Tapping into the hidden resources of the corporate world
The United Nations Development Programme (UNDP) believes that private sector-led innovation can significantly contribute to improving Human Development Index (HDI) outcomes, with advancements in education, healthcare, and social protection led and supported by businesses laying the foundation for more equitable and inclusive development.
In line with this vision, Vietnam's Resolution No.68-NQ-TW establishes the private sector as a central engine of economic growth. The resolution outlines comprehensive policies and strategies to promote and protect the private sector, aiming to transform the private economy into a major driving force of national development.
Key Policies and Strategies
The policies and strategies outlined in Resolution No.68-NQ-TW include institutional reforms, administrative simplification and decentralization, legal and regulatory clarity, encouraging private sector leadership in high-growth sectors, and supporting small- and medium-sized enterprises (SMEs).
Institutional reforms involve reviewing and amending tax laws, land access, fees, natural resource use, competition policies, administrative penalties, and interest rate support to reduce bottlenecks and transform institutional frameworks into competitive advantages.
Administrative simplification and decentralization aim to streamline administrative procedures to reduce time and costs, and delegate more authority to local governments to improve efficiency and responsiveness to private sector needs.
Legal and regulatory clarity focuses on improving transparency and legal certainty, fostering an open and supportive business environment as evaluated by specific business environment indices covering access to capital, land, innovation, digital transformation, business ethics, and environmental responsibility.
The resolution also encourages private sector leadership in high-growth sectors, such as infrastructure, renewable energy, green infrastructure, and technology, through mechanisms like public-private partnerships.
Supporting SMEs is a crucial aspect of the policies, with measures aimed at improving access to capital, land, and reducing administrative burdens to remove systemic barriers and foster competitiveness and innovation across the sector.
Positive Impact on SMEs
The impact of Resolution No.68-NQ-TW on SMEs is already showing positive signs. Since its implementation, over 24,000 new private enterprises have been established in just three months, indicating increased entrepreneurial activity and market confidence.
The Government’s emphasis on evaluating private sector satisfaction and using data-driven indicators is expected to further refine policies favoring SMEs' growth, job creation, innovation, and sustainable practices.
Blended Finance and Innovation
Resolutions 68 and 198 broaden the role of the Small and Medium-sized Enterprise Development Fund (SMEDF), allowing for startup loans, seed capital, or co-financing models that combine public and international/private resources. This approach, known as blended finance, has mobilized significant private capital flows for sustainable businesses globally.
Resolution 68 positions private enterprises at the centre of Vietnam's transition towards a green, circular, and sustainable economy, in alignment with the country's national development goals and international commitments.
UNDP Partnership and Future Prospects
The UNDP remains committed to partnering with Vietnam's private sector to strengthen capacity, promote inclusive and sustainable business models, and expand access to innovative finance.
Vietnam should consider expanding access to public loans, building a community of local angel investors, and offering incentives for large corporations to channel their Corporate Social Responsibility (CSR) funds into SMEs.
Resolution 57 introduces incentives to support enterprise investment in research, development, and technological innovation, with policies like tax incentives, mechanisms to attract venture capital, and a more risk-tolerant approach to scientific and technological research.
Alignment with Sustainable Development Objectives
Many businesses in Vietnam are already embracing circular economy principles, inclusive business models, and social impact businesses that align with sustainable development objectives. The private sector holds the key to unlocking Vietnam's sustainable development future, with the need to turn policy into practice by scaling up innovation and leveraging creative financing as a catalyst for shared prosperity for all Vietnamese people.
The Canada-funded ISEE-COVID project fosters business models that combine economic growth with environmental sustainability and social inclusion. Resolution 57 links innovation to human development, aiming to maintain Vietnam's HDI above 0.7, with Vietnam achieving an HDI of 0.766 in 2023.
In conclusion, Resolution No.68-NQ-TW drives a strategic shift from merely supporting to actively promoting and protecting the private sector—especially SMEs—by reforming institutional frameworks, simplifying administration, enhancing legal clarity, and encouraging sector leadership roles. Early outcomes suggest rising enterprise formation and improved business environment conditions vital for SMEs' sustainable development in Vietnam’s evolving economy.
- To further fuel the growth of SMEs in Vietnam and align with the United Nations Development Programme's (UNDP) vision, it is crucial to establish strategic partnerships, enabling the private sector to access innovative finance, such as the blended finance model, which combines public and international/private resources.
- With Resolution No.68-NQ-TW promoting private sector leadership in high-growth sectors like infrastructure, renewable energy, green infrastructure, and technology, finance plays a pivotal role in supporting these sectors, thereby contributing to advancing education, healthcare, and social protection, as key elements in improving the Human Development Index (HDI) outcomes, as championed by the UNDP.
