Improving Competitiveness for Sustainable Development

1:52:32 PM | 9/6/2022

Vietnam's third-quarter economy is witnessing a strong recovery with many impressive outcomes. The country's long-term credit rating was forecast "stable" and "positive". However, companies are still facing numerous difficulties in both domestic and international markets. To develop sustainably, every entrepreneur and enterprise needs to have plans to embrace new business trends and build their reputation and brands in regional and international markets.

For a force of elite entrepreneurs

Mr. Hoang Quang Phong, Vice President of the Vietnam Chamber of Commerce and Industry (VCCI), said business surveys for the Provincial Competitiveness Index (PCI) conducted by VCCI showed difficulties faced by the business community when up to 92% of the respondents (94% of domestic private companies and 86% of foreign-invested firms) reported being negatively affected by the COVID-19 pandemic.

Most businesses in all sectors and localities had to deal with difficulties caused by the COVID-19 pandemic, such as customer access (60%), labor shortage (53%), cash flow imbalance (52%) and supply chain disruption (52%). Besides negative COVID-19 pandemic impacts, the PCI survey also showed that businesses confronted a lot of difficulties in business.

At the same time, business difficulties plus COVID-19 pandemic impacts made companies more cautious about building business plans, and this also adversely affected their corporate competitiveness, he added.

In the new challenging context, Vietnam needs to develop a force of outstanding entrepreneurs to lead the business community, Mr. Phong noted.

“The Government is finalizing a draft resolution on key business support policies and solutions, enabling companies to have good adaptation, quick recovery and sustainable development by 2025 in order to build strong Vietnamese enterprises both in number and quality into an important force to the country’s development. Every entrepreneur and enterprise needs to be ready to face challenges, actively seize every opportunity for innovation and creativity, have a plan to embrace new business trends, and build the prestige and name of Vietnamese enterprises regionally and internationally,” Mr. Phong emphasized.

Vietnam also needs to accelerate digital transformation, scientific and technological application, innovation and investment in new, modern fields while improving the quality of human resources and better labor structure to adapt to and embrace new market trends.

Utilizing FTA markets

Mr. Trinh Minh Anh, Chief of the Office of the Inter-sectoral Steering Committee for International Economic Integration, said that to carry out focused comprehensive international economic integration, Vietnam has fostered economic integration in many aspects. This is demonstrated by active participation in international forums and economic organizations to negotiate and sign free trade agreements (FTAs) with partners in the region and the world.

In fact, many businesses have taken advantage of FTA-based market-opening commitments. According to the Ministry of Industry and Trade, every year, more than one million sets of preferential C/O are granted (including those under FTA and GSP) with a combined value of US$61.19 billion, with an annual growth of 15% in value and 10% in documents.

In addition, in the past two years, despite the world’s economic risks and uncertainties, a decline in global trade and a decrease in global exports from the previous year, Vietnam still maintained positive export growth. Its total merchandise import and export value reached a record of US$668.5 billion in 2021, up 22.6% over 2020, with its export value rising by 19%. It had a trade surplus of US$4 billion.

Mr. Anh said, to further expand markets and improve competitiveness, businesses need consistent solutions like anticipating and utilizing opportunities from redirected global investment capital flows, especially those out of China and Hong Kong (China). They should look to expand the Chinese market which has been, and will be, an important export and import market of Vietnam.

In particular, it is necessary to embrace markets where Vietnam has FTAs, especially the EU and the United States, in many forms and directions (such as import-export, direct investment; extending investment, manufacturing, import and export of corporations of other countries).

Businesses need to pay close attention to the origin of products, he noted. Customs authorities in FTA-signed countries and relevant agencies of Vietnam pay close attention to this issue and intensify strict inspection of origin of goods.

Simultaneously, to make the most of incentives in 15 FTAs to which Vietnam is a signatory, businesses need to closely cooperate with competent authorities (like Ministry of Industry and Trade, Ministry of Agriculture and Rural Development and Ministry of Finance). They need to understand their supply chains well to fill in or participate in disrupted points of these supply chains.

