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Economic Sector

Last updated: Tuesday, December 12, 2017

 

Vietnamese Businesses: Crisis Spectre Left Behind

Posted: Tuesday, March 14, 2017

FPT Software Company topped the rankings on the list of the 500 fastest-growing companies in Vietnam in 2017, FAST500, announced in Hanoi by Vietnam Report Joint Stock Company in combination with online newspaper VietNamNet.

The runner-up was Hanoi Southern City Development Joint Stock Company. Top 10 ranked companies included Nguyen Minh Steel Joint Stock Company, Him Lam Land Trading Corporation, Vietnam Livestock Corporation - Joint Stock Company, Vietjet Aviation Joint Stock Company, Hai Dang Joint Stock Company, Truong Long Engineering and Auto Joint Stock Company, and Duc Giang Chemicals and Detergent Powder Joint Stock Company. The average compound annual growth rate (CAGR) of FAST500 companies in 2017 was 145.7 per cent.

FAST500 rankings were built on objective, independent and scientific principles and comply with current international standards. The rankings were based on the compound annual growth rate (CAGR) of revenue and business performance. Besides, such criteria as total assets, employment, profit after tax and corporate reputation in the media were used as secondary elements to determine the size and position of candidates in their industries.

In addition to FAST500 companies, Vietnam Report also released the list of 500 fastest-growing small and medium-sized enterprises (SMEs) in Vietnam in 2017, topped by Hoang Thai Joint Stock Company, Minh Tuan Trading Joint Stock Company, Dai Phat Tin Co., Ltd, Petrolimex Binh Dinh, Van Nam Joint Stock Company, Van Long CDC Investment Trading Joint Stock Company, Phuc Vinh Production Trading Co., Ltd, An Phat Export Import Co., Ltd, Song Tien Seafood Joint Stock Company, and Minh Quy Seafoods Company. The average CAGR of Top 500 SMEs in Vietnam in 2017 was 94.4 per cent.

Higher CAGR
According to studies by Vietnam Report, in the 2011 - 2014 phase, the average CAGR growth of FAST500 climbed to 34 per cent from 31.1 per cent in the 2010 - 2013 period, showing that Vietnamese businesses completely escaped from the spectre of “economic crisis”. In 2012 - 2015, the rate surged to 42.4 per cent, showing the remarkable maturity of Vietnamese enterprises notwithstanding external negative influences caused by global political and economic instability.

By ownership, the average CAGR growth of all three enterprise types improved, particularly the private sector and the FDI sector. The State-owned sector also steadily gathered pace (with CAGR of 33.1 per cent), driven by the equitisation process.

The survey into FAST500 companies showed that most were optimistic about business performance in 2016 (with nearly 77 per cent citing revenue growth in 2016 and more than 82 per cent stating net profit growth). This optimism will help to boost growth opportunities in 2017 for Vietnamese companies.

The survey noted that market demands and trends were the factors with the most impact on business growth in the past five years, with 66.7 per cent of respondents - the highest – calling them “very influential”.

Seeing opportunities and challenges in 2017
FAST500 companies said that 2017 will open up new opportunities for further maturity of businesses. When asked about priorities in business strategies in 2017, they quoted revenue/profit growth in existing markets, new product/service introduction and productivity growth as their three main priorities, at 80.8 per cent, 61.5 per cent and 53.8 per cent, respectively.

However, they also predicted that more difficulties are standing in their way to growth in 2017. Typical hardships included higher input prices, higher labour costs, difficult talent employment and the rise of competitors in the same industry.

It was obvious that FAST500 companies all seemed to identify growth opportunities as well as business challenges in 2017. What they need to do right now is developing appropriate operating strategies to minimise negative external impacts and strengthen internal forces to move towards sustainable growth goals.

In previous FAST500 surveys, enterprises expected lower corporate income tax, stronger administrative procedure reform and lower interest rate - three most-expected policies to be improved in 2016. Things changed slightly in 2017. Apart from administrative procedures and corporate income tax, two challenging issues for enterprises and policymakers, improving the legal environment was ranked as a bigger issue than interest rate, expected to better support companies reaching growth objectives.

The Vietnamese business community is experiencing a transition period with numerous internal and external challenges. Many economists said 2017 will be an uncertain year for growth, as climate change remains complicated and losses from environmental pollution still persist in combination with obstacles of globalisation, trade cooperation, especially after the United States withdrew from the Trans-Pacific Partnership (TPP). However, challenges always come with opportunities. With their confidence in growth, flexibility, acuteness and dynamism, they can fully expect disruptive growth in the near future.

Anh Mai

 








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