Vietnam's VCCI Urges Major Legal Reforms to Boost Private Sector Growth

HANOI – Vietnam’s main business lobby has called for significant institutional reforms and a more predictable legal environment to support the country’s private sector, which is grappling with regulatory hurdles and economic shocks.

At a meeting with the National Assembly's Economic and Financial Committee in Hà Nội on June 15, the Vietnam Chamber of Commerce and Industry (VCCI) stressed that while rapid legislative changes are necessary, the quality and stability of new laws are paramount for businesses to invest with confidence.

VCCI Chairman Hồ Sỹ Hùng noted that Vietnam's economic reform agenda is accelerating, guided by the Politburo’s Resolution No 68, which designates the private sector as a critical engine for growth.

"Rapid legislative changes were necessary to remove bottlenecks and support economic development, but the quality of legislation remained equally important," Hùng stated. He emphasized that economic laws must be practical, reflect business realities, and provide stability. "What businesses want the most is a more stable and predictable legal framework, greater consistency among regulations and more effective implementation of policies," he added.

However, companies are facing a heavy burden from both long-standing structural issues and external pressures, with small and medium-sized enterprises (SMEs) and household businesses being the most exposed, according to VCCI’s deputy general secretary Đậu Anh Tuấn.

The private sector comprises over one million enterprises, or 96.6 per cent of all operating businesses in Vietnam. Yet, nearly 70 per cent of these have registered capital below VNĐ10 billion (US$382,000). Access to finance remains a persistent challenge, with a VCCI survey showing 75.5 per cent of businesses are unable to secure bank loans without collateral.

Tuấn also highlighted that for household businesses, the abolition of the lump-sum tax regime from January 1, 2026, could elevate compliance costs and deter expansion.

Compounding these domestic challenges, the outbreak of conflict in the Middle East in March 2026 led to a sharp rise in production costs, driven by higher prices for raw materials and fertilisers, alongside increased international logistics costs.

The VCCI also reported that numerous projects remain stalled due to overlapping planning regulations, protracted land clearance procedures, delays in land valuation approvals, and inconsistent policy implementation by local authorities.

A VCCI survey conducted in early 2026 revealed the extent of these regulatory frustrations. It found that 51.4 per cent of business complaints were related to unclear, impractical, or overlapping regulations. Approximately 25 per cent of businesses reported that administrative procedures were not conducted as publicly prescribed, 33.3 per cent experienced delays beyond official timelines, and 38.2 per cent said they still encounter informal costs. Consequently, 24 per cent of firms reported having cancelled or postponed their business plans.

“In that context, timely and well-designed legislative measures could play a critical role in strengthening business resilience,” Tuấn said. "It is time for provincial reforms to shift their focus from simply speeding up administrative procedures to creating a fairer and more competitive business environment."

The VCCI outlined several priorities for reform, including focusing on the quality rather than quantity of new regulations, shifting from pre-approval controls to post-audit supervision, improving policy consistency, and strengthening consultation with the business community.

Discussion on SME support law

During the session, participants also debated proposed amendments to the Law on Support for SMEs.

The VCCI put forward several recommendations, including raising the revenue thresholds used to classify SMEs in specific sectors. For instance, it proposed a threshold of VNĐ1 trillion (US$38.2 million) for electronics firms. It also suggested a three-year transition period for companies that grow beyond the SME criteria to adjust.

Further proposals included expanding eligibility for preferential corporate income tax rates to medium-sized enterprises in manufacturing and supporting industries, alongside new incentives for investment in technological upgrades and production expansion.

To address financing gaps, the VCCI recommended allowing intangible assets, such as intellectual property rights, to be used more effectively as collateral in lending. It also proposed an annual interest-rate support mechanism of at least 2 percentage points for SMEs.

The chamber also advocated for stronger support for digitalisation and green transformation. This includes proposals for the government to cover at least 50 per cent of technology adoption costs, increase interest-rate subsidies for green projects to 3 per cent per year, and allow 150 per cent of ESG consultancy and certification costs to be deducted from taxable income to help firms meet international sustainability standards.

Other key proposals included extending the principle of "guidance before penalties" to all SMEs and implementing mechanisms to ensure that at least 20 per cent of public procurement contracts are awarded to smaller enterprises.

Strategic cooperation proposals

At the meeting, the VCCI also proposed strategic cooperation with the NA’s Economic and Financial Committee to ensure business concerns are better reflected in the legislative process.

These proposals include establishing a formal mechanism for lawmakers to utilize VCCI research and surveys during policy appraisal and making consultation with the VCCI a mandatory step for all new economic laws.

The chamber also suggested that the National Assembly could allocate funding for the VCCI to conduct independent policy impact assessments and organize consultations on draft legislation.

Other initiatives proposed were cooperation on parliamentary oversight missions, joint policy forums, and the co-publication of reports, such as an annual review of business legislation.

The VCCI concluded that closer cooperation between lawmakers and the business community is essential to remove institutional bottlenecks and fully unlock the potential of the private sector as a primary driver of Vietnam's economic growth.