Curve for New Growth Period

According to the report, there were many positive signals of growth in 2014 like macroeconomic stability, stable GDP growth, increased FDI inflows, increased exports, and low of inflation. In 2015, Vietnam's economy is believed to accelerate slightly and become an attractive investment destination.

 

Most big companies anticipated an increase or steadiness in revenue in 2014. Notably, the percentage of companies seeing worse business performances is falling, 21.9 percent in 2012 versus 9.1 percent in 2014.

 

The confidence of big companies is probably based on their real business performances in the year. According to the VNR500 Report - the list of 500 biggest companies in Vietnam in 2014, the total revenue of Top 10 VNR500 companies was approximately VND2,354 trillion, up 14.8 percent from 2013. ROA and ROE rations were also better from a year earlier.

 

The good performance of big companies has also boosted business expectations for 2015. Just 7.1 percent of companies were pessimistic about business outlooks.

 

Without doubt, Vietnamese companies are very confident and optimistic about business prospects and environment when many have revitalised their health and outperformed in the past year. Together with positive macroeconomic signs, Vietnam’s economy is expected to enjoy a remarkable growth phase from 2015 till 2020.

 

Remarking on barriers to business performances, 44.4 percent of companies complained that cumbersome administrative procedures considerably affected their business operations. The next difficulties were infrastructure (37.4 percent), input prices (31.3 percent) and trade promotion and market expansion (31.3 percent).

When asked about the investment environment in Vietnam, a majority of companies said that the efficiency of administrative services was very low (88.2 percent said “poor”). Poor infrastructure (40.7 percent) and hard access to land (35.4 percent) are restricting foreign investment into Vietnam.

 

In the process of international economic integration, to become a potential and attractive investment destination, Vietnam will face many difficulties like policy transparency, procedure simplification and fair competitive environment, forcing the Government to change the way it runs the economy. However, VNR warned that the excessive involvement of foreign investors will sometimes restrict the development of local enterprises, which are mostly small and medium, typical of weak capital, technology and human resources. Hence, while drawing foreign investment, the Government should also carefully introduce appropriate measures to protect domestic enterprises to empower Vietnam's economy.

 

Most companies said credit rate cut is the top priority for the time being as it is expected to ease borrowing pressures and boost credit flows. After the economic crisis, companies tend to borrow more bank loans to expand production and business operations. But, not all companies can access bank loans, especially small and medium ones, because profitability is on a downward trend while medium and long-term lending rates are unlikely to fall to below 8 percent per annum.

 

Next priorities are lowering corporate income tax, strengthening measures to support enterprises to search for output markets, improving the regulatory environment, accelerating the reform of administrative procedures, improving infrastructure, perfecting investment law system, facilitating private sector development, effectively supporting key products and new products, and quickening SOE restructuring.

 

The Government has issued solutions and decisions to pick up the pace of economic restructuring, improve the business environment, and step up reform, and business growth support, especially SMEs. These moves have received positive feedbacks from the business community. However, the next stage will be a more challenging way not only for businesses but also for the Government to build a healthy and strong economy and to make inroads into the world.