Total Registered Capital and Average Registered Capital of Enterprises

The Enterprise Law 2000 and Enterprise Law 2005 have opened up business opportunities for all economic sectors at home and abroad. According to the Interim Reports on the Implementation of the Enterprise Law, by the end of 2007, the total number of private enterprises in our country had increased significantly, currently there are about 300 thousand enterprises. The number of newly registered enterprises has also continuously increased rapidly at an unprecedented rate: the number of newly registered enterprises in the 9 years from 1991 to 1999 was 45,000 enterprises. Meanwhile, this number from 2000 to 2007 was about

260,000. Thus, the current annual growth rate of the number of private enterprises is 5.75 times higher than the average annual growth rate of the period 1991-1999. The total newly registered capital reached 869,268 billion VND, equivalent to 54 billion USD, the additional registered capital during operation was 373,039 billion VND, equivalent to 23 billion USD. The investment ratio of the private economic sector/total social investment increased over the years: 20% in 2000, 27% in 2003, and 33.6% in 2005.

2.2. Capital scale

The number of enterprises and individual business households has increased, reflecting the great ability of the private economic sector to mobilize capital from the population for investment in production and business development. This positive factor is especially evident when the Enterprise Law is implemented.

Table 2.2: Total registered capital and average registered capital of enterprises

2000	2003	2006
Unit: Billion USD
Total registered capital of business	1.33	4.5	9.2
Unit: Billion VND
Average registered capital 01 business	0.96	3.21	6.52

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( Source: Vietnam's private economy after two decades of renovation - Current situation and problems - Social Sciences Publishing House )

Newly registered capital in all provinces and cities in the period 2000 - 2006 was higher than the registered capital in the period 1991 - 1999. Of which, 33 provinces and cities achieved a growth rate of more than 4 times, 11 provinces achieved a growth rate of more than 10 times. In particular, some provinces such as Quang Ninh, Vinh Phuc, Hung Yen, ... achieved a growth rate of more than 20 times. In Hanoi, from 2000 to present, there have been 40,000 private enterprises registered with a capital of approximately 100,000 billion VND. In the period 2000 - 2007, the total social investment capital in Hanoi was 143,268.1 billion VND, of which the investment of the private sector was 35,817 billion VND, accounting for 25%. In Ho Chi Minh City, private economic sector investment in total social investment capital also increased from 14.2% in 2000 to 26.5% in 2007.

The rapid growth rate of capital of each type of enterprise in the private economic sector has changed the capital proportion of the private economic sector in the total social capital. The investment proportion of private enterprises and state-owned enterprises in the total social investment was 20% and 18.5% in 2000, respectively, and by 2007, this proportion was 32.67% and 25%. Thus, the investment proportion of domestic private enterprises has continuously increased, surpassing the investment proportion of state-owned enterprises.

However, the growth rate of capital in the private economic sector and the state economic sector is still different. This is clearly shown through 2 stages. Stage 1 from 2000 to 2003, this is the stage where investment capital is still concentrated in the state sector, the non-state sector accounts for a small proportion. In 2000, capital in the state sector was 89,417 billion VND, accounting for 59.1%, by 2003, capital in the state economic sector was still 126,558 billion VND, accounting for 52.9%. Both the non-state sector and the foreign-invested sector were 112,688 billion VND, accounting for only 47.1% as of 2003 (see table 2.2). The period 2004-2007 marked a step forward in the scale of investment capital of the private economic sector in the total investment capital. In 2004, state capital was 139,831 billion VND, accounting for 48.1%, this figure in 2007 was

208,100 billion, equivalent to 39.9%. For the private economic sector and the foreign-invested sector, this figure was 51.9% in 2004 and 60.1% in 2007, respectively.

Table 2.3: Investment capital by economic sector

Total	Divide
Total	State Economy	Non-state economy	Foreign invested area
Actual price	Billion VND
2000	151183	89417	34594	27172
2001	170496	101973	38512	30011
2002	200145	114738	50612	34795
2003	239246	126558	74388	38300
2004	290927	139831	109754	41342
2005	343135	161635	130398	51102
2006	404712	185102	154006	65604
2007	521700	208100	184300	129300
	Structure (%)
2000	100.0	59.1	22.9	18.0
2001	100.0	59.8	22.6	17.6
2002	100.0	57.3	25.3	17.4
2003	100.0	52.9	31.1	16.0
2004	100.0	48.1	37.7	14.2
2005	100.0	47.1	38.0	14.9
2006	100.0	45.7	38.1	16.2
2007	100.0	39.9	35.3	24.8

(Source: General Statistics Office)

