Private Economic Development: Strengthening Domestic Business Connections

BAC GIANG - In recent years, the private economic sector has increasingly affirmed its role as an important driving force of the Vietnamese economy in general and Bac Giang province in particular. One of the solutions to promote the private economy is to strengthen the connection between domestic enterprises and foreign direct investment (FDI) enterprises.

Steps in private enterprise development

Resolution 68-NQ/TW dated May 4, 2025 of the Politburo on private economic development affirmed: “In a socialist-oriented market economy, the private economy is the most important driving force of the national economy, the pioneering force promoting growth, creating jobs, improving labor productivity, national competitiveness, industrialization, modernization, and restructuring the economy towards green, circular, and sustainable development”. To develop the private economy, Resolution 68-NQ/TW has proposed 8 groups of tasks and solutions, including the 5th task and solution: “Strengthening the connection between private enterprises, private enterprises with state-owned enterprises and FDI enterprises” and is specified in 4 groups of very specific tasks and solutions.

Production line at LGG Bac Giang Garment Corporation Joint Stock Company.

Currently, there are very few state-owned enterprises in Bac Giang province, while the number of FDI enterprises is very large. By the end of 2024, the whole province has about 18,000 enterprises, of which about 99% are private enterprises. The total registered capital is 206,279 billion VND; creating jobs for 33,150 workers, the income of workers in private enterprises in 2024 is 11.86 million VND. In addition, there are 1,200 registered cooperatives and about 140,000 individual business households in the area.

Enterprises operate in many areas of the economy such as: Real estate, construction, garment, agricultural processing, wood processing, mechanics, construction materials production, trade and services, tourism, education and training, healthcare, information technology, finance and banking... Private enterprises in the province are mainly small and medium-sized enterprises, even micro-enterprises; their contribution to the province's budget revenue is only 30%. The level of business administration and legal knowledge of enterprises is modest. In particular, the number of enterprises using high technology, operating in the fields of supporting industry, high-precision mechanical processing is still limited; the application of digital transformation and artificial intelligence (AI) of enterprises is at a rudimentary level.

Regarding FDI enterprises, Bac Giang has recently emerged as a top locality in attracting FDI investment and has become the new "Industrial Capital" of the North. Bac Giang has welcomed a series of world technology corporations such as Hana Micron, Foxconn, Luxshare-ICT, JA Solar, etc. It is expected that Bac Giang will also become the next destination in Vietnam for Aeon Mall Retail Group. Products of FDI enterprises are mainly electronics, semiconductors, solar panels, clothing, and food. FDI enterprises contribute up to 88% of industrial output and 95% of import-export turnover of the whole province; contributing about 3,000 billion VND to the budget.

The link is not tight.

Initially, the connection between domestic enterprises (DDI) and FDI enterprises has been formed through private enterprises in the province providing some services to FDI enterprises such as: Labor supply, providing lunch for workers, providing hotel services, trade, entertainment. In addition, some enterprises have participated in construction activities, providing supporting industrial goods such as: Packaging, electronic components. However, the connection is not high and not tight, only stopping at the step of providing simple services and goods.

Factory of SamKwang Vina Co., Ltd., Quang Chau Industrial Park.

DDI enterprises in the province only reach level 3 and level 4 in the component supply chain for FDI enterprises producing electronic products. The reason for the lack of close connection between DDI enterprises and FDI enterprises is due to many factors: FDI enterprises operating in the high-tech sector often tend to import input goods from their country of origin or tend to use goods produced by their own country's enterprises in Vietnam.

Currently, in the province, there are many FDI enterprises producing supporting industries to supply components and products to large FDI enterprises, so DDI enterprises find it difficult to participate in the supply chain for FDI enterprises. DDI enterprises in the province lack technology and do not have enough capacity to become suppliers for FDI enterprises. The State has policies to support the development of supporting industries, but they are not complete and most of the policies do not come into practice.

DDI enterprises find it difficult to access resources such as land, capital, technology, etc. Administrative procedures are still cumbersome, causing businesses to lose investment opportunities. Both DDI enterprises and FDI enterprises lack information about each other, leading to loose connections, and the parties do not grasp each other's capabilities and needs. The province has not had any specific, regular and continuous activities to promote the connection of these two business groups.

Synchronize solutions

In order for Resolution 68-NQ/TW dated May 4, 2025 of the Politburo on private economic development to come into life, it is necessary to research, develop and promulgate a Project to connect DDI enterprises and FDI enterprises, in which the framework of the Project includes: Assessment of the situation of DDI enterprises and FDI enterprises in the province; areas in which DDI enterprises and FDI enterprises can cooperate with each other in the present and the future; propose forms of information connection between DDI enterprises and FDI enterprises; propose forms of association between DDI enterprises and FDI enterprises; urgently implement support policies on research and development, training, consulting, trade promotion, and technology transfer for DDI enterprises. After having the Project, it is necessary to assign a unit to preside over and regularly urge, summarize, and periodically evaluate... In the long term, there should be sanctions to force FDI enterprises to use the products and services of DDI enterprises.

On the part of DDI enterprises, it is necessary to proactively grasp the needs of FDI enterprises through seminars and contacts between the two business sectors organized by state agencies or through other information channels. Boldly seek technology, improve product quality to meet the requirements of FDI enterprises... Coordinate with functional agencies to organize seminars, promote links between DDI and FDI enterprises; create communication channels to provide information on the capabilities and needs of the two business sectors. Effective connection between types of enterprises not only contributes to improving productivity and product quality but also creates a resonant strength for the entire economy of Bac Giang province.

Nguyen Cuong (Permanent Vice President of Provincial Business Association)

Source: https://baobacgiang.vn/phat-trien-kinh-te-tu-nhan-tang-cuong-ket-noi-doanh-nghiep-trong-nuoc-postid419568.bbg