Good governance is very beneficial

Ms. Ha Thu Thanh, Chair of the Vietnam Institute of Directors (VIOD); Vice Chair of the Vietnam Business Council for Sustainable Development (VBCSD); Senior Corporate Governance Consultant of Deloitte Vietnam

The 20th century was the century of Operational Management-Corporate Governance, and the 21st century is the century of Corporate Governance and Sustainable Development, based on core principles of integrity, equality, transparency, harmony and responsibility.

With a good governance system, businesses can financially benefit with improved business performance and access to capital markets; reduced cost; the enhanced reputation of the company, the board of directors and the executive board; and actions for ultimate sustainable development goals.

A good corporate governance framework should have three basic pillars: Designing the system; building an apparatus to implement that system; and having the personnel to implement it. When the three pillars are firmly built, businesses will develop sustainably regardless of whether their leaders are men or women, no matter what field or industry they are involved in.

However, to optimize benefits from corporate governance, the corporate governance system should not only stop at the initial level of complying with current laws and regulations, especially when a company is moving from rapid development to sustainable development.

Human resources are a determining factor in competitiveness

Mr. Truong Anh Dung, General Director of the Directorate of Vocational Education and Training

At the national level, a highly qualified, skilled and efficient workforce is a valuable resource and a decisive factor in the country’s recovery and sustainable development. At the corporate level, human resources are a decisive factor of competitiveness, evidenced by the size, structure, quality and productivity of labor, which results in reduced costs and prices and enhanced competitiveness.

We recently adopted solutions applied to governmental agencies and training facilities to access information of the business community. We also built a website where businesses and investors can search for relevant information and training scales.

We currently lack specific policies, such as business support policies in training although we have tax laws. We have specific financial mechanisms and resources, but we have not applied them well enough. We have an unemployment insurance fund and a trade union fund, but they do not work very effectively. Even the business support package of VND4,500 billion to improve professional skills has not been effectively applied.

There is a need for opening a mechanism to inspire businesses. They need to cooperate with the Directorate of Vocational Education and Training to provide information on labor demand and industry structure to create an industry information system right from the input stage, to build output standards, and develop a training program for workers to help boost corporate competitiveness in the coming time.

Grasping EVFTA opportunities

Mr. Nguyen Hai Minh, Vice President of the European Chamber of Commerce in Vietnam (EuroCham)

After the EVFTA came into effect, two-way trade growth climbed. European investors injected a considerable amount of capital into the country. This is a quality investment coupled with advanced environment-friendly technology.

Europe is a market with major potential. Participating in the supply chain and selling to European businesses is also an opportunity for Vietnamese businesses. On the other hand, European businesses want to export more to the Vietnamese market where they can access broader ASEAN and Asian markets. However, this depends on whether Vietnam can take advantage of this opportunity or not.

Currently, EuroCham is carrying out programs to strengthen connectivity between Vietnamese and European business communities like connections enabling businesses to grasp European ongoing practices; support programs for Vietnamese small and medium-sized enterprises (SMEs) to access the market and boost sales; training programs on regulations needed to be grasped by Vietnamese businesses.

Vietnam made strong commitments at the COP26 Conference and strategies and business models of Vietnamese enterprises will therefore need to be adapted to "green" in the coming time.

Digital communication can help businesses improve competitive quality

Mr. Nguyen Vu Anh, General Director of Coc Coc Co., Ltd

Business leaders need to pay attention to consumer behaviors because they have shifted from offline to online at the back of the COVID-19 pandemic. This is an opportunity but also a challenge for businesses when consumers have dramatically changed their behaviors and they will be very concerned about product prices. They tend to buy a lot online, but up to 66% of them search for prices and make careful comparisons.

In such a picture, how can businesses take advantage of digital transformation to enhance their competitiveness? Definitely, they need online communication and boost online marketing. Coc Coc has just been added to Vietnam's digital network, developed products for Vietnamese users and competed with Google. Our current position, in addition to being a browser, is the second most popular search engine in Vietnam. Every month, about 500,000,000 searches are made from computers and smartphones.

With the above user data, we can very deeply understand the behaviors of online users and can help businesses learn about their behaviors to utilize online opportunities.

Source: Vietnam Business Forum