The Prime Minister recently met with private enterprises, emphasizing the goal of transforming them into the most critical pillar of Vietnam’s economy. This strategic vision aims to accelerate the nation’s economic growth to double-digit levels.

In an exclusive discussion with VietNamnet, economist Nguyen Dinh Cung shared his insights on the role of private enterprises in shaping the country’s economic future.

A vital economic force

According to Nguyen Dinh Cung, former Director of the Central Institute for Economic Management (CIEM), recognizing the private sector as the primary driver of the economy would be a significant step forward.

Vietnam’s private sector consists of two key segments: formally registered businesses and household enterprises, which include both agricultural and non-agricultural businesses.

By the end of last year, Vietnam had approximately 980,000 active enterprises—far below the 2025 target of 1.5 million. Additionally, around 2.5 million non-agricultural household businesses contribute significantly to economic activity.

“The private sector currently accounts for more than 50% of GDP. Within this, private enterprises contribute about 28%, non-agricultural household businesses 12%, and agricultural household businesses around 10%,” Cung explained.

The private sector also contributes 56% of total social investment - far surpassing the 28% share from state-owned enterprises and 16% from foreign direct investment (FDI). It is responsible for 28-30% of total exports and, most importantly, generates over 80% of employment opportunities nationwide.

“This sector already plays the largest role in our economy, creating the most jobs. While a few private enterprises have grown into national-level corporations, there are still very few with regional or global influence. Recognizing this sector as the economy’s most important pillar is both accurate and necessary,” Cung affirmed.

Private sector growth is essential for Vietnam’s economic targets

Vietnam’s leadership has emphasized that private enterprises must achieve double-digit growth to enable the national economy to do the same.

“If the private sector, which contributes more than 50% of GDP and 56% of total investment, does not grow at double-digit rates, the overall economy will not reach that level of growth. Without this, the prosperity targets set for 2030 and 2045 will be unattainable,” Cung stressed.

To effectively support this growth, he called for better statistical tracking of the private sector’s contributions to GDP and investment. This data, he argued, would help shape policies tailored to each stage of economic development.

General Secretary To Lam has instructed that all economic sectors, particularly private enterprises, must operate in a safe, transparent, and cost-effective business environment that meets international standards. Encouraging entrepreneurship and wealth creation is a key priority.

Reducing legal risks and unlocking business potential

Despite years of economic reforms, many entrepreneurs still face excessive legal uncertainty. Vietnam’s regulatory environment has not fully embraced the principle that businesses should be free to engage in any industry not explicitly prohibited by law.

Cung pointed out that, in practice, businesses must operate only within a predefined list of legally recognized industries. If a business seeks to enter an unlisted industry, it must obtain special approval - an often difficult and uncertain process.

“Legal risks remain a constant concern for investors and entrepreneurs. Many businesses in Vietnam deliberately avoid expanding because they fear losing control over their assets due to legal uncertainties,” he explained.

One example is the requirement for government approval of investment projects - a process that dictates project objectives, locations, and even investors. Cung argued that this contradicts fundamental market principles, which dictate that decisions on production, investment, and location should be left to businesses and market forces.

“The need for ‘investment approval’ is unnecessary and burdensome. It does not replace environmental regulations, building permits, or land use policies, yet it adds significant bureaucratic hurdles,” he said.

Overregulation and its impact on entrepreneurship

Vietnam’s regulatory system has, in many cases, turned the principle of economic freedom on its head. Instead of allowing businesses to operate freely in any industry not explicitly prohibited, current laws often dictate that businesses can only operate in legally designated industries.

There are thousands of industries with licensing conditions, and tens of thousands of regulations impose unnecessary restrictions on business activities.

“The sheer volume of industry-specific regulations acts as a barrier to market entry for small and medium-sized enterprises (SMEs). Instead of fostering competition, these regulations often protect established players, creating monopolistic advantages for a select group of businesses,” Cung noted.

Excessive regulation stifles innovation, raises compliance costs, and leads to legal uncertainty. Many business owners struggle to fully comply with all regulations, leading to either partial compliance or superficial adherence. This creates significant legal risks, where businesses -knowingly or unknowingly - may find themselves in technical violation of the law.

“This situation has suppressed entrepreneurial ambition and discouraged businesses from scaling up. Many enterprises remain small not due to a lack of capability, but because they fear the legal and regulatory risks of growing too large,” Cung explained.

Vietnam has seen the rise of major private enterprises like Vingroup, Sun Group, Thaco-Truong Hai, and Hoa Phat. However, these success stories remain rare exceptions. For the country to cultivate more homegrown giants, it must dismantle bureaucratic obstacles that hinder private sector expansion.

“The time has come to remove institutional bottlenecks that hold back our economy. This will not be easy, but it is essential for Vietnam to transition onto a higher growth trajectory,” Cung concluded.

Tu Giang & Lan Anh