If we compare domestic private investment and foreign private investment, it is quite clear that if foreign direct investment only takes place in about 15 provinces and cities, then domestic private investment has been

implemented and is increasing rapidly in all provinces and cities across the country. Foreign direct investment can only reach localities with their own characteristics or favorable geographical locations, while domestic private investment appears in all regions, with many different circumstances, including poor regions, with difficult socio-economic conditions. Investment from the domestic private sector also increases faster than foreign direct investment even in localities that mainly focus on foreign direct investment. In fact, attracting domestic private investment is easier to implement and more feasible than attracting foreign direct investment. Investment capital from private enterprises has been playing an important role, even the main source of investment capital for local economic development. For example, investment by private enterprises in 2006 in Ho Chi Minh City accounted for 48% of total social investment capital, higher than the combined investment capital ratio of state-owned enterprises and the state budget (42%).

Box 2. What is the actual capital of a private enterprise?

The actual operating capital of private enterprises is also an issue that needs attention. Although there has not been a full investigation, a survey in some industrial parks and clusters shows that domestic private enterprises are the main investors and account for a large proportion. The actual investment of current private enterprises in industrial parks and clusters alone is higher than the registered capital in the locality in the same period. For example, in Nam Dinh, the registered capital of enterprises in 2002 was 84.5 billion VND, but the actual capital in Hoa Xa Industrial Park was up to nearly 700 billion VND; in Lao Cai, the corresponding figures were 93.422 billion VND. The situation in Hung Yen, Bac Ninh, and Thai Binh is similar. According to the assessment of the Department of Planning and Investment, although there were false declarations in some cases of construction practice registration, in general, the actual investment capital is higher than the total registered capital.

signed. There are many businesses that have invested tens, even hundreds of billions of dong.

According to the 4-year report on the implementation of the Enterprise Law.

Through the activities of the private economic sector, capital from the people has gradually been used effectively, promoting the investment scale of the economy. In 2000, the total investment capital in the private sector was 31,542 billion VND, accounting for 24.03% of the total social investment capital, but the contribution of the private sector to GDP reached 81,455 billion VND, accounting for 31.7% of the national GDP. By 2007, the total investment capital in the private sector was 184,000 billion VND, accounting for more than 34.4% of the total social investment capital. Thus, in the period 2000-2007, the proportion of investment capital in the private sector in the total social investment capital continuously increased over the years and contributed more to the national GDP, proving that the private economy is increasingly using capital more effectively.

2.3. Structure by industry and location

Along with the growth in quantity and capital scale, businesses tend to register to do business in many different types of business lines.

Table 2.4: Industrial production value at current prices by economic sector

2000	2001	2002	2003	2004	2005	2006
Billion VND
TOTAL	336100.3	395809.2	476350.0	620067.7	808958.3	991249.4	1204592.6
State economy	114799.9	124379.7	149651.5	181675.3	221450.7	249085.2	271050.6
Central	78586.5	85947.4	104626.7	129007.2	165697.5	191381.1	212758.3
Local	36213.4	38432.3	45024.8	52668.1	55753.2	57704.1	58292.3
Economy outside the home water	82499.1	107020.6	128389.9	171036.6	234242.8	309053.8	401492.8
Collective	2165.6	2162.0	2727.0	2745.8	3433.0	4008.8	4594.6
Private	47861.1	64608.0	79402.7	114277.0	164928.6	225033.4	306654.6
Individual	32472.4	40250.6	46260.2	54013.8	65881.2	80011.6	90243.6
Investment area foreign	138801.3	164408.9	198308.6	267355.8	353264.8	433110.4	532049.2

2000	2001	2002	2003	2004	2005	2006
Structure (%)
TOTAL	100.0	100.0	100.0	100.0	100.0	100.0	100.0
State economy	34.2	31.4	31.4	29.3	27.4	25.1	22.5
Central	23.4	21.7	22.0	20.8	20.5	19.3	17.7
Local	10.8	9.7	9.4	8.5	6.9	5.8	4.8
Economy outside the home water	24.5	27.0	27.0	27.6	28.9	31.2	33.3
Collective	0.6	0.5	0.6	0.4	0.4	0.4	0.4
Private	14.2	16.3	16.7	18.4	20.4	22.7	25.5
Individual	9.7	10.2	9.7	8.7	8.1	8.1	7.5
Investment area foreign	41.3	41.6	41.6	43.1	43.7	43.7	44.2

(Source: General Statistics Office)

The private economic sector in industry plays a huge role in the strong development of the country's industry in general. In 2000, the industrial output value of the private economic sector was 82,499.1 billion VND, equivalent to 24.5%. In 2006, this figure was 401,492.8 billion VND, equivalent to 33.3%.

