Report identifies pros and cons of country's business performance and environment during 2015.
The Vietnam Business Annual Report 2015 was released by the Vietnam Chamber of Commerce and Industry (VCCI) on April 13.
It emphasized that growth in the economy as a whole has increased but this is primarily due to the contribution of foreign-invested enterprises (FIEs), which account for 71 per cent of total export turnover. This size and revenue of domestic enterprises, meanwhile, has headed downwards.
The report also identifies inherent problems among enterprises, including low productivity, inefficient use of capital, outdated technology, and the absence of large-scale enterprises to integrate into international markets.
Employment growth at FIEs is improving and increasing rapidly compared to domestic private enterprises. Total capital increased almost five-fold during 2007-2015, for an average of 22.2 per cent each year. This also shows, however, that businesses rely more on capital flows than on labor productivity, which is something of a paradox given that Vietnam’s workforce is considered a competitive advantage.
According to Ms. Pham Thi Thu Hang, General Secretary of VCCI, average employee numbers at enterprises fell from 49 in 2007 to 29 in 2015, which is considered the level of “small”. Micro enterprises, which account for over half of all enterprises in the country, have displayed unsustainable performance.
Improving the business environment
The report recommends that State agencies thoroughly improve the business environment and support small and medium-sized enterprises (SMEs) by encouraging business development services, from intellectual property, product inspection and technical analysis to accounting, auditing and tax consulting.
Enterprises need to understand and take advantage of business development services to accelerate their operational efficiency, expand production scales, increase competitiveness, and ensure sustainable development.
Service providers need to apply marketing strategies to offer services that truly have an impact on enterprises, especially SMEs.