Consistent Policy of Encouraging Private Economic Development, Increasing Contribution of Private Economy in GDP and State Budget Revenue

for many years but has not been resolved. According to the rankings of the Business Environment Survey in recent years, it can be seen that economic centers such as Hanoi and Ho Chi Minh City have low business environment rankings, with many barriers for businesses. The most prominent problems that make it difficult for private enterprises to do business in our country include:

Market entry costs : Market entry costs are the costs required to conduct business in a given market, including business registration, land acquisition, and completion of various paperwork. High costs prevent businesses from entering the market and conducting production and business. Most of these costs are related to administrative procedures and administrative staff. To attract private businesses, efforts must be made to reduce costs related to market entry through administrative procedure reform, transparency, anti-harassment, anti-corruption, and clear and reasonable land use planning.

Access to land : Access to land is considered a huge difficulty for private enterprises, especially small and medium enterprises. Many private enterprises do not have access to land, and have to use the business owner's house as a production and business area, which not only pollutes the environment but also does not have the conditions to expand production.

Informal costs : These are costs that businesses have to pay outside of the reasonable costs according to regulations. These costs are quite common in many localities today. For example, on average, 64% of surveyed businesses in Dong Nai said that businesses have to pay informal costs, 50% of businesses said that the province uses its own local regulations to collect from businesses, 52% have to pay commissions to get contracts from state agencies. This increases the costs of businesses, causes distortions in market relations and business relations, and at the same time makes

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discourages honest businesses. Private businesses are often discriminated against and have to pay higher informal fees than state-owned and foreign-invested enterprises. Informal fees are often associated with a lack of information transparency, corruption, and harassment by management staff. Addressing this issue must be linked to administrative reform, improving staff ethics, and fighting corruption.

Overlapping and frequently changing policies: Frequent and overlapping changes in policies are a headache for businesses when they have to calculate production and business plans. Policy changes can cause a business to go bankrupt when all of the business's investments may have to be canceled due to policy changes. This increases business risks and businesses are not bold enough to invest in long-term business.

Difficulty in accessing credit : Access to credit is a problem for small and medium-sized private enterprises and individual businesses. Most of these businesses and businesses do not have much collateral and their reputation is not good enough, so banks are not interested in lending. Lack of capital makes it difficult for businesses to expand production and business, even when there are good investment opportunities. After we implemented a tight monetary policy, access to finance has become even more difficult for businesses.

Tax procedures : Tax is a problem that businesses often encounter. Specifically, tax procedures are complicated, tax rates are unclear, and tax officials often cause difficulties for businesses. This causes many businesses to bribe tax officials to get things done, causing hidden costs to increase.

To solve the above problems, some of the following measures need to be taken immediately:

- Continue to reform administrative procedures, make them transparent and simplify procedures to reduce costs and time for businesses. Businesses do not have to go through back doors or pay unofficial fees.

to obtain licenses or contracts with government agencies. In particular, pay attention to procedures related to taxes, land, business licensing, investment and bidding.

- Perfecting the legal system of enterprises, private investment, tax law,... to create the best conditions for enterprises to invest in production and business.

- Review taxes, fees and other business expenses, especially unofficial expenses and market entry costs to eliminate and prevent them.

- Improve civil servant discipline, fight against harassment, bribery, embezzlement and corruption. Actively inspect, monitor and strictly handle violations of civil servants.

- Implement economic development planning well to create conditions for businesses to grasp planning and policies, avoiding risks due to unclear planning and planning changes.

- Planning and creating clean land to serve the business production of the enterprise.

- Develop programs to support access to capital for individual households and small and medium enterprises. Develop forms of micro-credit, especially in rural areas.

- Actively listen to businesses to promptly resolve difficulties and problems, creating the best conditions for production and business.

4.3.2 Consistently promote the development of the private economy, increase the contribution of the private economy to GDP and to the State budget revenue.

To mobilize financial resources from the private economy, we must first start investing in policies to promote private economic development. In recent years, the Enterprise Law 2000 and the amended Enterprise Law 2005 have had

This is an encouraging step to liberate resources of the private economy, creating conditions for the birth of hundreds of thousands of new private enterprises. In the coming years, we need to continue to improve existing policies and issue new policies to promote the development of the private economy, on the basis of the Resolution of the 11th Party Congress.

- Firstly, it is necessary to continue to amend and supplement the Enterprise Law in the direction of creating conditions for individuals and entrepreneurs to easily establish and operate private enterprises to enrich themselves and contribute to society. Currently, the prominent problems that private enterprises face are issues of land access, administrative procedures, and tax policies. These are areas that need to have procedures simplified and difficulties quickly removed.

- Continue to simplify administrative procedures on business registration, tax code registration, tax reporting, especially for small and medium enterprises.

- Create favorable conditions for land access for private enterprises, especially small and medium enterprises. Continue to develop models of enterprise clusters and handicraft clusters in communes and districts, ensuring sufficient area and low costs, while still separating production from residential areas and ensuring the environment.

- Promote and facilitate the formation of venture capital funds for start-ups, capital support funds for small and medium enterprises with reasonable interest rates, and have forms of loan guarantees for small enterprises without collateral to access credit sources.

- Promote household economy, especially in agriculture and rural areas through forms of technical support, capital, microfinance, support in market access, product chain linkage, etc.

- For large private enterprises, there needs to be a strategy to support the

Enterprises compete in the international market, have mechanisms for investment linkage and technology research transfer between the state and the private sector, between research institutes and schools and enterprises.

