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[Research Contribution] Unleashing National Inner Strength from the Private Sector: Restructuring Vietnam’s Development Model – Part 2

12 October, 2025

Keywords: private sector, GDP growth, time periods, economic institutions.

After more than a decade of robust transformation, Vietnam’s private sector has evolved from a “recognized position” to a “key driver” of national growth. Its development across three distinct phases—foundational (2010–2015), acceleration (2016–2020), and breakthrough (2021–2024)—not only reflects the sector’s maturation but also mirrors the evolution of institutional thinking and the operational capabilities of Vietnamese enterprises in the currents of global integration. From initial limitations to resilient post-pandemic recovery, the private sector has affirmed its indispensable role in GDP growth and economic restructuring. As the economy shifts towards digital growth and innovation in the 2025–2030 period, establishing a strategy to leverage this sector as the “most important driving force” is not just a development requirement but a prerequisite for Vietnam to achieve its goal of becoming a prosperous and sustainable nation by 2045.

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Developing the Private Sector in the 2025–2030 Period: Institutional Breakthroughs to Elevate its Role as the Main Driving Force of the National Economy

The 2025–2030 Period: A Breakthrough to Become the Most Important Driving Force in National Economic Development

The 2025–2030 period is defined as a “breakthrough” phase to solidify the leading role of the private sector—the economic component owned and operated by private individuals for profit, innovation, and sustainable development—within the nation’s socialist-oriented development strategy. In the spirit of Resolution 68-NQ/TW (2025), this sector is no longer merely an “important driver” but is targeted to become “the most important driving force of the national economy,” pioneering technological innovation, digital transformation, and leading national growth (Politburo, 2025). This demonstrates the Party’s emphasis on promoting business freedom, protecting private property, fostering linkages between the private, public, and FDI sectors, and expanding the business landscape for the private sector in this new era.

As of 2024–2025, the private sector accounts for approximately 50% of total credit debt (about VND 7 quadrillion), contributes around 52% of GDP, employs over 87% of the labor force, attracts about 45% of total social investment, and makes up over 55% of total goods export turnover (General Statistics Office, 2024). Many large-scale private enterprises such as VinFast, Masan, and VNG have become national symbols in fields like electric vehicles, clean agriculture, and digital technology/AI, demonstrating their capacity for global integration and competition in the post-COVID-19 era.

Despite this progress, the private sector, especially small and medium-sized enterprises (SMEs), still faces profound systemic challenges. Firstly, bank interest rates, currently at 9–11% per annum, are significantly higher than the ASEAN average of 6–7%. Long-term capital mobilized through the stock market accounts for only about 13% of total financial needs, far below the 40–60% seen in developed economies. The venture capital ecosystem remains thin, with only about 30 funds primarily active in the technology sector, while industries like agriculture, logistics, and supporting industries lack significant capital.

Notably, the legal and financial institutional frameworks are not sufficiently interconnected, lacking risk assessment mechanisms between the state and the private sector, credit rating agencies, and financial capacity analysis tools, making it difficult for businesses to attract long-term capital. According to a 2024 survey by the Hanoi Association of Small and Medium Enterprises, up to 67% of businesses face obstacles in accessing loans, mainly due to a lack of collateral, high interest rates, and complex procedures. A root cause is that 60% of SMEs do not undergo independent audits and use non-standard internal accounting books, making it difficult for banks to assess risk, leading to loan denials or low credit limits.

Furthermore, a mismatch in loan tenors hinders long-term investment: 80% of current loans have terms of less than 12 months, which is insufficient for large-scale projects, whereas businesses truly need capital for 3–5 years at stable interest rates.

While human resources and technology have improved, they still fall short of long-term development needs. Many small businesses have not fully embraced digital transformation or supply chain digitalization, lack high-quality personnel, and have limited adoption of ESG standards. This makes it difficult for them to participate in global value chains with their stringent requirements for sustainability and transparency.

Finally, although the business environment has improved, complex administrative procedures, high compliance costs, and legal risks discourage businesses from scaling up or making long-term investments. These challenges—from finance and human resources to technology and institutions—all require synchronous solutions for the private sector to truly become the main driving force for sustainable growth and international integration in the 2025–2030 decade.

The Private Sector in the New Development Strategy: The Driving Force Leading the Economy in a New Era of National Ascent

With the strategic direction of Resolution 68-NQ/TW (2025), the development path for the private sector to 2030 has been clearly defined, with a comprehensive strategy to transform this sector from a supporting force into the engine leading the national economy.

