FAST 500 - Rising Stars of Vietnamese Economy

 

FAST 500 is based on scientific and independent principles which comply with international standards (with reference models rankings like Inc500, Fortune500 and Deloitte500). This is the third consecutive year that FAST500 has been published in Vietnam.

 

According to the General Statistics Office, by January 1, 2012, Vietnam had had nearly 342,000 existing businesses, more than 2.7 times that of 2007, including 313,000 operating businesses. The business sector attracted 10.9 million workers, of which 10.77 million workers in operating business, increase 65 percent compared to 2007. Thus, since Vietnam joined the WTO in late 2006, the number of Vietnamese enterprises has increased about 3 times.

 

In particular, after Vietnam's accession to the WTO, based on data of FAST500, about 2,700 Vietnamese enterprises employing over 30 employees were successful in doubling enterprise scale, as measured by revenue. However, among the rapid growing businesses, only about 700 Vietnamese businesses increased profits by that rate in the same period. Thus, after Vietnam joined the WTO, Vietnamese businesses now have strongly grown in scale, but their effectiveness of business is not adequate.

 

According to statistics, Vietnam's FAST 500 businesses have average growth of 62.2 percent in the period 2008-2011, in which the Top 5 have growth of more than 374 percent. It can be said that the recent 5-year period is the period of good growth in the scale of the Vietnamese business sector, despite the world’s economic turmoil in financial and economic crisis.

 

In particular, Hanoi and Ho Chi Minh City continue to rank the first and second position in the rankings, but the rate is down slightly compared to 2011, only 25 percent and 23 percent compared to 29 percent and 24 percent, respectively.

 

In terms of sectors, the real estate sector continues to account for the majority of businesses having the fastest growth rate compared to the 2011 FAST 500, subsequently followed by the agriculture and forestry sector. This is consistent with the facts about the blooming business of real estate and the overheating of the industry in recent years. However, in terms of average growth rate, the industry sector is the highest growth rate equivalent to 86 percent, which now heads to the equivalent of 231.5 per cent growth in the period 2008-2011 , higher than the number of businesses in this industry in 2011 FAST500 (44 percent and 70 percent). Following the mechanical engineering industry is the telecommunications industry with the growth rate of 72.7 percent and the leading business’s growth rate of 281 percent. Thus, in terms of the structure of industry, a number of vital sectors such as agriculture, engineering, and telecommunications have increasingly important positions in FAST500.

 

Notably, the survey results of Vietnam Report shows a surprising result, for the first time since early 2011, the number of optimistic businesses has surpassed the number of pessimistic ones. Over 62 percent of surveyed businesses expect their revenue to increase in 2013 compared to 2012, while less than 15 percent of businesses are afraid that their revenue will decline in 2013. Similarly, more than half of business respondents plan to hire more employees in 2013.

 

The main reason of the psychological turning point of this is due to the relative stability of the macro economy in 2012 (inflation, exchange rates and interest rates). Although economic growth and demand are low, policy environment and business environment seems likely positive. At the same time, many large enterprises in Vietnam, having been through so many difficulties and crises in the past two years, have contingency plans for the economic situation that may be even more difficult in the coming years.

 

It is shown that the government should firmly continue operating with priority in macroeconomic stability, strengthening economic restructuring and improving the efficiency of investment activities. The rushed operation towards "rescuing" market way or increasing public investment in loans to stimulate and promote economic growth, with the accompanying risk of economic instability and inflation, will be bitter medicine for the newly rekindled faith of the business community.