The Vietnamese business community has developed quite rapidly over the past 30 years, making a major contribution to socio-economic development, but for many different reasons, the quality and competitiveness of today’s Vietnamese businesses encounter several limitations, according to Dr. Nguyen DinhCung, Director of the Central Institute of Economic Management (CIEM).
The urgent requirement is to develop a force of Vietnamese businesses that is large in quantity and strong in quality, to enhance the resilience of the economy, creating motivation for the country to quickly recover after the upheaval and instability from outside.
Restoring confidence for businesses and entrepreneurs
Dr. Nguyen Dinh Cung, former Director of the Central Institute of Economic Management.
Over the past three decades, the Vietnamese business community has had rapid and strong development in both quantity and quality, making great and important contributions to the country. Many businesses have made breakthroughs, implemented ambitious projects, and reached out to the international market.
But up to now, the density of businesses/1,000 people is still low, so the number of jobs created by businesses for the economy remains modest. Vietnam has very few large enterprises and, a lack of medium enterprises, but up to 70% are small and micro enterprises. The business performance of domestic private enterprises in all indicators, is much lower than that of foreign-invested enterprises (FDI).
Notably, in the 2011-2022 period, the proportion of profitable businesses decreased, and the number of businesses reporting losses tended to increase. Only 40% of domestic private enterprises were profitable, while the corresponding rate in FDI enterprises is 50% and in state-owned enterprises is about 80%. In particular, domestic private enterprises are comprehensively disadvantaged compared to FDI enterprises, in terms of integration and competitiveness, right in their “home field”.
Vietnam’s economy is very open and will continue to be open even in the context that the world and regional economies are forecast to have more unpredictable fluctuations. Therefore, building an independent, self-reliant and resilient economy has become more urgent than ever.
On the State side, it is necessary to come up with solutions to continue to maintain macroeconomic stability, promote reform, improve the business environment, remove barriers, and create maximum favourable conditions for investment, production and business activities.
In addition, it is necessary to continue solutions to support businesses in cutting costs, such as reducing interest rates, taxes, and fees. These solutions on the one hand help businesses reduce costs, and on the other hand, have the effect of increasing demand. Consumption is also a solution to support output for businesses.
What businesses need now is for the proposed solutions to be implemented fully, consistently, and strongly at a higher and more sudden level, to offset difficulties for businesses, thereby restoring confidence in the production and business community. In especially difficult times like today, what businesses need most is trust.
Considering business development, a priority goal
From the Party’s policies and orientations, there needs to be some more solutions focusing on removing “bottlenecks” that are hindering the development of private enterprises.
That is to rapidly increase the number of businesses entering the market; continue to expand and upgrade business freedom; ensure maximum safety in business operations, and reduce legal risks and compliance costs for businesses.
In addition, it is necessary to implement support programmes for small and micro enterprises in a flexible, specialised and effective manner, while still having selective support programs for medium and large enterprises.
It is also necessary to innovate the working methods and attitudes of civil servants and mechanisms, to control the quality of legal documents on business investment; and to improve the integration capacity of businesses, especially medium and large enterprises investing abroad.
Strongly developing the private economic sector in terms of quantity, quality, efficiency and sustainability, truly becoming an important driving force in economic development is the policy set out in the 10-year Socio-economic Development Strategy for the 2021-2030 period.
This strategy also set a target of having at least 2 million businesses by 2030, with the private economic sector's contribution to GDP reaching 60-65%. But now, this goal has become very challenging.
To achieve the set goal, on average each year, at least 143,000 businesses must be added. The Government must determine the annual increase in the number of businesses as a priority goal of the annual and 5-year socio-economic development plan.
At the same time, there must be a series of corresponding solutions to increase the number of newly established businesses and businesses returning to operation, reduce the number of businesses temporarily suspending business and minimise the number of dissolved and bankrupt businesses.
Specific solutions and measures will be expressed in a programme to encourage start-ups and accompany and support the development of private enterprises, that will last for a long time and continuously throughout the 2024-2030 period. Thus, this programme may be supplemented, amended, and refreshed annually, especially content related to tasks and solutions, to suit the changed context and actual conditions.