Hanoi-based construction company chief executive Nguyen Hieu was last year turned down by several banks for a US$800,000 loan for a project the company had won and had already invested nearly US$500,000.
“It’s very difficult for small, private companies like us to get bank lending,” said Hieu, whose company employs a few dozen people. “They prefer to lend to big businesses and state-owned companies. We’ve had to trim down operations due to a lack of capital.”
The Vietnamese Communist Party says it recognizes the challenges companies like Hieu’s face and is setting a firmer tone to support private businesses over the next five years, as frustration grows over the slow reforms at state companies.
The nation is set to be one of the fastest-growing economies in the world, yet local firms have struggled to benefit while foreign manufacturers reap the export boom.
In his opening address on Thursday last week at the most important party conclave that occurs every five years, Vietnamese Communist Party General Secretary Nguyen Phu Trong said the “private sector is an important engine of the economy” and urged for policies to support it.
An online draft of the party’s five-year economic plan, which the 1,510 delegates are expected to approve this week, calls for private businesses to get “equal access” to credit, land and other resources — the level playing field companies have been seeking for years.
While many are skeptical the words will translate into policy change soon, other business leaders said they are cautiously hopeful.
“It’s good they recognize the importance of the private sector, but implementation is the key thing,” Hieu said. “We still don’t know how much of that idea will be translated into policies and regulation to really help private businesses.”
Along with a new slate of leaders, the party congress also sets the tone for economic reform and growth. The proposed socioeconomic plan through 2020 shows the nation could target as much as 7 percent average annual expansion and GDP per capita at US$3,200 to US$3,500 by 2020 from the current IMF estimate of about US$2,170.
If Vietnam hits these goals, it would be one of the fastest growing economies in the Asia-Pacific region, the IMF said.
Vietnam’s stock market has attracted foreign investors, with overseas investors net buyers for the 10th consecutive year last year. The benchmark VN Index has lost 7.8 percent so far this year, as emerging-market stocks face a rout on China’s slowing economy and dropping oil prices.
The economic blueprint for this year to 2020 calls for the creation of “favorable conditions” to support private companies. The plan also lays out accelerating the privatization of state enterprises, resolving bad debt and improving the nation’s competitiveness.
Several leaders, including Trong, have stressed that Vietnam is at risk of falling behind regional peers.
Average growth in 2011 through last year was 5.9 percent, lower than the 6.5 percent to 7 percent target that the nation’s leaders had set.
Delegates at the conference also registered a different tone from the previous five-year plan.
“The idea of promoting the private sector is expressed more clearly and deeply this time with more details to support it,” Tay Ninh Province delegate vice-chairman Nguyen Thanh Ngoc said. “The document will pave the way for the government to enact more policies and regulations later to support private businesses.”
State-owned companies use almost 50 percent of Vietnam’s public investment and tap 60 percent of the nation’s bank loans, while contributing to just one-third of GDP, government data showed.
The economy is forecast to expand 6.7 percent this year, the same pace as last year, Bloomberg surveys showed.
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