Removing Institutional Bottlenecks to Channel Capital into Private Sector

Domestic enterprises need stronger partnerships with foreign firms to access technology and improve competitiveness

Institutional reforms create momentum for private enterprises

According to experts, never before has the private sector held such an important position or faced expectations this high. The foundation for the new standing of private enterprises is Resolution 68-NQ/TW issued by the Politburo on May 4, 2025.

Nguyen Viet Viet, Editor-in-Chief of Vietnam Securities Economic Magazine, said Resolution 68 established the private sector as a central growth driver, marking a shift in resource allocation and institutional reform.

Although the sector contributes around 50% of GDP and more than 80% of jobs, it continues to face many barriers, particularly in access to capital. As a result, the need to unlock resources and strengthen corporate capabilities has become increasingly urgent.

Dr. Phan Duc Hieu, Member of the National Assembly’s Economic and Financial Committee, said Resolution 68 calls for broader and stronger reforms, focusing on changing the mindset behind lawmaking and law enforcement, removing administrative barriers and the “ask-give” mechanism, and reducing compliance costs for businesses.

“The biggest challenge today lies not only in issuing policies, but also in the ability to implement them effectively in practice, thereby creating a truly favorable and transparent business environment for the private sector,” Hieu said.

Unlocking stable long-term capital flows

The issue of financial resources is also creating growing pressure on the development of private enterprises. Nguyen Duc Thong, CEO of SSI Securities Corporation, said Vietnam’s outstanding bank credit has reached around 146% of GDP, far higher than levels in neighboring countries. More importantly, about 80% of bank-mobilized capital is short-term with maturities of less than one year, while 50% of outstanding loans are medium- and long-term. This mismatch creates significant liquidity risks for the national financial system.

Against this backdrop, the capital market, including equities and bonds, is expected to play a larger role in providing medium- and long-term capital for the economy. Le Thi Viet Nga, Vice Chairwoman of the State Securities Commission, said capital raised through the stock market in 2025 reached VND744.48 trillion (US$29.78 billion), up 42.85% year on year. Private enterprises need to move from a passive approach to accessing capital toward proactively raising funds, treating the stock market as part of a long-term development strategy. Only when the stock market becomes a transparent fundraising channel can the financial strength of the private sector truly be freed from excessive dependence on the “milk bottle” of bank credit.

Beyond raising capital through banks and the stock market, Nguyen Phuc Long, Chairman of Thang Long Investment Group (TIG), said domestic enterprises need to strengthen joint ventures and partnerships with foreign partners to gain access to technology and improve competitiveness.

Enhancing competitiveness

According to experts, only about 5,000 companies out of more than 1 million operating enterprises in Vietnam are currently participating in supply chains. The localization rate in the electronics industry stands at just 35%, while the mechanical engineering sector reaches only 25% to 30%.

Dr. Le Duy Binh, Director of Economica Vietnam, said Vietnamese businesses need to fundamentally change their development mindset. Instead of focusing on low-cost processing, companies should move toward creating higher added value by participating in areas such as design, production of complex components, and technology development, while proactively innovating to expand growth opportunities and improve access to capital.

Discussing the ability of Vietnamese enterprises to join global supply chains, Nguyen Anh Tuan, Chairman of the Foreign Invested Enterprises Association, said many FDI corporations currently have thousands of suppliers, but the number of Vietnamese companies involved remains very limited. As a result, more specific mechanisms and policies are needed to encourage large corporations to support and guide small and medium-sized enterprises in improving their capabilities to join supply chains.

Particularly in the Industry 4.0 era, digital transformation and green transformation through ESG are no longer optional, but have become mandatory requirements. Mai Danh Hien, Vice Chairman of the Board of Directors of EVN Finance JSC (EVF), shared a practical lesson: “Digital transformation and green transformation do not begin with technology, but with people and streamlined operations. We started by reducing intermediary stages, including human involvement.” EVF was among the first enterprises to issue green bonds that met international standards, proactively upgrading its capabilities to unlock long-term foreign capital.

Businesses need to invest in workforce quality, Luong Minh Huan, Director of the Institute for Enterprise Development (VCCI) Current realities show that many Vietnamese enterprises are still facing basic bottlenecks: technology remains underdeveloped, management practices have yet to meet international standards, and participation in global value chains remains limited. As a result, although manufacturing output continues to rise, there is still a significant gap when it comes to moving into higher value segments of global supply chains. In this context, the challenge of adaptation cannot fall on one side alone. Coordination is needed among the government, businesses, training institutions, and workers themselves. At the policy level, the focus should be on building vocational skills frameworks suited to the industry 4.0 era, selecting the right strategic industries for investment, and linking training more closely with actual business demand and technology transfer. Training models need to expand through greater social participation, alongside the development of labor market forecasting systems to avoid situations where there is “a surplus here and a shortage there.” From the business perspective, the way companies view training also needs to change. It should not be treated as a cost, but as a long-term investment. What matters is proactively retraining and continuously improving employee skills, making use of new learning methods such as online education and digital platforms, and recruiting based on actual capabilities rather than relying only on degrees. Training institutions also need to stay closer to market realities by updating curricula to international standards, working more closely with businesses, and even allowing companies to participate in curriculum development and graduate assessment. For workers, the biggest change lies in mindset. With technology evolving so rapidly today, proactively learning new skills, updating capabilities, and redefining career paths have become almost mandatory rather than optional. Addressing maturity mismatch with an ecosystem capital approach, Tran Hoai Nam, Permanent Deputy CEO of HDBank As Vietnam targets double-digit growth, the issue of capital for the economy, especially the private sector, has become more urgent than ever. Although the banking system continues to provide most of the funding, the financial gap, particularly for medium- and long-term capital for private enterprises, remains substantial. This creates a clear requirement: commercial banks must move beyond their traditional role as credit providers and shift toward guiding capital flows and designing financial solutions based on value chains rather than isolated lending. Some banks have already moved in this direction, with HDBank serving as a typical example through financial packages designed around cash flow, business cycles, and industry-specific characteristics. Bonds are increasingly viewed as a key source of capital alongside credit and equities. However, after the market turbulence of 2022, declining investor confidence pushed capital flows back toward banks, while the market’s “output” side narrowed because regulations governing professional investors remained restrictive, limiting companies’ ability to issue bonds. Over the long term, as credit becomes more tightly controlled, the bond market will become even more important, both domestically and internationally. Many Vietnamese enterprises are fully capable of accessing these markets if they receive stronger support in connectivity and standardization. In this context, the role of banks is shifting from capital intermediaries to “financial capability architects,” providing resources while also shaping how capital is used, thereby raising corporate standards and connecting businesses more deeply with global capital flows.