According to the latest statistics of the Hanoi Department of Planning and Investment, since 2000 (when the Enterprise Law was issued) more than 40,000 new private businesses have been registered in Hanoi. The number of private businesses in Hanoi is higher than the total number in all 12 Red River Delta provinces. Hanoi authorities said that despite a rapid increase in the number of private businesses, the performance of these businesses does not match the potential of the capital, which plays a locomotive in the national economy. Many businesses were unable to operate after registration, as they had not prepared properly for the market conditions.

Luu Tien Long, director of the Hanoi Department of Industry said Hanoi’s 40,000 private businesses operate almost spontaneously with a total capital of nearly VND100,000 billion, each with around VND2.5 billion. Only 15 percent of these businesses have legal capital of more than VND10 billion. They mainly focus their trading activities in the fields such as  trade and services that require low investment capital but bring in profit quickly. Few businesses are keen on safe agriculture, processing technology, construction technology and high technology.

Another reason for slow development of Hanoi’s private businesses is that they have failed to employ highly qualified workers as they wish.

The number of university and college trained scientists and technician working for private businesses accounts for only around 10 percent while the figure is 14 percent in State-owned enterprises and 15 percent in foreign-invested enterprises. The number of qualified workers in private businesses is 30 percent while the figure in State-owned enterprises and foreign-invested enterprises is 60 percent. The average income of workers in private businesses is equal to 75 percent of those in State-owned enterprises and 45 percent of those in foreign-invested businesses.

Mr Long said due to weak technological qualifications and management ability, the competitiveness of private businesses is lower than rivals in the State-owned and foreign invested sectors, partially making Hanoi’s economy less competitive.

Mr Long promised that in 2007, Hanoi will pay more attention to private businesses, create more favourable conditions for them to develop strongly and to improve relations between Hanoi authorities and private businesses in order to boost the capital’s socio-economic development.