NATIONAL ECONOMIC UNIVERSITY

NEU BUSINESS SCHOOL

oOo

ESSAY

MACROECONOMICS
Title: Describe the situation of non-State enterprises in Vietnam
since 2010

Class: EBBA 15.2 – Group 9

Lecturer: Mr. Nguyen Viet Hung
Member:
Đỗ Ngọc Khánh Ly
Hoàng Khánh Chi
Vũ Anh Đức
Nguyễn Hoàng Thái Hà
Nguyễn Bá Hải Ninh

Hà Nội, 2024
Table of Contents
I. Introduction. ................................................................................................................1
II. Non–state enterprises. ............................................................................................1
1. Definition. ................................................................................................................1
2. Classification. ...........................................................................................................1
3. Regulations...............................................................................................................1
III. Domestic operation overview of non-state enterprises in Vietnam. ...................2
IV. The current performance of non-state enterprises in Vietnam (2010 – 2021). .3
1. Number of acting enterprises having business outcomes by type of enterprise. ...3
2. Number of employees in acting enterprises having business outcomes by types of
enterprise..........................................................................................................................5
3. Annual average capital of acting enterprises having business outcomes by types
of enterprise. ....................................................................................................................6
4. Net turnover from the business of acting enterprises having business outcomes by
types of enterprise. ...........................................................................................................7
V. Opportunity and challenge. ...................................................................................8
1. Opportunities: ..........................................................................................................8
2. Challenges:...............................................................................................................9
VI. Conclusion. ..............................................................................................................9
VII. References. .............................................................................................................10
I. Introduction.
With a contribution of over 40% to the GDP, 30% to the state budget, and attracting
approximately 85% of the country's workforce, non-state enterprises are playing a crucial
role in the overall development of Vietnam's economy. The achievements of non-state
enterprises in recent years can be observed through their continuously expanding
production scale, revenue, and profits, along with increasing obligations to the state, which
have consequently raised workers' incomes and improved their living standards. During
the period of 2010-2021, despite achieving notable results, the development of private
enterprises in Vietnam has experienced significant fluctuations in both the number and
scale of businesses. Thus, our research here aims to go deeper into the activities and current
situation of non-state enterprises in Vietnam since 2010.

II. Non–state enterprises.

1. Definition.
Enterprise is an independent and organizationally separate business entity with the legal
rights: it is involved in the production and sale of goods, execution of work, and provision
of services. [Office, g. s. (2019)]
A non-state enterprise is an enterprise that is not state-owned, has capital that is
collectively owned, privately owned by one person, a group of people, or has state
ownership but only accounts for 50% of the charter capital. rate or less, long-term, equal
before the law, and has legal profits to proactively take the initiative in all production and
business activities within the framework of the law.
The owner or operator of a business is fully responsible for his or her production and
business activities and has the full right to decide on the method of profit distribution after
completing tax obligations without being controlled by the government. decisions of the
state or management agencies.
2. Regulations.
Non-state enterprises in Vietnam are those operating under the Enterprise Law, which
are economic entities existing in the forms of limited liability companies (LLC), joint-stock
companies (JSC), private enterprises, where one or more individuals act as owners and bear
full responsibility, either limited or unlimited, for all activities of the enterprise.
• Business Registration Regulations: Non-state enterprises must comply with
regulations on business registration according to the procedures and requirements
of the law, including registering the enterprise name, registered address, business
lines, etc.
• Taxation and Financial Reporting Regulations: Non-state enterprises must adhere
to regulations on corporate income tax, value-added tax, and other taxes as
stipulated by law. They must also conduct periodic financial reporting and publicly
disclose financial information as required by tax authorities and financial
management agencies.
• Labor and Occupational Safety Regulations: Non-state enterprises must comply
with regulations on labor, including signing labor contracts, implementing welfare
policies for employees, ensuring occupational safety and hygiene, etc.

