2
In the third week of May 2025, during an international workshop hosted by the Commonwealth Institute of Advanced and Professional Studies themed “Managing Global Trends: Opportunities and Challenges” and featuring participants from over 17 countries, I posed the question, “What do you readily associate with Vietnam?” during one of the classes I led. To my amusement and surprise, most participants limited their responses to war, rich history, stunning landscapes, delectable cuisine, and vibrant culture. Regarding the mention of the war, I thought to myself, “Here is a pass that will not pass,” and as I looked around, I noticed that most of the managers in that room were born after 30th April, 1975. Besides feeling older than usual, I made a mental note that those interested in development and prosperity need to know more about Vietnam.
One of the most notable aspects of Vietnam, particularly in the context of its economic development, is its remarkable transformation into one of Southeast Asia’s most dynamic and rapidly growing economies over the past few decades. This transformation has been accompanied by a peculiarity that is significant and cannot be overemphasised: the crucial role of small and medium-sized enterprises (SMEs) in driving this economic change. In fact, to assert that SMEs are the backbone of the Vietnamese economy is a significant understatement. SMEs in Vietnam constitute an overwhelming majority, making up over 95% of the total number of enterprises in the country. Their influence extends beyond just numbers; they contribute approximately 45% to the country’s gross domestic product (GDP), highlighting their vital importance in shaping Vietnam’s economic landscape. Furthermore, these SMEs are also a major source of employment, accounting for over 50% of jobs within the country.
The small and medium-sized enterprises (SMEs) in Vietnam are actively engaged in a diverse array of enterprises that are not only small or niche but rather span a broad spectrum of sectors. These sectors include, but are not limited to, agriculture, manufacturing, technology, and services. The significant presence of SMEs in Vietnam reflects the country’s distinct and dynamic development trajectory, which is characterised by a phase of decentralised economic growth, relatively low barriers to entry for new businesses, and a variety of supportive government policies and initiatives that have collectively fostered an environment in which small businesses are able to thrive and prosper.
Intoday’srapidlyevolving economic landscape, Vietnam is undergoing a significant transformation as it shifts from an agrarian-based economy to a more industrialised and knowledge-driven economy. In this context, SMEs emerge as a vital player by not only absorbing a substantial portion of the labour force within the informal sector but alsogeneratingnewjobopportunitiesandactively contributing to poverty alleviation across various communities. Particularly in rural areas, the presence and operations of SMEs have a profound impactonlocalcommunity development. They serve as a crucial link connecting local resources with both national and international markets, thereby helping to elevate livelihoods, enhance economic stability, and promote sustainable development at the grassroots level. Through these contributions, SMEsdriveeconomicgrowthandplayanessential role in the socio-economic fabric of Vietnam, facilitating a more integrated and prosperous future for its citizens.
Things were, however, not always this way. Before Vietnam’s transformation into an SME-led economy, life in the country was shaped by a combination of war recovery, centralised planning, economic hardship, and limited private enterprise. From the end of the War in 1975 to the launch of economic reforms in 1986, life in Vietnam was characterised by widespread poverty, food insecurity, and economic stagnation.
The aftermath of the Vietnam War resulted in significant and enduring scars on the country’s infrastructure as well as its economy, affecting the livelihoods and well-being of millions of people across the nation. The conflict wreaked havoc on crucial infrastructure components, such as roads, bridges, and factories, which were either extensively damaged or completely destroyed. In addition to the physical destruction, Vietnam grappled with severe international sanctions, particularly those imposed by the United States, which further isolated the country both economically and diplomatically on the global stage.
The limited foreign aid available, primarily from the Soviet Union and other Eastern Bloc nations, was often conditional and insufficient to meet the vast needs of the war-torn nation. This situation of isolation not only hampered Vietnam’s recovery but also significantly delayed its technological advancement, making it increasingly difficult for the country to modernise and grow. Consequently, Vietnam became reliant on inefficient state mechanisms for economic operations and development, hindering its ability to transition towards a more productive and diversified economy. Over the years, the lingering effects of the war continued to manifest, presenting a considerable challenge for the Vietnamese people as they sought to rebuild their lives and their nation in the face of significant historical and structural obstacles.
Following the reunification of North and South Vietnam in 1975, the government implemented a Soviet-style centrally planned economy. The state controlled nearly all aspects of economic activity. In this context, private ownership of businesses and land was largely abolished; agriculture was collectivised, requiring farmers to work on state-run cooperatives. Industry and commerce were dominated by state-owned enterprises (SOEs). This model stifled entrepreneurship and innovation while generating inefficiencies and shortages. With the state as the primary employer and the private sector suppressed, formal job opportunities were extremely limited, leading many Vietnamese to resort to small, unregistered businesses or moonlighting as street vendors, mechanics, or traders, despite the legal risks.
The turning point in Vietnam’s economic trajectory came with the introduction of Đổi Mới (which can be translated as “renovation’ or “innovation”) in 1986. Đổi Mới consists of a set of political and economic reforms that transformed Vietnam from a centrally planned economy to a socialist-oriented market economy. The reforms loosened state control over production and trade, legalised and even encouraged private businesses, including small-scale enterprises. Farmers and small producers were granted autonomy over production and pricing. Undoubtedly, all this created space for the informal sector and small businesses to formalise and expand, but the people of Vietnam were ready to embrace and make the most of the opportunities that the reforms brought them.
As the State moved away from controlling the economy, local entrepreneurship stepped in to fill the void, and SMEs began and continue to play a pivotal role. It must be noted that the rise and status of SMEs were neither mysterious nor accidental; rather, they were desired, envisaged, and driven by institutionalised support for SMEs through key policies and laws. Some of the policies that aided the height and width of SMEs in Vietnam and bolstered the development of its SME-led economy include the Enterprise Law (2000), which simplified business registration and legal frameworks, leading to a surge in the number of SMEs, as well as the Law on Support for Small and Medium-sized Enterprises (2017), which provides incentives for credit access, innovation, market entry, and training. Other government support for SMES includes business development services, tax relief, and funding mechanisms.
Today, Vietnam’s SME-led economy stands as a testament to the power of grassroots entrepreneurship and policy support. While challenges persist, the future remains promising. With ongoing reforms, increased investment in human capital and technology, and continued integration into global markets, SMEs will continue to be central to Vietnam’s economic resilience and growth. Vietnam is demonstrating that strengthening the SME ecosystem not only contributes to a country’s growth and prosperity but can also ensure inclusive development within the nation.
Join me, @anthonykila, if you can, to continue these conversations.
Anthony Kila is a Jean Monnet Professor of Strategy and Development at the Commonwealth Institute of Advanced and Professional Studies
You Might Be Interested In Provided by SyndiGate Media Inc. ( Syndigate.info ).
0 Komentar