Private sector - driver of Viet Nam’s economy and social progress

Strengthening socialist orientation

Over nearly four decades, the private sector has grown strongly. With approximately 940,000 enterprises and over 5 million business households, as well as millions of agricultural business households, farms, and individual businesses, the private sector now contributes around 50% of Viet Nam’s GDP, over 30% of the country’s total state budget revenue, and employs 82% of the total workforce.

The private sector has helped the Vietnamese economy achieve tremendous, historically significant accomplishments. From a closed, isolated economy, Viet Nam has now become the world’s 22nd largest trading economy, with its growing adaptability and resilience. Recent reality shows that the private sector has played a pivotal role in helping Viet Nam firmly overcome the negative impacts of the Covid-19 pandemic, followed by the global economic downturn, earning high praise from the international community.

The private sector has also contributed to impressive social progress. For example, the poverty rate has fallen sharply from 58% under the old standard in 1993 to just 1.93% under the multidimensional poverty standard in 2024, making Viet Nam a prominent model for hunger eradication and poverty reduction efforts amongst developing countries. Viet Nam’s human development index (HDI) has continuously improved, reaching 0.73 points in 2023, much higher than countries with similar income levels and ranking in the top 5 within ASEAN.

Over nearly 40 years, tens of millions of jobs have been created by the private sector. As of 2024, over 42 million workers are employed in the private sector, equivalent to 82% of the labour force.

Private enterprises have surpassed state-owned enterprises in worker income, with this gap continuing to widen. Total income generated for workers by domestic private enterprises reached 1.17 quadrillion VND (46.8 billion USD) in 2023, equivalent to approximately 10% of the nation’s GDP in the same year.

Not only ensuring livelihoods, the increasingly higher total income of private enterprise workers has helped increase total disposable income and spending capacity, thereby spurring economic growth, particularly through increased domestic consumption.

In 2024, a worker in a domestic private enterprise earned 8.7 million VND (335 USD) per month, higher than the average of approximately 6.5-7 million VND for workers in the agricultural sector.

Workers at Tan A Dai Thanh, a private company specialising in water solutions.

Realising core values

The private sector also makes important contributions to the goal of a wealthy people and strong nation. In 2024, Viet Nam’s GDP per capita reached 4,700 USD, approaching the upper-middle-income threshold. This income level is more than 50 times higher than the 86 USD per person per year in 1988, when Viet Nam began opening its economy.

The middle class (with average per capita spending of 11-110 USD per day) is forming rapidly in major urban areas, currently accounting for about 13% of the population and forecast to increase to 26% by 2026. According to Forbes magazine, Viet Nam currently has approximately 5-6 billionaires.

The private sector has contributed to helping Viet Nam gradually realise the goal of “wealthy people”. The concept of a “strong nation” can be viewed from the perspective of Viet Nam’s national brand value, which has now reached 507 billion USD, ranking 32nd globally.

It is forecast that Viet Nam’s total import-export turnover will reach a record 800 billion USD. Goods and services produced and supplied by Vietnamese enterprises will be present in over 200 markets worldwide, with strong contributions from the private sector.

Private enterprises also contribute significantly to expanding social insurance coverage and social welfare programmes. As the total workforce in state-owned enterprises declines, public sector and state sector employment remains stable and is forecast to continue declining sharply due to ongoing apparatus restructuring. Private enterprises and establishments play a key role in increasing social insurance participants nationwide from 9.2 million people in 2010 to over 19.02 million people in 2024.

Annually, social insurance is expanded with new participation from approximately 190,000 workers, most of whom are currently working at private enterprises. Additionally, the private sector contributes over 30% of Viet Nam’s total state budget revenue in 2024.

The contribution of the private sector will become even more important, particularly as the Party and State are actively promoting many programmes to increase social welfare for the people, such as policies on tuition fee exemption for public schools nationwide, the policy of annual health check-ups for people towards universal free hospital fees in the 2030-2035 period, the programme to eliminate temporary and dilapidated housing, and many other social service and social welfare programmes and policies.

Thus, the private sector is not only one of the most important driving forces of the economy. The private sector’s contributions to social progress and social development as mentioned above show that developing the private sector does not contradict socialist orientation, but is truly harmonious with the socialist path of the market economy.

Le Duy Binh, Economica Viet Nam

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