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 • Environmental and Food Safety Regulations: Non-state enterprises must comply
with regulations on environmental protection and food safety, including waste
treatment, efficient use of resources, adherence to food safety standards, etc.
• Intellectual Property Rights Regulations: Non-state enterprises must adhere to
regulations on protecting intellectual property rights, including registering
protection for products, services, and technologies, avoiding copyright and
trademark infringement, etc.
• Trade and Import-Export Regulations: Non-state enterprises must comply with
regulations on trade and import-export, including customs procedures, adherence to
import-export restrictions and fees, etc.
3. Classification.
There are following types of non-state enterprises:
• Private enterprises: are companies owned and run by individuals or groups of
people rather than the government. They are the driving force behind a capitalist
economy, which is one in which the means of production are privately owned and
operated for profit.
• Limited liability company (LLC): is a form of limited liability company specific to
the United States. This is a business structure that can combine the pass-through
taxation of a partnership or sole proprietorship with the limited liability of a
corporation.
• A joint stock corporation is an organization in which shareholders can purchase and
sell equity shares. A shareholder's shares (certificates of ownership) reflect their
proportionate ownership of the company's equity. Shareholders' capacity to transfer
their shares to others has no influence on the company's ability to continue
operations. Joint stock corporation include Joint-stock companies without State
capital and Joint-stock companies having State capital.

III. Domestic operation overview of non-state enterprises in Vietnam.

Non-state enterprises in Vietnam play a crucial role in the country's economy. Here's an
overview of their domestic operations:
• Sectoral Diversity: Non-state enterprises operate across a wide range of sectors,
including manufacturing, services, agriculture, construction, retail, and technology.
They contribute significantly to the overall GDP and employment generation in
Vietnam.
• Employment Generation: Private enterprises are major contributors to job creation
in Vietnam. They provide employment opportunities to millions of people across
urban and rural areas, contributing to poverty reduction and economic development.
• Small and Medium-sized Enterprises (SMEs): A significant portion of non-state
enterprises in Vietnam are SMEs. These businesses play a vital role in driving
innovation, fostering entrepreneurship, and promoting economic diversification.
However, SMEs often face challenges such as limited access to finance, technology,
and skilled labor.

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 • Regional Distribution: Non-state enterprises are spread throughout Vietnam, with
concentrations in urban centers such as Ho Chi Minh City, Hanoi, and Da Nang.
However, there is also a growing presence of private businesses in rural areas,
especially in sectors like agriculture and agribusiness.
• Technology Adoption: Many non-state enterprises are adopting modern technologies
to improve their productivity, efficiency, and competitiveness. This includes the
adoption of automation, digitalization, e-commerce, and advanced manufacturing
techniques.
• Challenges: Despite their significant contributions, non-state enterprises in Vietnam
face several challenges, including limited access to financing, bureaucratic hurdles,
corruption, inconsistent enforcement of regulations, and competition from state-
owned enterprises. Addressing these challenges is essential for creating a more
conducive environment for private sector growth and innovation.
• Government Support: The Vietnamese government has implemented various
policies and initiatives to support the development of non-state enterprises. These
include reforms to streamline business registration processes, improve access to
finance, enhance infrastructure, and promote innovation and entrepreneurship.
Overall, non-state enterprises in Vietnam play a vital role in driving economic growth,
employment generation, and innovation. With continued support from the government and
efforts to address key challenges, they are expected to further contribute to Vietnam's
development in the years to come.

IV. The current performance of non-state enterprises in Vietnam (2010 – 2021).

1. Number of acting enterprises having business outcomes by type of enterprise.

The number of non-state enterprises in Vietnam is growing steadily over time. The
number of non-state enterprises reached 694,181, accounting for 96.59% of total Vietnam
business. The figure is also about 2.6 times larger than in 2010. In the period of 2010 –
2021, the number of non-state enterprises increased by an average of 10% per year. Joint
stock corporation without capital of state has 138,109 companies in 2021, rising 2,5 times
higher than in 2010, with an average annual increase of approximately 10%. By types of
enterprise, private limited liability witnessed similar trend when the number of acting
enterprises having business outcomes is 523,406, 3.2 times more than in 2010, increasing
by 13% per year on average. In addition, the number of private enterprises decreased from
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48,007 companies in 2010 to 30,425 companies in 2021, a decrease of nearly 1.6 times.
Corporations with corporate capital also decreased moderately from 2010 to 2018,
recovered and increased in 2019 and 2020, and then decreased sharply again to 999
companies in 2021. Therefore, corporations with corporate capital Enterprises decreased
1.7 times compared to 2010. The number of business groups tends to increase the most
strongly, 79 companies in 2010 and up to 16% in 2021, reaching 1242 companies.
The non-state economic sectors of all types tend to increase sharply in quality, quantity,