In addition to solutions that directly impact the establishment and expansion of private enterprises and business households, the development of private enterprises is influenced by a series of other policies, such as macroeconomics, business environment, education, training, investment policies, etc. Solutions related to these areas will be presented separately.

4.3.3. Restructuring and innovating business methods of commercial banks to attract financial resources from the private economy

Banks are the key channel for indirect capital mobilization from the private sector today. To continue to promote the attraction of financial resources from households in the form of savings, promissory notes and bank bonds, it is necessary to continue to develop and expand the banking system. In addition to attracting savings deposits, banks need to have other diversified forms of services to attract financial resources from the private sector.

In the period from now to 2015, vision 2020, the banking industry will face many growth challenges:

Firstly , the opening of the financial market to foreign banks makes competition more fierce. Foreign banks have large capital, modern management experience, and a global network, while Vietnamese banks are still too small in scale, lacking experience and weak in qualifications, with their networks only concentrated in large cities and not covering the whole country (except for agricultural banks), let alone reaching out internationally. If banks do not have solutions to rapidly increase their scale and network, and improve their own management and professional skills, they will lose in competition with foreign banks. Mergers, acquisitions, additional issuance of shares and seeking foreign strategic shareholders are methods that have been and should continue to be used.

implemented to upgrade banks.

Second , the interest rate gap along with the opening of the capital market can cause foreign capital to flood into our country. Besides the benefits of foreign capital, one of its consequences is the crowding out of domestic private capital. Banks and businesses will chase after foreign capital while neglecting to mobilize resources from the domestic private sector. As a result, domestic financial resources are wasted while the country will have to spend foreign currency to pay interest to foreign countries. Not to mention that dependence on foreign capital will cause the country to be exposed to payment and exchange rate risks once foreign capital is withdrawn from our country. The necessary solution is still to tighten the management of foreign capital flows into Vietnam along with efforts to narrow the interest rate gap between VND and foreign currencies. This is related to the success of stabilizing the macro economy and controlling inflation.

Third, the dependence of banks on the credit channel. Credit has been the main operating channel and the main source of income for banks for many years. Therefore, the banking system has always strived to push the credit growth rate very high, often above 20%/year and sometimes up to nearly 40%/year. High credit growth causes the economy to develop rapidly, creating asset bubbles (real estate, stocks, etc.) and inflation. With the policy of lowering credit growth to control inflation, growth based on credit expansion will be difficult to implement. Therefore, banks need to diversify their activities and expand new services to provide to businesses. In terms of mobilizing financial resources, banks also rely mainly on the savings channel. This is limited once savings interest rates are no longer attractive to people. Banks will also have to pay high interest rates to attract capital and are forced to lend at high rates. To lower the cost of capital, banks need to diversify their methods of attracting financial resources. For example, banks can promote payment services, providing more utilities on accounts.

Payments such as electricity, phone, water, etc. to encourage people to keep money in their payment accounts. This is a source of capital with low interest rates that banks can take advantage of if they know how to exploit.

Therefore, the urgent solution is to accelerate the restructuring of the banking and financial system. Small scale, monotonous operations, poor risk management and liquidity management are pressing issues in the banking and financial system in recent years. Restructuring the banking system towards increasing scale, improving management level, expanding services, and enhancing international integration is an urgent task. Specifically:

- First of all, it is necessary to increase the scale of banks' equity capital through mobilizing financial resources from issuing shares to the public or to domestic and foreign strategic partners or merging with other banks. On the basis of expanding the scale of capital, banks expand their geographical scope of operations, improve their management level, especially risk management and liquidity management.

- Rapidly reduce the number of banks through dissolution and merger. The number of banks should be maintained at less than 20. Small banks are forced to merge with other banks. This contributes to improving the health of the banking system and also solves bottlenecks related to monetary policy and interest rates.

- Expanding forms of attracting idle financial resources in society, especially financial resources from the private sector. For example, mobilizing financial resources through payment accounts, mobilizing through issuing bonds, stocks, securities certificates or combining savings with life insurance. Expanding services for businesses to avoid dependence on credit channels.

- Accelerate the equitization of state-owned banks that have not been equitized such as Agribank and BIDV and sell off shares in state-owned banks that have been equitized.

Partial equitization such as Vietcombank and Vietinbank. Equitization by issuing additional shares not only helps increase capital for banks, but also improves the efficiency of banks' operations, thereby enhancing the ability to mobilize financial resources from society in general and from the private sector in particular.

- Separate state-owned banks from social and policy activities. These activities should be undertaken by the Vietnam Development Bank and the Social Policy Bank. Separating activities will help state-owned commercial banks operate more effectively and mobilize private financial resources better.

- On the part of the central bank, it is necessary to create an environment of equal competition among banks, avoiding interference in the business activities of banks, including state-owned banks.

4.3.4. Breakthrough in equitization of state-owned enterprises

Equitization of state-owned enterprises is a form of attracting private financial resources into enterprises and improving the efficiency of enterprises. As presented, after several years of accelerating equitization, in recent years, the speed of equitization has slowed down. There are many reasons for this situation. First, enterprises that are easy to equitize have been implemented first, now only large enterprises that are more difficult to equitize remain. Second, many enterprises and corporations do not want to or delay equitization due to their own interests. Third, the policy of building powerful state-owned corporations seems to overwhelm the will to equitize enterprises. Finally, some of the difficulties of equitization are associated with the policy of IPO on the stock exchange due to the decline of the stock market in the past few years.

To speed up the equitization process, especially the equitization of large-scale enterprises, a number of solutions need to be implemented, but the most important is the government's will to equitize:

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