FINANCIAL TIMES
26-3-18

Vietnam looks to bolster private sector output

Communist-ruled nation determined to make private enterprise main economic driver

John Reed in Hanoi

Vietnam aims to generate half of its economic output from the private sector within two years, its prime minister said, giving a clear indication of the communist-ruled country’s determination to make private enterprise the main engine of its economy.

Nguyen Xuan Phuc also said that Vietnam, bolstered by new trade agreements and improved conditions for businesses, was set to surpass its GDP growth rate of nearly 7 per cent last year, and maintain this momentum for “many years to come”.

“The private sector is an important impetus for the economy of Vietnam,” said Mr Nguyen. “We will try to put in place the most favourable policies and create the most favourable environment so that by 2020 we will have in operation over 1m businesses accounting for 50 per cent of Vietnam’s GDP”, up from 43 per cent at present.

Vietnam’s export-driven economy grew 6.8 per cent last year, one of the strongest showings in south-east Asia, and 7.4 per cent in the first quarter of 2017.

“We hope that the growth figure of this year will exceed that of last year, and (we) will sustain that figure through at least 2020 and maintain that impetus for subsequent years,” Mr Nguyen said. “In order to attain this, we will try to maintain favourable conditions for businesses, healthy environment for businesses and further international integration, especially support for private sector and nurture innovation so that we can enhance GDP growth for many years to come.”

Since taking office in 2016, the Vietnamese prime minister has sought to reduce the role of the state-owned enterprises that until recently dominated its economy, disposing of stakes in food and drink, oil, and power generation companies. In a record-setting sell-off in December, a consortium led by Thailand’s Thai Beverage bid $4.8bn to acquire a controlling stake in Sabeco, the country’s largest brewer.

In February the country said it had set up a committee to oversee $220bn worth of state-owned assets as part of its drive to speed up privatisation.

Mr Nguyen said his government would also support small and midsize enterprises and give “special attention” to agriculture and the development of rural areas, which contribute a modest share of the country’s GDP, but account for a larger share of employment.

Vietnam’s government is also banking on an economic lift from new trade agreements, including the new act between 11 Asia-Pacific countries signed in March in response to President Donald Trump’s withdrawal of the US from the proposed Trans-Pacific Partnership.

Members of the new grouping, called the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), have said they were open to the US — Vietnam’s largest export market — joining in future, and Mr Nguyen said that he hoped it would.

“I cannot say for sure what the decision will be for President Donald Trump — whether he will come back into the CPTPP or not,” the Vietnamese leader said. “However, I believe it is in the interest of all the member economies for the US to join in this agreement, (which) will be a great impetus for growth in this region and the world.”

Mr Nguyen spoke ahead of a regional summit of the “Greater Mekong Subregion”, grouping five south-east Asian countries and China, in Vietnam later this week. His office carefully vetted interview questions, and declined to address Vietnam’s delicate relations with China, which is playing an ever more dominant role in the region, and has caused Hanoi to suspend two energy projects in the disputed South China Sea.