State owned enterprises (SOEs) play a uniquely important role in Vietnam’s economic system. Their significance has been consistently affirmed in both theory and practice across multiple stages of the country’s development. Within Vietnam’s socialist oriented market economy, SOEs are not a transitional legacy but a strategic pillar designed to ensure stability, sovereignty, and long term growth.
Anchoring Macroeconomic Stability
Vietnam identifies the state economy, with SOEs at its core, as the leading component of the national economic structure. SOEs function as the state’s primary material instruments to guide, regulate, and stabilize the economy.
They are responsible for maintaining critical economic balances, including the supply of electricity, coal, petroleum products, food security, and essential infrastructure services such as aviation, railways, and road transport. During periods of crisis or sudden shocks, including events like the COVID 19 pandemic, SOEs enable rapid and coordinated intervention to protect economic stability and prevent systemic disruption.
This stabilizing role explains why SOEs remain central in Vietnam’s economic strategy rather than being fully replaced by market mechanisms.
Safeguarding Strategic Autonomy and National Security
SOEs are a foundational element of Vietnam’s strategic autonomy in an increasingly volatile global environment. These enterprises operate in sectors that are directly linked to national security and long term resilience.
Key areas include defense and security related industries, energy security, financial stability, and food security. SOEs are also entrusted with the management and protection of strategic national assets such as natural resources, mineral reserves, airspace, maritime zones, islands, and underground space.
By retaining state control over these strategic domains, Vietnam reduces external dependency and strengthens its capacity to respond independently to global disruptions.
Leading and Opening Pathways for Other Economic Sectors
Rather than crowding out private enterprise, SOEs in Vietnam are designed to lead, pioneer, and enable broader economic development.
They invest in high risk and long horizon sectors such as core technologies, advanced materials, high tech industries, and strategic infrastructure where private investment is often hesitant due to high uncertainty or capital intensity. Once foundational capacity is established, these investments create pathways for private firms to participate and scale.
SOEs also play a crucial role in connecting domestic businesses to global production and supply chains. Through the development of large scale economic groups and national champions, Vietnam aims to enhance its international competitiveness, with an explicit ambition to place Vietnamese enterprises among the world’s top 500 largest companies.
Correcting Market Failures and Promoting Social Equity
Free markets do not always allocate resources efficiently or equitably. In Vietnam, SOEs serve as instruments to address these structural limitations.
They ensure the provision of essential public services such as electricity, water, and telecommunications at affordable prices. In remote and economically disadvantaged regions, where private investors often avoid low return projects, SOEs undertake development responsibilities to support poverty reduction and social inclusion.
SOEs also help prevent excessive concentration of economic power by ensuring that critical means of production are not monopolized by private interest groups, protecting public welfare and economic fairness.
Driving a New Growth Model
In the current development phase, Vietnam expects SOEs to act as pioneers of a new growth model driven by science, technology, innovation, and digital transformation.
Resolution 79-NQ/TW requires SOEs to lead in modern corporate governance and operate on digital platforms, setting benchmarks that can be replicated across the wider economy. This leadership role is intended to generate spillover effects, accelerating productivity gains and technological adoption beyond the state sector.
State owned enterprises matter in Vietnam because they combine economic, strategic, and social functions that market forces alone cannot fully deliver. They stabilize the economy in turbulent times, safeguard national autonomy, open new development frontiers, correct market failures, and spearhead technological transformation.
In practical terms, SOEs function like the flywheels of Vietnam’s economic engine. They provide inertia and stability during external shocks while generating the initial momentum needed to pull the broader economy into new, high risk technological journeys that private enterprises often cannot undertake alone.