Table 2.5: Total retail sales of goods and consumer service revenue at actual prices

Year

Total	Divide
Total	Economy State	External economy State	Investment area foreign
Billion VND
2000	220410.6	39205.7	177743.9	3461.0
2001	245315.0	40956.0	200363.0	3996.0
2002	280884.0	45525.4	224436.4	10922.2
2003	333809.3	52381.8	267724.8	13702.7
2004	398524.5	59818.2	323586.1	15120.2
2005	480293.5	62175.6	399870.7	18247.2
2006	596207.1	75314.0	498610.1	22283.0
2007	731809.7	74556.8	629000.3	28252.6
Structure (%)

2000

100.0	17.8	80.6	1.6
2001	100.0	16.7	81.7	1.6
2002	100.0	16.2	79.9	3.9
2003	100.0	15.7	80.2	4.1
2004	100.0	15.0	81.2	3.8
2005	100.0	12.9	83.3	3.8
2006	100.0	12.7	83.6	3.7
2007	100.0	10.2	85.9	3.9

(Source: General Statistics Office) Along with the development of society, human needs are increasingly diverse, the service sector is increasingly expanded to meet human needs. The characteristics of the trade and service sector are diverse industries, low investment capital, high profits, so this sector attracts a large number of households and enterprises to participate. In recent years, the number of enterprises participating in this sector has increased. The non-state economic sector accounts for an increasingly large proportion of the total retail sales of goods and consumer services of the whole country. Statistics show that, if in 2000, the total retail sales of goods and consumer services of the non-state economic sector only reached 177,743.9 billion VND, accounting for 69.6% of the total retail sales of goods and consumer services of the whole society, then in 2007, this figure was 629,000.3 billion VND, accounting for 85.9%. If we include this foreign-invested economic sector in the private economic sector,

This trend is even more pronounced (see table 2.4).

Thus, the role of the private economic sector in providing goods and service revenue for the economy is increasingly large. This also demonstrates the strength of the private sector in the field of trade and services.

In recent years, the development of the private economic sector has also focused mainly on the service sector, while services have developed strongly in densely populated areas, which has led to an imbalance between regions in the development process.

Table 2.6: Number of enterprises operating in production and business as of December 31 each year, classified by locality

Business

	2000	2001	2002	2003	2004	2005	2006
NATIONWIDE	42288	51680	62908	72012	91756	112950	131318
Red River Delta	8884	11678	15998	19457	25178	30510	35967
Hanoi	4691	6407	9460	11813	15068	18214	21739
Hai Duong	507	617	681	778	1123	1480	1766
Hai Phong	1089	1187	1586	1904	2625	3143	3730
Nam Dinh	404	555	714	777	990	1159	1368
Northeast	2078	2778	3682	4421	6196	7292	7895
Thai Nguyen	211	341	473	574	802	872	917
Quang Ninh	472	560	733	907	1202	1455	1547
Bac Giang	175	224	290	384	907	1027	1112
Phu Tho	341	437	574	638	990	1165	1286
Northwest	382	493	607	791	1044	1338	1454
Son La	130	154	181	219	274	333	369
Peace	138	196	248	297	390	551	588
North Central Coast	2254	2807	3794	4368	5373	7212	8466
Thanh Hoa	464	592	764	935	1191	1766	2256
Nghe An	560	772	982	1195	1429	1901	2018
Thua Thien Hue	498	497	805	826	973	1150	1357
South Coast Central	3301	3875	4574	5108	6262	7820	9563
Danang	915	1107	1397	1645	1938	2621	3271
Pacify	460	590	713	854	1040	1263	1601
Khanh Hoa	884	999	1068	1210	1497	1809	2143
Central Highlands	1827	1940	2142	2315	2880	3564	4039
Lam Dong	690	733	763	779	962	1139	1286
Southeast	13541	17529	21008	24317	31866	40792	48445
Tay Ninh	412	483	589	664	724	860	1037
Binh Duong	1046	1493	1704	1963	2359	2918	3596
Dong Nai	1349	1485	1750	2013	2436	2820	3537
Ba Ria - Vung Tau	650	753	852	1040	1122	1191	1464
Ho Chi Minh City	8624	11550	14506	17370	23727	31292	36855
Mekong Delta	9837	10377	10900	11032	12757	14258	15325
Long An	612	727	908	947	1131	1260	1618
Tien Giang	1180	1277	1333	1391	1494	1628	1733
Kien Giang	1541	1535	1376	1458	1761	1981	2155
Ca Mau	672	852	828	895	1089	1151	1240

(Source: General Statistics Office)

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