Resolution 68 is a new dawn for Vietnam’s private sector

Hailed as a historic turning point, the resolution fundamentally elevates the status of the private economic sector. It represents a significant evolution from previous definitions in which the private sector was considered merely a component of the economy.

Michael Kokalari, chief economist, VinaCapital

re vision of Resolution 68 is to cultivate a fast-developing, sustainable, high-quality, and globally competitive private sector which will not only be an economic powerhouse but also a leader in science, technology, and innovation. The goal is to help Vietnam avoid the middle-income trap and achieve its aspiration of becoming a developed, high-income nation by 2045.

A standout feature of Resolution 68 is its goal to develop 20 large private companies by 2030 that are capable of integrating into global value chains and driving industrial growth. The model draws inspiration from South Korea, where chaebols like Samsung and Hyundai have propelled national development. The hope is that by nurturing large private enterprises, Vietnam can enhance innovation, create high-quality jobs, and strengthen economic resilience.

Vietnam’s government recognises that the next decade presents a critical window for accelerating economic growth before demographic and other challenges make sustaining high growth rates more difficult.

In our April report on Vietnam’s government restructuring, we examined the series of public sector reforms being implemented with the aim of accelerating the country’s GDP growth. The measures discussed in that report are focused on the public sector, while Resolution 68 is focused on private sector development. Policymakers canvased advice from a variety of sources, including the Private Economic Development Research Board, which the government established in 2017.

The board has worked to identify and propose solutions to address the issues facing private enterprises in Vietnam. Its mission is to streamline administrative procedures, improve the ease of doing business, and attract increased foreign investment, all while promoting innovation and fostering sustainable economic development.

This board tackles major constraints facing private enterprises, such as gaps in technology, management, and financing and advocates for innovation through tools like legal sandboxes and research and development (R&D) incentives, with the aim of cultivating a more dynamic, tech-oriented, and sustainable private sector.

Although the private sector currently contributes half of Vietnam’s GDP and accounts for more than 80 per cent of employment, it faces resource and capacity limitations in reaching the government’s goal of vaulting Vietnam’s private sector to rank among the top three in ASEAN and top five in Asia for innovation, technology, and digital transformation, despite its strong, youthful talent base in STEM fields.

Finally, Resolution 68 ignites momentum for investment funds to intensify investments in the private sector, supporting the government’s objectives.

Vietnam’s domestic private sector faces persistent challenges such as limited access to finance, bureaucratic red tape, and inadequate technological adoption, all of which hinder the sector’s full potential. Resolution 68 aims to cut at least 30 per cent of the time, cost, and procedures associated with doing business by simplifying licensing, reducing compliance burdens, and moving from a pre-licensing/approval model to one based on declaration and post-audits for many activities.

The resolution also calls for reforms to the tax system to make it fairer and more supportive of business development. A specific measure includes abolishing the lump-sum tax regime for household businesses by 2026, aiming to encourage their formalisation into registered enterprises with a more tailored tax approach.

Next, localities are mandated to set aside dedicated land funds (including some portion of each industrial park’s land area) for small and medium-sized enterprises and innovative startups. Additionally, private firms may benefit from a 30 per cent reduction in land rental fees for the first five years of their lease.

Resolution 68 also calls for the establishment of dedicated credit channels and financial support mechanisms for such businesses, startups, newly registered firms, and enterprises operating in priority areas like digital transformation and green transition.

This includes measures to provide support for lending rates and enhance the role of credit guarantee funds. On a related note, private sector firms will be able to allocate up to 20 per cent of their annual earnings into dedicated R&D funds and deduct 200 per cent of their R&D expenses from taxable income, a move designed to stimulate investment in innovation.

Finally, Resolution 68 addresses a long-standing challenge in Vietnam’s economy: the preferential treatment of state-owned enterprises (SOEs) and foreign investment over private enterprises. The government also plans to restructure SOEs across key sectors, including industry, agriculture, services, and the digital economy.

Meanwhile, Resolution 68 emphasises the role of entrepreneurship as a key element of Vietnam’s national identity. Entrepreneurs are recognised as “new warriors on the economic front” and the government has committed to improving public perception of private enterprises in several ways, including a national campaign for entrepreneurs, legal protections for entrepreneurs, and targeted support measures.

Resolution 68’s importance cannot be overstated, and is a landmark directive aimed at significantly elevating Vietnam’s private sector to become the most important driving force of the national economy. Ultimately, it is expected to play a critical role in helping Vietnam avoid the middle-income trap and achieve developed nation status by 2045.

Strategic pillar now in its rightful place For many years, the private sector has been considered an important motivation. Now that Resolution No.68-NQ/TW is initiated, the private sector is no longer a supporting force that is subject to institutional barriers. It is now seen as a circuit – bringing the energy of reform, technology, and innovation into real economic life.

Pivotal turning point arrives for nation’s private sector Despite its significance, the private sector in Vietnam continues to face challenges. Most businesses are small or medium-sized, with limited capacity for technological innovation, modest productivity, and weak integration with state-owned enterprises and foreign firms. These limitations have hindered its ability to become a truly transformative economic force.

Private sector evolution sets long-term foundation Vietnam has adopted the unprecedented Resolution No.68-NQ/TW, fully opening the doors for the private sector and demonstrating the country’s strongest determination to elevate Vietnam to new heights.