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Private sector plays important role in economic development
Small to medium enterprises have grown rapidly, and they play an important role in the Vietnam’s economic development as they contribute about 47 percent of the country’s GDP and create over 54 percent of jobs.
They operate in many fields and industries including sweets, textile, clothing, pottery, automobile and machinery.
Thanks to flexible and competent management, the private sector has operated more and more effectively.
According a study by the Vietnam Institute of Economics in 2009, a private company could generate VND271 worth of property and VND4.4 worth of profit from a capital of VND100 in 2000, while the figures were VND398 and VND7 respectively in 2008.
The sector has created more jobs compared to other sectors. After nine years of implementing the Law on Enterprises, by the end of 2008, private enterprises created 4.3 million jobs, four times more than those created by State-owned companies.
The average annual income of employees in the private sector has also risen, with VND8.2 million in 2000 increasing to VND32 million in 2008.
Labor productivity of employees has been improved remarkably. The average revenue created by an employee soared from VND225 million in 2000 to VND710 million in 2008.
Private enterprises account for 33 percent of 1,000 enterprises that pay the most tax.
Many years ago, when small to medium enterprises wanted money to expand their businesses, they had to borrow money from banks.
However, the situation is different now, with the presence of investment funds that target the private sector, which can operate effectively, enterprises have more options.
Many foreign investors have poured their money into this sector through joint ventures.
At a seminar on investing in the private sector in 2007, Mr. Ayumi Konishi, country director to Viet Nam of the Asian Development Bank, said in order to strengthen the Viet Nam’s economy, the Government should remove limits on the policies and structure of investment for private companies.
Thuy Hai, Van Khanh, Hoang Yen
sggp
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