Duong Ngoc Minh (L), general director of seafood exporter Hung Vuong, said at a meeting on April 18 that his was one the first industries to show signs of trouble due to the tight capital flow.
Vietnam does not offer a level playing field for the domestic private sector, economists have said.
There are no policies to support small and medium-sized private companies though the sector contributes most to economic growth, Nguyen Duc Thanh, head of the Vietnam Center for Economic and Policy Research (VEPR), said while speaking at a recent meeting with businesses in Ho Chi Minh City.
Despite receiving only 27 percent of total investment between 2006 and 2010, the private sector accounted for half the economic growth during the period. State-owned companies received nearly half but accounted for only a fifth of the growth.
The skewed policy would "harm" the economy in the long term, he warned.
Tran Dinh Thien, deputy head of the Central Institute for Economic Management (CIEM), agreed, saying the unfair support provided to state-owned enterprises has to stop.
The government's tight monetary policy in reaction to inflation has hurt local businesses and consumption, he said.
Since last year a slew of cuts have been made to deposit rates in the hope of bringing down lending rates, but Thien said the government should enable companies to borrow easily.
Duong Ngoc Minh, general director of seafood exporter Hung Vuong, said his was one of the first industries to show signs of trouble due to the tight capital flow.
Nguyen Dinh Cung, deputy head of CIEM, expected things to improve for the private sector in "the next few years," but said they should not wait for better policies to improve their performance.
Sustainable economic growth
Economists at the meeting said while the economy grew at around 7 percent in the last decade, it has lacked stability.
Vietnamese companies are mainly involved in the production stages and do little value-addition to a product in the form of assembling or packaging, they said.
Only 20 percent of companies use high technology compared to 30 percent in Indonesia, 40 percent in Malaysia, and 70 percent in Singapore.
The economy remains resource-based, they said, pointing out there are nearly 2,000 firms licensed for mining, five times the number in 2000.
The economy managed just 5.03 percent growth last year, the lowest in 13 years.
The head of the VEPR said a "true" economic restructuring plan is imperative.
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