Private Sector: Remaining Major Growth Driver

The private sector is the core of growth power and creativity of Vietnam’s economy, according the FAST500 Report, a list of 500 fastest-growing companies in Vietnam in 2011 released by Vietnam Report Joint Stock Company (VNR).

 

According to Vietnam Report, the private sector makes up majority of FAST 500 businesses, accounting for 71.6 percent. State-owned enterprises (SOEs) take up 22.2 percent in the list. Growing private businesses have lofty aspirations and long-term investment commitments. Even in the current tough times, more than 70 percent of private enterprises in the FAST 500 list plan to expand production in 2012, according to the FAST report surveyed in January 2012. Many FAST 500 companies are optimistic about continued high business growth in 2012 and 2013.

 

According to VNR researchers, FAST 500 companies have coped quite well with uncertainties and difficulties of domestic and global economies.

 

Although the growth rates of Top 50 and Top 100 companies in the FAST 500 list are a bit slower this year, all FAST 500 companies maintain impressive growth. The average growth was 57 percent in the 2007 - 2010 period, compared with 54 percent a year ago. In particular, Top 50 fastest-growing companies achieved 127 percent growth, lower than the growth of 160 percent a year earlier, and Top 100 fastest-growing companies had the growth of 94 percent, compared with 112 percent.

 

VNR said it is noted that FAST 500 companies employ 313,128 workers in 2011, a significant improvement from 276,318 workers in the FAST 500 companies in 2010.

 

Manufacturing companies operating in food processing, agricultural and export manufacturing industries continue to be the engine of employment for the economy. This emphasised the importance of FAST 500 companies to not only the economy, but to the society, particularly in the context that many non-FAST500 companies involved in the securities and real estate sectors have laid off staff.

 

As regards industry structure, enterprises operating in processing, manufacturing, production and construction take the lead in the FAST 500 list, with some 29 percent. Nonetheless, petroleum and service companies generate a majority of revenues.

 

Impressively, agricultural, forestry and aquatic companies have a relatively high CAGR (Compound Annual Growth Rate) of over 50 percent, similar to that of steelmakers and service companies. This growth rate is also somewhere in the top list.

 

Hanoi and Ho Chi Minh City are still the most dynamic economic centres in the country, with 144 companies (29 percent) and 120 companies (24 percent) respectively, totalling over half the FAST 500 companies. Notably, poor provinces also have many companies present in the FAST 500 list. Nghe An and Dak Lak Provinces have nine companies and seven companies, respectively, while Da Nang City has only five enterprises in the list.

 

Interestingly, many FAST 500 companies are little known to the mass media and investors, including Thai Hoa Group Joint Stock Company, Din Co Joint Stock Company, Masan Group, Fruit and Vegetable Private Enterprise, TMG, and Magic Flame.

 

The FAST 500 ranking aims to search out and honour well-performing and fast-growing companies, the rising stars of Vietnam’s economy. The ranking is based on scientific and independent principles and employed international standards (with reference to Inc 500, Fortune 500 and Deloitte 500 ranking models). This is the second year in a row the FAST 500 was published.

 

The data used is updated over four years (2007-2010) and the ranking descends on the CAGR of revenue in the 2007 - 2010 period. Total assets, profit and employment are also included in the ranking process. To be considered for the FAST 500 ranking list, the CAGR of revenue must be at least 30 percent a year in 2007-2010.

 

In addition to the FAST 500 ranking list, VNR also released the list of 500 small and medium enterprises (SMEs) with the highest growth rates in Vietnam. The sorting criteria are based on Decree 56/2009/ND-CP on support for SME development. Chosen SMEs must have total assets of less than VND100 billion as of December 31, 2010.