First, the primary focus must be on unblocking the financial system—a persistent “bottleneck.” Vietnam needs to resolutely reduce commercial lending rates, especially for SMEs, while expanding preferential credit for green and innovative sectors. Diversifying long-term capital mobilization channels is paramount: from enhancing the transparency of stock and bond issuance and establishing a credit rating system to promoting multi-sector venture capital funds. Concurrently, there is an urgent need to build risk-sharing mechanisms and policy-based credit guarantees to instill investor confidence and expand the private financial market.

Second, innovation and digital transformation are no longer choices but have become the developmental destiny of the private sector in this new phase. Resolution 68-NQ/TW (2025) clearly defines the need to promote this sector to become the most important driver of the economy. In this context, providing tax incentives of up to 200% for investments in R&D and digital technology is a key policy lever that must be implemented consistently and synchronously. To achieve this, the state needs to connect policies to create opportunities for businesses to be proactive and innovative in their science and technology investments, in line with Resolution 57-NQ/TW on breakthroughs in STI and national digital transformation, while integrating green transition requirements and applying ESG standards in the spirit of Resolution 59-NQ/TW on international integration.

Third, for the private sector to truly become the main driver of the national economy, a holistic development ecosystem is required, in which universities—especially multidisciplinary and key economic universities—play a strategic intermediary role. Beyond training human resources, universities are essential for policy advisory, leading knowledge transfer, overseeing investment funds, and, crucially, effectively connecting businesses, government, and the market. The tripartite cooperation model—state, enterprise, and university—has proven effective in many developed countries and is an irreversible trend in creating an innovative and integrated economy. Overlooking the intermediary role of universities would render policies supporting the private sector one-dimensional and difficult to disseminate.

Strategically, Vietnam needs to nurture at least 20 large private corporations with global competitiveness while expanding the number of enterprises to 2 million by 2030. Ambitious quantitative targets—such as the private sector contributing 55–58% of GDP, creating jobs for 84–85% of the labor force, and achieving an average growth rate of 10–12% per year—reflect not just political determination but also a development model based on internal strength, innovation, and global connectivity. Therefore, universities have a key role in providing the scientific basis for policymaking and training high-quality human resources, while also serving as advisors and critics to help the government enhance national governance and promote sustainable development.

Recommendations for the Private Sector to Fulfill its Role as an Important Economic Driver

Recommendations for the State

Despite being identified by the Party as the “most important driving force” of the national economy (Politburo, 2025), Vietnam’s private sector still faces limitations deeply rooted in policy and institutions. Major shortcomings include high lending rates (9–11%), restricted access to long-term credit, cumbersome administrative procedures, and a lack of risk guarantee mechanisms and financial credit assessment tools (Nguyen Trang, 2025; World Bank, 2024). To dismantle these “bottlenecks,” the state must first perfect the financial institutions for the private sector by reducing commercial interest rates, expanding preferential credit, and promoting the formation of venture capital funds and a transparent corporate bond market. Second, it must concretize policies encouraging innovation with substantial tax incentives for R&D and digital transformation, while integrating ESG standards into business support programs to ensure sustainability (Politburo, 2025; Resolution 59-NQ/TW). Third, a coordination mechanism between the state, businesses, and universities should be established for policy advisory, monitoring the effective use of capital, and connecting enterprises to global value chains.

Recommendations for Private Enterprises

Alongside institutional obstacles, Vietnam’s private sector has internal limitations that reduce its competitiveness. Most private firms are small or micro-sized (over 94%), with weak governance and a heavy reliance on personal experience rather than modern management (CIEM, 2023). About 60% of firms do not undergo independent audits, making it difficult to access credit (Hanoi SME Association, 2024). To overcome these issues, businesses must first professionalize their governance through leadership training and financial transparency. Second, they need to shift from an individual business mindset to a model of industry linkages and public-private partnerships (PPP) to increase value and market access. Third, the business community must proactively participate in innovation programs, ESG initiatives, and labor standard upgrades to meet international integration requirements. Strengthening internal capabilities is a prerequisite for enterprises to effectively leverage policies and truly become the central driver of national growth.

Read the full research paper: Unleashing National Inner Strength from the Private Sector: Restructuring Vietnam’s Development Model HERE.

Authors: Prof. Dr. Nguyen Dong Phong, Assoc. Prof. Dr. Pham Thi Kien – University of Economics Ho Chi Minh City

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