Abstract
In recent years, the Vietnamese government has emphasized its commitment to create a fair business environment for both the state and non-state sectors in its medium and long-term economic development programs. This paper examines the development of the private sector in Vietnam, focusing in particular on the relationship between the state and the private sector. The first part of the paper reviews the trends in private sector development, the second part discusses obstacles for private sector development, with focus on the role of state-owned enterprises, and the third part discusses future challenges and suggests some policy reforms on the basis of the lessons from the first two decades of economics reforms in Vietnam, as well as international experiences. The paper also considers the pattern of new firm establishment, including the impact of foreign investment on the domestic private sector.