Private economy shows signs of 'running out of steam', many businesses do not want to grow

The above comment was made by Professor Ngo Thang Loi at the seminar " Breakthrough solutions to remove bottlenecks in the development of the private economic sector " organized by the National Economics University on August 15.

Prof. Dr. Ngo Thang Loi, senior lecturer at National Economics University.

Although it is still the sector leading the entire economy in terms of growth in the number of enterprises, capital, and labor, Mr. Loi said that the private economic sector is showing signs of "stagnating" or, more accurately, is showing signs of "running out of steam".

Professor Loi cited that the business performance of the private economic sector is lower than that of the State and FDI, when nearly half of the enterprises make annual losses.

In terms of average pre-tax profit of an enterprise, it is equal to 0.52% of that of a state-owned enterprise and nearly 3.1% of that of a FDI enterprise. Labor productivity of the private economic sector is only equal to 34% of that of the state-owned enterprise sector and about 69% of that of the FDI sector.

In addition, the scientific and technological capacity of the private economic sector is still weak with the number of high-tech enterprises accounting for only 12.1%. The income of workers in the private sector remains low, only 57.1% compared to the State sector and 80.5% compared to the FDI sector...

" The phenomenon of enterprises not wanting to grow or even 'miniaturize' has been increasing in recent years, the average size of enterprises in the private economic sector is becoming much smaller than that of state-owned enterprises and FDI enterprises in terms of capital, labor and revenue... ", Professor, Dr. Ngo Thang Loi assessed.

The cause of these limitations, according to Professor Loi, comes from many "bottlenecks". In terms of perception, there is still a mindset that the private economic sector is just a simple addition of its constituent parts. The position of this sector in relation to other economic sectors has not been clearly defined, and there is a fear that the strong development of the private economy will deviate from the socialist orientation.

In particular, although the policy system has been improved, it still lacks inclusiveness and has not created conditions for all private sectors to maximize their potential. Private enterprises have not been guaranteed equality in accessing business opportunities, land resources, and capital; have difficulty in supplementing capital during the production and business process; and have differences in tax policies compared to state-owned enterprises or enterprises with foreign investment capital.

" The private economic sector itself is not yet connected, sometimes competing unfairly and lacking connections with the Vietnamese business community abroad, " Mr. Loi stated the reality.

To achieve the 8% growth target, the private economic sector needs to achieve a growth rate of 10.3% and after 2025, to achieve the double-digit growth target, the private sector must grow at least 11.5-12% or more. In response to this requirement, Professor Ngo Thang Loi proposed two solutions.

First, Mr. Loi recommended perfecting the inclusive development model, ensuring equality among business types in accessing opportunities and distributing business results. Policies need to provide separate support for each target group, from large-scale enterprises, small and medium-sized enterprises to business households, to encourage development and expansion.

The second solution, the expert said, is to promote intra-bloc and international connections, perfect the business association model, and empower dedicated entrepreneurs to become the focal point for connecting businesses.

" It is necessary to quickly convert local associations to regional level, remove administrative barriers, and take economic benefits and internal unity as the standards for association, " added Professor Ngo Thang Loi.

Agreeing with the requirement to perfect the institution, Dr. Tran Van The, Chairman of the Board of Directors of InDel Petro Investment and Development Company, acknowledged that administrative procedure reform must be substantive, helping businesses save time and compliance costs.

Mr. The recommended that the State should provide financial support for linkage initiatives and tax incentives for large enterprises leading SMEs to create conditions for private enterprises to participate in public investment projects and national industrial supply chains.

In addition, it is necessary to issue preferential mechanisms on tax, financial sponsorship, technical support and development of innovation ecosystem.

" At the same time, the State needs to amend the regulations to allow and create favorable conditions to support officials or organizations that own intellectual property and scientific products to contribute capital to establish enterprises ," said Dr. The.

English

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