Big Firms Confident in Business Results in 2014

 

While preparing the VNR500 Report 2014, Vietnam Report also conducted a survey with VNR500 firms since 2007 to depict an overall picture of business in 2014 and forecast economic outlook for 2015. The survey, carried out in November, collected more than 300 replies.

 

According to the survey results, big companies are confident of their business results in 2014 when the majority of respondents (50 percent) said that their revenue, profit, labour productivity and orders are higher than the previous year. 64.3 percent of respondents said their business performances in 2014 are better than in 2013; 28.6 percent saw stability and only 7.1 percent said their business situations are worse than in 2013.

 

Given such confidence, nearly 95 percent of businesses surveyed predicted their business performances in 2015 are ‘basically stable’ and tend to ‘increase’ over the previous year, especially in revenue, profit and orders. In 2015, the utilisation of equipment and employees will be maintained as in 2014.

 

Notably, according to the VNR500 Report, Bac Ninh province has risen to become the third largest province by the revenue of VNR500 companies thanks to the contribution of foreign-led businesses.

 

The situation of Nokia production facilities, followed by Samsung in 2013, drove the province to the third place with nearly 10 percent of revenue, just after Hanoi City (45.2 percent) and Ho Chi Minh City (21.4 percent). This showed that Vietnam in general and Bac Ninh in particular are becoming attractive destinations for foreign investors today.

 

Not only that, foreign direct investment (FDI) companies are playing a bigger part while they make up more than 22 percent of VNR500 revenue while their appearances accounted for less than 16 percent. Obviously, to compete with this dynamic business group, Vietnamese companies, especially the private sector, must be very conscious to opt for appropriate business strategies for the next stage.

 

According to the VNR500 Report 2014, up to 59.4 percent of VNR500 revenue was contributed by State-owned enterprises (SOEs). This showed that although Vietnam is speeding up the equitisation of SOEs in order to create more space and improve the competitiveness of the private sector, in fact, SOEs still dominate the Vietnamese economy.

 

About 15 percent are mining and petroleum companies but they generate 32.9 percent of VNR500 revenue, the highest rate among business categories. Clearly, the current sector structure needs to be more reasonably adjusted to reduce dependence on extractive industries, stimulate processing, manufacturing and information technology industries. The second-placed revenue contributor is the electricity sector (19 percent), followed by the financial - banking sector (10.3 percent).

 

The VNR500 data are similar to the survey results performed by Vietnam Report. When asked about the effect of economic restructuring in three areas: finance - banking, public investment, and SOE, most respondents said public investment restructuring and SOE restructuring “do not have any clear effect”, with 70.5 percent and 64.4 percent of respondents saying this, respectively. In contrast, financial - banking restructuring is being performed quite effectively while over 65 percent of businesses ticked the answer "effective" or "very effective".

 

Remarking on the Government’s priority solutions in the coming time, 76.8 percent believed that the Government should continue "to ensure macroeconomic stability", especially taming inflation. Basically, only when the macro economy is stable enough, businesses can make accurate forecasts about business outlooks, avoid financial risks, and promote investment for long-term growth. In the past two years, the "macroeconomic stability" has become a top priority task not high economic growth as previous years. This is a priority option and a main objective that the Government should achieve before thinking of “increasing direct business supports by means of financial aid, investment incentives and tax incentives."

 

The combined revenue of the Top 10 VNR500 companies was approximately VND2,354 trillion. Vietnam National Oil and Gas Group (PetroVietnam) topped the list for the seventh consecutive year, from 2008 to 2014.

 

The combined revenue of the Top 10 VNR500 private companies was approximately VND236 trillion. Doji Gold and Gems Group led the list for the third consecutive year from 2012 to 2014.