Vietnam lacking medium-sized private enterprises
The business results recorded by Vietnam’s private sector have not improved to any major extent, Mr. Hoang Quang Phong, Deputy Chairman of the Vietnam Chamber of Commerce and Industry (VCCI), told the “Improving the Development Environment of the Private Economy” forum held on July 10 in Hanoi.
Such enterprises more able to link with supply chains and better enter global market, Hanoi forum hears.
The private sector dominates other sectors in terms of numbers but efficiency has not been significantly enhanced, he went on. Nearly 70 per cent of businesses still earn no profits despite the private sector contributing nearly half of GDP, according to a VCCI survey.
“The private sector has warmed up and has a stronger belief in its future,” Mr. Phong told the gathering. “But we also need to drastically improve the business and investment environment and though the role of the private sector has grown in the last few years it isn’t enough. The way of ensuring ‘private enterprises are not alone’ should play a leading role in creating an equal environment, socializing public services, and cutting business costs.”
Of the private enterprises in operation, large and medium-sized concerns both account for 2 per cent while the remaining 96 per cent are small and micro enterprises.
“Vietnam’s economy is seriously lacking medium-sized enterprises that can become channels that connect to global value chains and directly participate in the global market,” Mr. Phong noted. “The private sector must be the main driver of growth, ensuring economic autonomy and effective links between the FDI sector and the domestic business sector.” Bridging the gap between Vietnam and the top three economies in ASEAN remains a difficult task.
Administrative costs have doubled, and while administrative procedures have been improved they are still a burden. The cost of doing business in Vietnam is rising quickly and at a rate higher than workplace productivity, which leads to other costs. Links between Vietnamese and foreign-invested enterprises, he added, are yet to be standardized.
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