Leveraging private investment to improve the quality of growth.

Private investment plays a crucial role, impacting the quality of economic growth not only in the short term.

Recovery is underway, but many challenges remain.

According to data from the General Statistics Office, during the period from 2019-2023, investment from the non-state sector, while not experiencing negative growth (unlike the foreign direct investment sector in 2020 and 2021, or the state sector in 2021), also underwent a sharp decline and slow recovery. The situation remained relatively unchanged until the end of the first quarter of 2024 (up 4.2%) before improving in the second quarter (up 7.9%), thus contributing to a 6.7% increase in the first half of this year.

As the sector with the largest business community and consistently accounting for the largest proportion of total social investment (often between 55% and 60%), the slow growth of the non-state sector not only reflects the difficulties and challenges faced by the private sector but is also one of the reasons for the slowdown in overall economic growth. According to Dr. Can Van Luc, a member of the National Financial and Monetary Policy Advisory Council, the private sector is extremely important, contributing approximately 50% of GDP, 19% of the budget, 25% of exports, and creating 80% of jobs. Therefore, a slowdown in this sector will cause economic stagnation and hinder overall growth.

Currently, large private corporations are involved in many key sectors of the economy.

This is a reality that experts are very concerned about, although they acknowledge that objective factors, especially the Covid pandemic and its long-lasting consequences, have contributed significantly to the difficulties faced by investment activities in general and the private sector in particular during the past period. However, there are also many subjective, domestic causes that need to be addressed.

Dr. Le Duy Binh, CEO of Economica Vietnam, pointed out that in recent times, the number of large-scale investment projects by private enterprises has not been as high as before. Many investors' decisions have been delayed due to concerns about legal risks and administrative obstacles. In addition, while the number of newly established or reactivated businesses is higher in absolute terms compared to the number of businesses withdrawing from the market, the growth rate is significantly lower. This partly reflects the low level of confidence in starting new businesses and resuming operations.

Public investment should be a lever for private investment.

It should be noted that the results of the first six months of the year were very positive, with growth drivers such as exports and imports, public investment, tourism , consumption, and FDI attraction recovering, providing a basis for expecting higher GDP growth for the whole of 2024. However, experts believe that private investment remains a weakness, with recovery still low compared to the pre-pandemic period. “Given that public investment is limited and cannot be expanded indefinitely due to potential impacts on macroeconomic balance, and while foreign investment may continue to be positive, it still has certain limitations. Therefore, the most important thing is to leverage the role of private investment to achieve rapid and sustainable growth for the future,” emphasized Dr. Le Duy Binh.

One of the specific objectives set out in Government Resolution No. 45/NQ-CP dated March 31, 2023 (Promulgating the Government's Action Program to continue implementing Resolution No. 10-NQ/TW dated June 3, 2017 of the Fifth Plenum of the 12th Central Committee on developing the private economy into an important driving force of the socialist-oriented market economy) is: To improve the quality and efficiency of business in the private economic sector. The growth rate of the private economy should be higher than the overall growth rate of the national economy. The goal is to increase the contribution of the private economic sector to GDP to approximately 55% by 2025 and 60-65% by 2030.

As an experienced consultant for businesses and investors in implementing investment projects, lawyer Bui Van Thanh of the New Sun Law Firm believes that to promote private sector investment, the most important thing is to build a transparent and equitable business environment. This needs to be reflected in access to resources, policies, land, and capital. Sharing this view, Dr. Le Duy Binh emphasizes that the crucial step now is to boost confidence and enthusiasm for investment within the business community by improving the business environment and creating more favorable conditions for businesses. Obstacles identified in the past, such as procedural difficulties, high costs, and concerns about legal risks, need to be addressed comprehensively as well as for individual projects and businesses, so that businesses can confidently decide to invest capital and inject funds into the economy. Alongside this, the leading role of public investment in guiding, paving the way, and stimulating private investment needs to be strengthened.

“I believe that public investment will continue to play a crucial role as a growth driver for the economy in 2024 and beyond, and it can also be used as a lever to spread and promote private investment,” said Dr. Binh, adding that effectively utilizing public investment will not only make it a quantitative contributor to GDP but also play a very important role in improving the quality of growth and supporting other sectors, thereby establishing a harmonious and sustainable structure of the overall social investment capital structure.

Therefore, the effectiveness of state investment capital also needs to be assessed from the perspective of its impact on supporting and stimulating private investment, becoming one of the criteria for selecting and approving projects funded by state capital. As a result, the economy will develop sustainably with a solid, stable structure and a higher degree of self-reliance and self-sufficiency if domestic private investment continues to play a pivotal role in the total investment implemented by the entire society.

In the same spirit, at a recent meeting of the Government Standing Committee on reports proposing amendments and additions to laws under the management of the Ministry of Planning and Investment, including the report on the draft amendment to the Law on Public Investment, Prime Minister Pham Minh Chinh directed: Contents that are clear, proven correct in practice, effectively implemented, and generally agreed upon should continue to be implemented and codified; avoid scattered investments, central government investment budgets should be used; public investment should lead and stimulate private investment, and all social resources should be mobilized and used effectively.

Source: https://thoibaonganhang.vn/phat-huy-dau-tu-tu-nhan-de-nang-chat-tang-truong-154723.html