period.

Meanwhile, geopolitical risks remain high, and global trade policy risks have begun to soar with forecasts of increased tariffs after US President Donald Trump officially took office. “In particular, trade protectionism is forecast to increase three times compared to 2019. Anti-dumping investigations will be quite a common tool this year,” Dr. Luc warned.

The above international context will certainly make it difficult to achieve the targets of further increasing export and investment growth rates in 2025. Even if efforts continue to promote public investment, it will only contribute a few percentage points to growth.

“Social investment accounts for about 37-40% of GDP, of which the private sector accounts for 56%. Final consumption, including both people's and government's consumption, accounts for about 62.5% of GDP. My view is that this year's growth momentum will rely on internal resources,” Dr. Luc analyzed.

Concerns that businesses have too many challenges

Determining growth based on the domestic private sector, Dr. Luc is very concerned when there are too many challenges that businesses are facing. These are legal risks related to slow land processing, land valuation still has many problems; high input costs, specifically significantly increased wages, logistics costs increased by about 30%, while orders recover unevenly...

"In particular, the plan to streamline the organizational apparatus that the Government is implementing very quickly may have a certain impact on the progress of implementing processes and procedures," Mr. Luc shared.

The problem is, the above situation is making it difficult to rapidly improve the growth rate of private investment.

In 2024, although the private investment growth rate will improve compared to the 2.7% increase in 2023, it will only be around 7%, less than half of the pre-Covid-19 level (17%).

Not only from an investment perspective, Dr. Nguyen Minh Thao, Head of the Department of Business Environment and Competitiveness, Central Institute for Economic Management (CIEM) also saw a slowdown in the growth rate of the number of enterprises. In the pre-pandemic period, the ratio of new enterprises to the number of enterprises withdrawing was usually 3 times, but in 2023, this ratio was 1.26 and in 2024, according to updated data, it decreased to 1.18 times.

Ms. Thao analyzed that the biggest bottleneck is the institution, from documents to implementation. Even amending and removing bottlenecks also creates great challenges for business operations when there is a lack of comprehensiveness, each industry still fixes its own industry.

“Enterprises often operate in multiple sectors, so even if they benefit from the openness of one sector, they will encounter difficulties when problems remain in other sectors. Locally, many businesses also shared that reform has slowed down, and there are not many reform initiatives like in the previous period,” Ms. Thao frankly shared CIEM’s business environment surveys.

How to remove the system

In growth scenarios, without promoting the increase of the private enterprise sector, the targets will become difficult. Even the problem of growth above 8% and higher will be very challenging.

“After 35 years of private economic development, since the Law on Companies and the Law on Private Enterprises in 1990, we are still making things difficult for businesses,” said Mr. Nguyen Duy Ninh, General Director of Ho Guom Group Joint Stock Company, mentioning that a series of mechanisms and policies that “make things difficult” for businesses still exist, while support regulations are only available on paper.

For example, the Law on Support for Small and Medium Enterprises, which stipulates preferential corporate income tax rates for this sector since 2017, has not yet been applied. Credit guarantee funds have a lot of money, but cannot lend...

Dr. Luc even proposed to issue a new resolution on private economic development, replacing Resolution 10-NQ/TW in 2017 on private economic development to become an important driving force of the socialist-oriented market economy, because many contents were not implemented vigorously.

At the workshop, the research team of the Vietnam Institute for Economic and Policy Research (VEPR) proposed 6 groups of policies to achieve the highest growth scenario. “The recommendations are all aimed at promoting the business environment. After all, enterprises are the main growth drivers, so it is necessary to promote innovative and sustainable business for them,” Dr. Nguyen Quoc Viet, Deputy Director of VEPR, recommended.

Policy groups according to VEPR recommendations

First, stabilize the macro economy with rapid and strong growth recovery, avoid hasty, subjective, and voluntarist thinking in growth.

Second, reform and streamline the state apparatus towards an effective, efficient, modern, transparent, easy-to-understand and easy-to-implement institutional and state management system to reduce business risks and compliance costs.

Third, promote sustainable development momentum, based on new growth models and linked with global trade and investment trends to achieve high growth.

Fourth, with short-term risks, it is necessary to ensure room for macroeconomic adjustment policies to support domestic economic activities and vulnerable groups.

Fifth, in the medium term, addressing the remaining weaknesses - below average - are infrastructure, qualifications and skills for labor and science and technology strategies.

Sixth, in the long term, build strategies and implement targeted, focused, and key development policies, while ensuring effective disbursement of public investment.

Source: https://baodautu.vn/kinh-te-2025-kich-ban-tang-truong-nao-cung-can-doanh-nghiep-manh-d238963.html