Professor Vũ Minh Khương of the Lee Kuan Yew School of Public Policy in Singapore. — Photo courtesy of Việt Nam Government Portal

Việt Nam is stepping up reforms and deepening international integration and the private sector is emerging as a key pillar of the national economy. In an interview with the Government News, Professor Vũ Minh Khương of the Lee Kuan Yew School of Public Policy in Singapore, talked about the challenges, opportunities and solutions needed for the private sector to become a driving force for the country’s development.

How do you assess the Vietnamese Government’s efforts to boost private sector development and turn it into a key driver of the national economy?

I believe Việt Nam’s political system is undergoing significant transformation, underscored by a strong push to deliver robust economic growth in the years ahead, with particular emphasis on advancing private sector development, aligning with global trends. General Secretary Tô Lâm and Prime Minister Phạm Minh Chính have issued bold directives, reflecting both strategic vision and firm resolve to establish the private sector as a keystone of the national economy.

The overarching guidance from the country’s top leadership highlights not only a deep appreciation of the private sector’s role, but also a commitment to fostering innovation and modernising economic management. To translate this vision into actual results, we need to develop clear, coordinated policies that will create the right conditions for the private sector to achieve a strong breakthrough in the near term.

How do you see the role of the private sector in Việt Nam’s economy today? How does its contribution compare to that of other key sectors, such as state-owned enterprises and foreign direct investment?

The private sector is increasingly asserting itself as a crucial pillar of Việt Nam’s economy. Where it once lagged in scale and competitiveness, we are now seeing the emergence of private entities, with ambitions that reach beyond national borders to regional and global markets. Industries such as steel, automotive manufacturing and high technology have all experienced remarkable growth, fuelled by dynamic Vietnamese private firms.

While the private sector has yet to eclipse state-owned enterprises or foreign direct investment as the leading force in the economy, this shift appears inevitable. Just ten or twenty years ago, private businesses were still finding their footing. Today, big private groups are making significant contributions to GDP growth, employment and the country’s overall competitiveness.

The key challenge now is ensuring that this sector develops in a sustainable and strategic manner. This will require more than simply cutting red tape and reducing obstacles. It demands robust and well-aligned policies, particularly aimed at eliminating the bottlenecks still hampering private sector progress. With the right support, I am confident the private sector will take on an even greater role and become a key driver of Việt Nam’s economic success in the years ahead.

In your opinion, what are the biggest barriers currently facing Vietnamese private enterprises? What specific measures should the Government take to better support the private sector?

Việt Nam’s private sector stands on the point of a significant growth trajectory, yet it continues to grapple with several deep-rooted challenges. In my view, three critical issues must be urgently addressed, including institutional bottlenecks, limited innovation capacity and shortcomings in workforce quality.

Firstly, on the institutional front, the task is not simply to identify broad obstacles but to zero in on the specific bottlenecks within each industry. Currently, private enterprises are active across some 35 sectors and each faces its own unique regulatory and structural hurdles.

Resolution No. 10-NQ/TW, widely known as Khoán 10, was issued by the Politburo in 1988 and marked a turning point in Việt Nam’s agricultural management reform, today’s private sector requires sector-specific reforms of equal magnitude. Businesses are calling for a fundamental shift in the legal and administrative landscape, with simplified procedures and stronger inter-sector linkages. This will require the Government to engage more proactively and consistently with industry bodies to make precise and timely policy interventions.

For example, the maritime transport industry. Despite handling millions of tonnes of cargo, many Vietnamese companies are compelled to register vessels overseas where procedures are more efficient. At home, customs clearance at major ports such as Cái Mép remains fragmented and uncoordinated. Adopting a unified digital system akin to that of Singapore could unlock substantial production capacity.

In logistics, outdated regulations allow for only a single instance of domestic transhipment, forcing many routes to divert via Hong Kong or Singapore instead of fully optimising Việt Nam’s own transport corridors. Addressing these inefficiencies could lead to immediate growth of between 10 and 20 per cent in certain industries.

Production at VinFast’s factory, part of Vingroup, in Cát Hải, Hải Phòng City. — VNA/VNS Photo

Secondly, innovation is a decisive factor in enabling private-sector breakthroughs. In many advanced economies, businesses investing in research and innovation benefit from financial support or tax incentives. In Việt Nam, however, these mechanisms remain unclear, causing firms to hesitate out of concern for potential audits and regulatory scrutiny.

The Government needs to implement a robust framework that promotes innovation, such as offering preferential financing and tax breaks for enterprises pursuing technology upgrades and digital transformation. Countries like Thailand and Singapore have set valuable examples, from which Việt Nam could draw practical lessons to accelerate the growth of its domestic enterprises.

Thirdly, human capital is a basic pillar for the private sector’s success. Việt Nam currently lacks a flexible and responsive training system closely aligned with the real-world demands of businesses. In Singapore, the government has been known to support enterprises in training double the number of required workers, creating a readily available talent pool and encouraging new investments. Việt Nam’s efforts to assess business needs, meanwhile, often lack depth and remain largely formalistic. A more targeted and practice-oriented training strategy is needed to ensure that private firms can access a workforce with the necessary skills to meet the demands of a modern economy.

I greatly commend the leadership’s vision and determination to elevate the private sector as a core engine of Việt Nam’s economic growth. Yet, to realise this ambition, a vigorous regulatory environment, strong incentives for innovation and a comprehensive human resources strategy are essential. Should these elements be put in place, Việt Nam’s private sector will be well positioned to deliver transformative growth and make a lasting impact on the national economy in the years ahead.

What steps should Vietnamese private enterprises take to boost their competitiveness, particularly amid the challenges of international integration and the accelerating pace of digital transformation?

For Vietnamese private enterprises to make a decisive step forward, a shift in development mindset is essential. Many businesses today remain focused on short-term gains, often drawn to fast-profit sectors such as real estate or export-oriented activities, yet they lack a coherent, long-term strategy for sustainable growth. In an increasingly volatile global landscape, this quick-win approach risks leaving companies exposed to external shocks, with short-term opportunities quickly turning into long-term vulnerabilities.

A key limitation of the private sector lies in its insufficient grasp of global trends and a notable underinvestment in modern management practices. Without a long-term vision, many firms risk stagnation, falling short of their potential. For an economy to advance, it is not enough to pursue growth alone; it must aim for qualitative development. An enterprise with an effective business model can generate far greater value from initial investment, ultimately building more durable competitiveness.

In parallel, the Government has a crucial role to play in providing targeted support to help steer businesses onto a sustainable growth path. Singapore offers a useful model, where private firms benefit from well-structured programmes offering strategic advice, technology support and digital transformation assistance. For example, businesses requiring consultancy on technology adoption or digitalisation may receive subsidies of up to 50 per cent, depending on sector priorities.

As Việt Nam advances its global integration and digital transformation, private enterprises must go beyond relying on state support. By modernising, improving governance and adopting long-term strategies, they can drive sustainable growth and fulfil their role as a vital force in the nation’s economic future. — VNS