Dialogue to foster domestic business development

Dec 5, 2002

Ha Noi - Progress of the implementation of the 14th Resolution of the 5th Plenum of the Party Central Committee on private sector development was the focus of the meeting organised by the Central Institute for Economic Management (CIEM) with support from UNDP today. The Party Commission on Economic Affairs, the Government, the Ha Noi Union of Associations on Industry and Commerce, business associations and private entrepreneurs, discussed the challenges in the implementation of the Resolution focusing on the need to support far reaching reforms for a more competitive, broader-based private sector for both local and export markets.

The domestic private sector in Viet Nam has witnessed a real boom since the enactment of the Enterprise Law in early 2000 with the creation of some 53,000 businesses with a total investment of about US$ 5.3 billion. In 2001, this sector represented some 25 percent of the total investment in Viet Nam compared with 20 percent of the foreign sector. However, there is still a long way to go with the domestic private sector accounting only for 4% of total GDP.

This first ever Domestic Business Meeting, which brought together nearly 200 private entrepreneurs from Ha Noi and the northern provinces of Viet Nam, focused on progress made as well as continued impediments to conducting successful and competitive business in Viet Nam. These included negative perceptions of the private sector, the limiting and contradictory regulatory environment (in particular with reference to tax and customs regulations), preferential treatment of state-owned enterprises, limited access to capital and land, inadequate implementation of policies at local level, and weak business education and management training.

The 14th Resolution of the 5th Plenum of the Party Central Committee identifies private sector development as an important component of Viet Nam's economy. According to Mr Nguyen Van Dang, Deputy Head of the Party Commission on Economic Affairs, the Party Resolution seeks to abolish discrimination between different economic sectors.  “The Resolution highlighted the need to ensure equality between economic sectors in terms of opportunities and choices for development,” Mr Dang said.

UNDP Resident Representative, Mr Jordan Ryan, noted the critical role of the private sector in creating jobs and tax revenue as well as raising living standards of people. “Viet Nam will meet many of its social and economic challenges in the coming decade if it can further tap the talent and drive of domestic private entrepreneurs. And it is critical that this expansion happen in the most equitable way possible, so as not to exacerbate income and Human Development gaps in the country,”  Mr Ryan said.

Entrepreneurs present at the meeting welcomed the Party Resolution on private sector development and the Enterprise Law. However, entrepreneurs shared their concerns on the shortcomings of the actual implementation of these policies at the local level and the negative attitude of the local officials towards private businesses. "Access to land, capital and economic information are of particular significance to the forward momentum of the private business sector but we, entrepreneurs, meet with many difficulties in working with local officials on these issues. Despite the government’s efforts to promote exports contradictory regulations concerning tax, customs and currency regulations for trade with China threaten viability of our businesses. We look forward to this being addressed by the government as they support our efforts to increase competitiveness in the regional and world economy," said General Director of Que Huong Green Bean Cake Company, Mr. Vu Thien Huu. Proliferation and reemergence of numerous permits required for conducting a business were also mentioned by the entrepreneurs as a major hindrance to viability of their companies.

According to Vice Minister of Planning and Investment Lai Quang Thuc, early indications of the private sector growth have been positive, however, many challenges remain in the effective implementation of the Enterprise Law and in further improvements in the policy, legal and institutional environment. He praised the initiative to organize Domestic Business Meetings as a forum for policy dialogue among the domestic private sector, the government and the Party. “The active participation of entrepreneurs in this dialogue is essential to further improving legal and institutional environment for domestic business development,” Mr Thuc said.

Two Domestic Business Meetings are scheduled for 2003 to cover the central and southern provinces. According to CIEM President, Dr Dinh Van An, CIEM/MPI will set up a mechanism to ensure appropriate inter-agency follow-up on the issues discussed at each of the events to ensure the feedback received from enterpreneurs is translated into the practical actions required to facilitate further successful implementation of the Party Resolution. “These meetings aim to keep domestic business community abreast of the Government’s policies and provide an opportunity for domestic private sector to engage in a dialogue with government to address the constraints to conducting viable business in Vietnam. CIEM will hold follow-up working sessions with relevant ministries and agencies to address the concerns voiced by the entrepreneurs at this meeting,” Dr. An said.

Contact informationNguyen Viet Lan, UNDP Public Information Assistant
phone 9421495 (ext 186)