and scale. In terms of quality, non-state enterprises are continuously improving their
management practices, applying science and technology to production and business
operations, and enhancing the quality of their products and services. Many companies have
achieved international standards and are exporting their products to demanding markets.
The number of non-state enterprises, particularly small and medium-sized enterprises, is
rapidly growing. This signifies the dynamism and creativity of Vietnamese entrepreneurs
and the attractiveness of Vietnam's business investment environment. Regarding scale,
many non-state enterprises are expanding significantly, reaching regional and international
prominence. Several companies have even made it onto the Fortune 500 list or other
prestigious rankings. This area is the main driving force promoting the development of
Vietnam's economy. Although from 2010 until now, there have been difficult times such as
the Covid 19 epidemic, businesses had to temporarily stop business activities, or even close
their businesses, but by 2021, new businesses still established and trying to grow. Vietnam
has many non-state enterprises that play an extremely important role in Vietnam's GDP.
Therefore, to help the economy develop further, the Government needs to continue to have
policies to support the development of the non-state enterprises, while encouraging non-

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state enterprises to innovate, improve competitiveness and contribute effectively to
Vietnam's international integration.
2. Number of employees in acting enterprises having business outcomes by types of
enterprise.

As of December 31, 2021, the number of employees working in the non-state

enterprise sector was 8.6 million, which was 1.4 times larger than in 2010. By business
type, Limited company is the area that attracts the most workers with 4.79 million people
(accounting for 55,6% of all non-state enterprises), 1.55 times higher than in 2010. Next is
Joint stock Co. without Capital of State, which attracted 3.4 million workers (accounting
for 39.4% of all non-state enterprises) in 2021, 1.9 times higher than in 2010. However, the
number of workers only increased to 3.5 million people in 2019 and then decreased to only
3.4 million people in 2021. Collective name Company employs 9930 people (accounting
for 0.11 percent of all non-state enterprises), which is 9.93 times more than in 2010 and
attracts an average of approximately 24 percent more people each year. Joint stock Co.
having capital of State has a workforce of 0.25 million (accounting for 2.9% of all non-
state enterprises), which decreases by 2 times compared to 2010. Private companies have
0.17 million employees (accounting for 2% of all non-state enterprises), decreases by 3.7
times compared to 2010, with a negative growth rate of 10.87%. Research has consistently
demonstrated the private sector's paramount role in propelling Vietnam's remarkable
economic expansion. The private economy has maintained an impressive growth
trajectory, absorbing approximately 85% of the nation's workforce. Moreover, private
enterprises contribute a higher proportion of corporate income tax compared to state-owned
enterprises, playing a crucial part in mobilizing social resources for investment in
production and business operations, driving economic growth, facilitating structural

