Businesses as the Heart of Industrial Development

He added that Vietnam needs to define the right economic structure and core fields where the private sector must play a pivotal role to develop industrial production.

Dr Thien said Vietnam’s current industrial development vision and strategy pays little attention to manufacturing and technological sectors. The current industrial structure still relies heavily on the exploitation of natural resources as a driving force of economic development, while manufacturing and processing sectors - the core of the industry - increased by only 1.6 per cent. That is why Vietnam’s industry is still weak, standstill or even backward in the world.

 

Besides, the private sector is not invested to play a full role while this is a pivotal driving force of economic development. Dr Thien said it is necessary to balance and rationalise the development of domestic and foreign businesses to ensure long-term sustainable development

 

Sharing the same point of view, Dr Doan Duy Khuong, Vice President of the Vietnam Chamber of Commerce and Industry (VCCI), said that, in 2015, only 36 per cent of Vietnamese enterprises engaged in export-oriented production chains, which is quite low relative to almost 60 per cent in Malaysia and Thailand, according to the Asian Development Outlook released by the Asian Development Bank (ADB). This showed that Vietnam's production is much worse than other countries in the region.

 

Besides, most of Vietnamese companies now lack knowledge of challenges and remain unprepared to grasp opportunities from Vietnam’s participation in international organisations and free trade agreements with major regions and economies. They have not prepared well enough to compete with competitors in the region, particularly in labour, goods and service markets.

 

Former Deputy Trade Minister Luong Van Tu also warned that Vietnam is exposed to falling into the “trap” of a movement of high-commission outdated technologies because developed nations always tend to renovate their technologies to enhance competitiveness and they often transfer backward polluting technologies to underdeveloped countries. The import of outdated blast-furnace cement plants and sugar plants from China are typical examples.

 

According to Dr Tran Dinh Thien, it is vital to determine the right economic structure where the private sector is the backbone force while businesses have to interlink to create markets for each other. From domestic production chains, they also need to link closely with foreign production chains to raise the competitiveness of products and goods.

 

Dr Nguyen Manh Hai from the Central Institute for Economic Management (CIEM) asserted that enterprises need to be the heart of the new development model. He stressed that Vietnam needs to develop green industry trends which use less natural resources and focus on key industries instead of unfocused development.

 

VCCI Vice President Doan Duy Khuong said what trade and investment promotion representative agencies need to do is to build and restructure the national model to gather and promote business forces. This model will take production and industry as the core of and stimulant for the economy.

 

“Vietnam has entered a stage that decides whether the country falls into the so-called middle income trap or not. It can only escape it with an effective industrial and manufacturing development strategy capable of creating new products and leading creative, knowledge-based industries instead of relying on subsidy mechanism, natural resources and unskilled labour,” he stressed.

 

Looking from the perspective of the business, Mr Le Phuoc Vu, President of the Board of Directors of Hoa Sen Group, admitted that investing in industrial production is risky. Thus, in addition to the own efforts of the business, authorities should provide practical support for industrial companies to take advantage of opportunities that economic integration brings in.