"10-year Development Journey and Market Approaching Capability"

Speaking at the launching ceremony, Dr Vu Tien Loc, VCCI President, said that continuing the success of previous Vietnam Business Annual Report starting in 2006, VCCI published the “Vietnam Business Annual Report 2012". Themed "10-year Development Journey and Market Approaching Capability," the report puts forth some policy recommendations in an attempt to improve business environment and suggests enterprises to enhance competitiveness. The report is an important instrument which assists competent authorities to issue policies to improve the business environment in Vietnam on the one hand and helping enterprises to build business solutions to live through this tough time on the other.

 

VCCI General Secretary Pham Thi Thu Hang said, according to the report, Vietnam has witnessed a robust development in businesses, expanding from nearly 63,000 businesses in 2002 to more than 312,000 businesses (as of April 1, 2012). The number of jobs generated by enterprises increased over 2.36 times from 4.66 million to 11 million jobs. Investment capital climbed 30 percent annually on average, reaching VND15,300 trillion, revenue growth leaped 27.4 per cent, grossing over VND10,700 trillion by 2011.

 

However, she said employment efficiency in Vietnamese companies worsened, especially FDI enterprises.

 

Regarding market entry, the report picked up six industries for study, namely export market entry of seafood industry, domestic market entry of mechanical manufacturing, domestic market entry of drink, consumer goods, drink retailing, advertisement for domestic market promotion, and export-oriented trade promotion. According to the report, market entry capability of Vietnamese enterprises remains low, reflected by the sharp rise in inventory index and business sentiment. Specifically, up to 73 per cent of feedbacks said that inventory is indeed of their concern; 5.7 per cent of responses admitted to stop operation in 2012 due to poor sales. Difficulties against Vietnamese enterprises in 2012 are capital shortage and inventory.

 

The report makes industry forecasts for 2013 and suggests recommendations to State authorities. The State needs to have a more suitable approach whilst making business support policies, especially for small and medium-sized enterprises; further reduce lending interest rates, boost credit guarantee for enterprises; expand export markets, and accelerate trade to clear inventory backlog.

 

For the business community, the most important thing is to complete corporate restructuring process. Enterprises must focus on enhancing market approach and expansion capacity - both input and output markets; build, review and monitor production and business expenses, enhance business linkage, build brand names, and establish effective distribution channels; etc. In addition, they need to apply science and technology to production to boost labour productivity, improve quality and reduce production costs.

 

Global economies have gradually improved in the first months of 2013. International trade and capital flows have started to recover, commodity prices have fallen, and employment bettered. However, the recovery time of world economies may be long.

 

For Vietnam, despite external impacts arising from world economies, it still needs to focus on resolving internal problems because it is experiencing the longest decline period since the advent of doi moi (renovation). Vietnam’s economic growth climbed up to 7 per cent a year in 20 years but it fell to below 7 per cent in the latest 5-6 years. Therefore, the current urgent need is to accelerate economic restructuring. Accordingly, restructuring programmes must be selective, uniform and thoroughly prepared. The country needs to have bad debt settlement mechanism, enhance risk management and corporate governance system, raise supervisory capability of managers, and introduce a suitable legal framework.

 

To support Vietnamese businesses in getting through this tough time, the Government should have a more appropriate approach when it makes business support policies, particularly for SMEs. Macroeconomic measures always must be done together with enhancing the quality of domestic and international market development forecasts and analyses. Besides, the Government needs to overcome shortcomings in gold market management and stabilisation, intensify inspections into local development planning and capital viability, and facilitate enterprises to access bank loans with lower interest rates.

 

Specially, State management agencies must have appropriate policies to reduce lending rates to reasonable levels, reduce borrowing costs for businesses, especially SMEs, strengthen credit guarantee fund system, diversify security and insecurity loan forms to widen access to credit sources for SMEs, and expand exports to and reduce luxury imports.

 

For enterprises, the most important thing is now to complete corporate restructuring process. They must focus on enhancing market approach and expansion capacity - both input and output markets; build, review and monitor production and business expenses.

 

Besides, they need to enhance business linkage, focus on core competencies, and build brand names, and promote development.