A customer buys cake at a Kinh Do store

A shortage of big businesses would deter Vietnam's private sector from further development despite the positive role of private enterprises, experts have said.

A Vietnam Association of Young Entrepreneurs survey revealed that the scale of private enterprise had by now increased to more than 9,000 since the Prime Minister approved their establishment in principle.

The private sector has managed to create 1.5 million jobs alongside an average annual revenue of US$25 billion.

However, the association said that most private businesses were small-and-medium-sized with a modest number of large firms.

The Top 500 Big Vietnamese Businesses list, put together by the Vietnam Report Company, showed that only 29 per cent out of the total number of businesses were involved in the private sector. Such popular brand names include Dong Tam, Kinh Do, Trung Nguyen, Hoa Phat, Hoang Anh Gia Lai, Saigon Invest, SSI, CMC, Hoang Long, T&T, Phu Thai and Mai Linh.

An additional top 200 list, drawn up by the UN Development Programme (UNDP), revealed that 17 private enterprises were eligible to be listed as big ones.

The Ministry of Finance's General Department of Taxation added that Vietnam had nearly 273,000 private businesses, accounting for 59 per cent of the country's total number of newly established enterprises.

It said that these businesses accounted for a large proportion in terms of numbers, but were still small in scale, which meant Vietnam lacked medium and big enterprises to expand into regional and world markets.

Association Vice Chairman Nguyen Manh Cuong said that the private enterprises needed guidelines and support from the Government to develop successfully.

In agreement, Hoang Tran Hau, deputy director of the Institute for Finance, said that the Vietnamese private sector was still not strong enough in terms of capital, management, strategy and competitiveness.

"Viet Nam has still not developed its private enterprise," Hau added.

Pham Duc Trung, deputy head of the Central Institute for Economic Research and Management's Enterprises Management Research Board, said that the sector did not need a specific mechanism. Activities could be stipulated and managed via legal documents such as the Law on Business and the Law on Business Registration.

Le Phuoc Vu, chairman of Hoa Sen Group's Management Board, said that the establishment of private groups was vital for the economy, serving as leading players in the private sector and contributing to development along with State-owned enterprises (SOEs).

Chairman of Phu Thai Group Pham Dinh Doan agreed, saying that private enterprises and SOEs had to join efforts to mobilise resources for development.

Source: VNS