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transformation, augmenting government revenue, generating employment opportunities,
enhancing living standards, and ensuring social security.
3. Annual average capital of acting enterprises having business outcomes by types of
enterprise.
The average annual capital of actively operating enterprises, categorized by business
type based on business performance, is a statistical measure reflecting the financial health
and sustainability of different types of enterprises within a year. This data is typically
collected and analyzed by national statistical agencies or other relevant entities.
The average annual capital of enterprises operating during the period of 2010-2021
shows a remarkable increase in the non-state sector, while in 2010 it was just over 5 trillion
dong, eleven years later, they had increased sixfold to 30 trillion dong, representing a 1.2%
increase compared to the same period last year and a 9% increase compared to 2010 in the
overall market. During this period, non-state enterprises consistently maintained the
highest average capital, indicating the strong presence of non-state enterprises in the
Vietnamese economy. This is not surprising given the increasing number of related
companies and their growing role in national growth. On the other hand, limited liability
companies showed an increasing trend from 2010 to 2015, although experiencing a slight
decrease in the following year, they bounced back thereafter (2017 – 2021) and by 2021,
reached nearly 10 trillion dong, accounting for 19.43% of market share. [Office, g. s., 2021]
(Joint-stock companies also demonstrated significant growth in average capital, especially
those without state capital. This indicates the increasing role of private ownership and
private investment in the economy.
Currently, many Vietnamese enterprises have the potential to reach international
levels, such as Vietnam's largest conglomerate - Vingroup, FPT Corporation, private bank
Techcombank, Sun Group tourism corporation, and others. The gradual process of asserting
their positions in the global market remains a costly endeavor, although it has improved
over time. For enterprises with foreign investment, this trend is similar to non-state
enterprises, although it only reached 10 trillion dong. The reason for its explosive growth
may lie in the countless opportunities that Vietnam offers. Similarly, many reports show
that Vietnam will be a big force in the near future, with projections of being a high-income
country by 2045, giving it an opportunity that investors cannot afford to pass up. During
this period, joint ventures experienced no substantial monetary changes, with this ratio
even falling to 2% in 2021, like chance public companies in that year. However, this
constitutes a squandered opportunity because some businesses rely heavily on it to boost
earnings, sometimes exceeding expectations.

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4. Net turnover from the business of acting enterprises having business outcomes by
types of enterprise.
The net turnover from business of acting enterprises across all types of enterprises
has experienced a steady upward trend from 2010 to 2021. This indicates a significant
expansion and growth in business activities during this period. The growth rates among
different types of enterprises show significant variation. Some types have experienced
much faster growth than others.
The net revenue of the entire non-state enterprise sector in 2021 reached 17,577.93
billion dong, increasing 4.3 times compared to 2010. The net revenue of private limited
liability companies in 2010 was only 1,865.90 billion dong, but by 2021, there was a
breakthrough increase to 9,250.81 billion dong, nearly 5 times higher than in 2010. The
figures for private enterprises vary. In 2010, the net revenue earned by these enterprises
was 391.40 billion dong. Over the next two years, revenue continued to increase to 541.70
billion dong. However, from 2017 to 2021, there was a relative decrease in net revenue,
reaching only 0.69% of the total net revenue of other enterprises. For non-state-owned
joint-stock companies, we can see from the chart, there is a significant increase in revenue,
and by 2021, this figure had risen to 7,608.33 billion dong, with predictions of continued
growth in the future. State-owned joint-stock companies also showed a good change in
their net revenue. In 2010, new revenue reached only 432.90 billion dong, with slight and
continuous increases in the following years, reaching 609.79 billion dong by 2019.
However, in the following 2 years (2020 – 2021), the net revenue of this type of enterprise
decreased to 507.45 billion dong, lower than the peak by 102.34 billion dong. During this
period, joint ventures also experienced significant growth from 442.40 billion dong (2010)
to 1,352.24 billion dong (2021), tripling after 11 years. [Office, g. s., 2021]

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 To sum up, the trends observed indicate the increasing role of private ownership and
investment, the strong presence of foreign investment, and the government's focus on
maintaining stability in key sectors. These findings provide valuable insights into the
evolving economic landscape of Vietnam and the factors driving its growth.

V. Opportunity and challenge.

1. Opportunities:
• Trade Agreements: Vietnam’s trade relations with the EU have reached a major
turning point with the signing of the EU - Vietnam Free Trade Agreement (EVFTA).
This agreement is expected to eliminate nearly 99% of tariff lines and trade barriers
between Vietnam and the EU. This presents a significant opportunity for non-state
enterprises in Vietnam to expand their business operations and reach a larger
market. The reduction in trade barriers means that these enterprises can now export
their products to the EU at a much lower cost, making their products more
competitive in the EU market. Furthermore, the agreement also opens up the
possibility for these enterprises to import high-quality raw materials and advanced
technology from the EU, which could significantly improve their production
efficiency and product quality. [Lan Anh (2022)]
• Market Expansion: The rapid and effective development of Vietnam-EU trade
relations opens opportunities for non-state enterprises to expand their market reach.
With the EVFTA, Vietnamese non-state enterprises now have access to one of the
largest and most lucrative markets in the world. This not only allows these
enterprises to increase their sales and profits but also exposes them to new ideas,
technologies, and business practices. Moreover, by expanding their market reach,
these enterprises can diversify their customer base, reducing their dependence on

