Strengthening Vietnamese private sector should be a 2019 focus: experts

"FDI companies can come in and go out of the country whenever they want, therefore it is vital to increase the competitiveness of domestic private businesses," economist Nguyen Tri Hieu told VnExpress International.

Export made the most significant contribution to Vietnam's economic growth last year, but the majority of export value was created by foreign direct investment (FDI) businesses, not domestic private firms, he noted.

The country posted GDP growth of 7.08 percent in 2018, the highest in 10 years, and exports of $244.8 billion, up 14 percent year-on-year.

Last year, the majority of Vietnam’s exports, 71.7 percent, came from FDI businesses, while local firms accounted for just 28.3 percent, according to the General Statistics Office.

Echoing Hieu, Le Dang Doanh, former head of the Central Institute for Economic Management, said that the domestic private sector should be Vietnam’s main focus this year.

"The government needs to focus on domestic private companies in 2019, using them as a motivation for growth," he said.

"The unpredictable U.S.-China trade war will have negative impacts on global trade, therefore Vietnam needs to create favorable conditions for private businesses to thrive by reducing time and costs for administrative procedures," Doanh noted.

The Economic Consulting Board for the Prime Minister recently said that the government needs stronger solutions to reduce difficulties for the domestic private sector, making it account for 15 percent of the GDP this year and the next.

Experts say that one way to increase private investment is to improve Vietnam’s business environment.

Government leaders have also iterated that Vietnam needs to improve its business environment to help local private firms thrive. A government resolution issued earlier this month said ministries and local authorities need to review and simplify unclear business conditions.

Apart from making the business environment more favorable for existing companies, Vietnam also needs to embrace new startups and help them grow, experts say.

Hieu said that the government this year should help startups find funding from local banks and provide them with tax incentives. Licenses and administrative procedures should be minimized to help young entrepreneurs pursue their dreams, he added.

"Startups are the future of Vietnam’s economy," Hieu said, adding that they would gradually help Vietnam becomes less reliant on FDI businesses.

"The unpredictable U.S.-China trade war will have negative impacts on global trade, therefore Vietnam needs to create favorable conditions for private businesses to thrive by reducing time and costs for administrative procedures," he said.