Entering a new era, our economy stands at the crossroads of maintaining growth tempo and enhancing growth quality, while boosting self-reliance and competitiveness of the economy.
Important innovations in development thinking, especially clarifying the role of the private sector, promoting science and technology, innovation, digital transformation, along with institutional reform and reorganizing the development space, are opening new opportunities for the domestic
business sector.
However, to become a developed country, the economy needs not only more enterprises but those with large scale, modern management capabilities, mastery of technology, and deep participation in global value chains, capable of competing with multinational groups.
Why, after four decades of renovation, has the private sector developed strongly in quantity but few enterprises have the capacity to become leading regional and global private economic groups remains limited? The answer lies not only in the enterprise's internal capability but also in the costs for growing, the institutional environment and the development ecosystem that have not yet created sufficient conditions for firms to accumulate, innovate and rise.
To have national-brand groups, Vietnam needs to look straight at the bottlenecks hindering growth. The private sector’s development does not only depend on business will but also on the intrinsic capacity of enterprises and the quality of the institutional environment and development ecosystem around them.
Why do domestic firms not want to scale up?
Domestic firms are not lacking ambition to grow, but to become large they need an environment where long-term investments and innovation become more effective.
A notable paradox is that while the private sector is identified as a major driver of development, many enterprises still prefer cautious growth over scaling.
This is not due to lack of will; the issue is costs, risks, and the required capabilities to become large.
For many small and medium-sized firms, scaling up means undergoing a comprehensive change in governance, finance, human resources, technology and market. When firms move to a new scale, management methods based on personal experience are no longer adequate; instead, a professional governance system and long-term development strategy are required.
One major bottleneck is the high cost of scaling. That includes capital costs, technology access costs, building managerial capacity costs, compliance costs and costs to participate in global value chains.
Small capital scales prevent many firms from investing in areas requiring large resources and long time horizons, such as R&D, technology upgrading, brand building and expanding international markets.
Beyond this, the ability to diffuse knowledge and technology is hampered by limited linkages between domestic firms, between large and small firms, and between domestic firms and FDI enterprises, meaning the spillover effects are not strong enough.
Therefore, the issue is not that domestic firms do not want to grow, but that the costs to grow must be reduced and an enabling environment created to enable long-term investment, innovation, and scale-up.
Bottlenecks in the institutional framework and development ecosystem
Without a robust base of large industrial and technology groups, the economy cannot thrive. To grow firms big, an ecosystem must be created to help them accumulate capital, master technology, and deeply participate in global value chains. The growth of firms depends not only on internal efforts but also on the institutional environment and ecosystem around them.
A notable issue is that the structure of enterprises in the economy has not yet laid the foundation for forming industrial and technology groups with leading capabilities. Most firms are in service, trade, retail sectors with quick turnover, serving consumer demand. In contrast, the share of firms in processing, manufacturing, supporting industries, and high-tech is still limited.
This reflects a reality of an economy that has grown strong in the number of enterprises but has not achieved a corresponding shift in quality, technology capability and productivity.
Additionally, the innovation ecosystem among firms, universities, research institutes, and support organizations has not yet formed a strong network to translate knowledge into products and competitiveness.
The spillover from the FDI sector to domestic firms has not met expectations. We have succeeded in attracting foreign direct investment, but forming a network of supporting enterprises and strengthening domestic technological capacity remains an ongoing task.
To have Vietnamese private sector groups reach global scale, we must shift from a mindset of supporting firms to one of creating an environment that enables firms to accumulate capabilities and grow into leading forces.
Vietnam needs to move from a mindset of having many firms to a mindset of having firms that lead.
However, the key lesson for Vietnam is not to copy any country's model. Each economy has different historical conditions, institutions, and resources.
What Vietnam needs is to create a purposefully developed ecosystem, connecting national strategy, science and technology, education and training, capital markets, industrial policy, and enterprise development into a coherent whole. Only then can domestic enterprises move from breadth to depth in productivity, innovation, and long-term competitiveness.
After four decades of renovation, private sector development has become a major engine of the economy. But the requirements of a new development stage call for a bigger leap: moving from quantity growth to strengthening enterprise capabilities; moving from market participation to owning value chains.
To have private sector groups at regional and global scale, Vietnam must treat this as a problem of national competitiveness. Enterprises must innovate, improve governance, invest in technology, and develop aspirations to rise. But the state must create an ecosystem that enables firms to scale up.
If the past 40 years of renovation were about opening, integration, and attracting international resources, the new era must be about building endogenous capacity, where the strengthening of domestic enterprises becomes a pillar of national economic power.