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 the domestic market and making their business more resilient to local economic
fluctuations.
2. Challenges:
• Competition: With the opening up of the Vietnamese market, foreign enterprises
are entering, leading to increased competition. These foreign enterprises often have
more advanced technology, superior product quality, and stronger brand
recognition, making them formidable competitors for Vietnamese non-state
enterprises. To survive and thrive in this increasingly competitive market,
Vietnamese non-state enterprises need to continuously improve their products,
services, and business operations. They also need to invest in marketing and
branding to enhance their competitiveness. [Dr Nguyen Hoang Tien, Assoc. Prof.
Nguyen Minh Ngoc (2020)]
• Performance Limitations: Most non-state SMEs in Vietnam are young and face
several performance limitations. These limitations include lack of management
experience, lack of skilled labor, and lack of access to finance. These factors can
significantly hinder the growth and competitiveness of these enterprises. To
overcome these limitations, Vietnamese non-state enterprises need to invest in
human resource development, improve their management practices, and seek new
sources of financing.
• State-Owned Enterprise (SOE) Reform: The reform of SOEs in Vietnam is
ongoing. This process includes privatization and shifting to a more efficient and
diversified economic system [Dang, L. N., D. D. Nguyen, and F. Taghizadeh-
Hesary, 2020], which could impact the business environment for non-state
enterprises. The reform of SOEs could lead to increased competition in sectors
previously dominated by SOEs. On the other hand, it could also open up new
business opportunities for non-state enterprises as the government divests from
certain business areas. However, the process of SOE reform is complex and
uncertain, and it requires non-state enterprises to constantly monitor the policy
environment and adjust their business strategies accordingly.

VI. Conclusion.
Non-state firms are often economic units that exist in the form of limited liability
companies, private enterprises, joint stock companies, or partnerships owned by one or
more individuals who are accountable for the company's assets and actions. Although the
economy has much more changes and modernity is much more dynamic, the significance
of state-owned companies in market stabilization cannot be denied. However, the specific
function and impact of non-state enterprises varies according to the country's economic
structure, level of development, and regulatory framework. To summarize, non-state firms
are critical drivers of Vietnam's economic development, with major contributions to GDP
growth, job creation, innovation, and competitiveness. Supporting the growth and
sustainability of these businesses is a top goal for the Vietnamese government as it works
to build a vibrant and robust economy.

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VII. References.
• Dr Nguyen Hoang Tien, Assoc. Prof. Nguyen Minh Ngoc (2020), Coping with
Challenges and Taking Opportunities in International Business Strategies of
Foreign Enterprises in Vietnam.
• Dang, L. N., D. D. Nguyen, and F. Taghizadeh-Hesary. 2020. State-Owned
Enterprise Reform in Viet Nam: Progress and Challenges.
• Lan Anh (2022), The ‘bridge’ between EU and Vietnam: EVFTA, Vietnamnet
Global.
• Nguyen Van Hung (2023), Thực trạng hoạt động sản xuất, kinh doanh của các
doanh nghiệp tư nhân tại Việt Nam, Tạp chí Kinh tế và Dự báo, số 01+02 tháng
01/2023.
• N. T. Uyen (2017), non-state SMEs in Vietnam: Understanding Strategic Situation
and Implications for Organizational Performance.
• Office, g. s. (2021). enterprises data. Hanoi: general statistics office,
https://www.gso.gov.vn/en/enterprises/
• Office, g. s. (2021). Statistical data. Hanoi: general statistics office,
https://www.gso.gov.vn/
• Office, g. s. (2019). Explanation of terminology, content, and methodology of
some statistical indicators on enterprises. Hanoi: general statistics office,
https://www.gso.gov.vn/en/metadata/2019/03/enterprise/
• Vietnam, T. w. (2022). Overview about development success story. The world
bank in Vietnam.
• Wikipedia: the free encyclopedia.

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