VPBA forum to encourage Vietnamese enterpreneurship spirit

April 04, 2017 | 09:08
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The private business forum to be held by Vietnam Private Business Association (VPBA) for the first time this April is expected to raise the business spirit of private firms in Vietnam. Associate professor Dr. Nguyen Trong Dieu, chariman of VPBA, talked to VIR’s Thu Ha about the current situation of the private sector in Vietnam and the purpose of the forum.

What is the target of VPBA by holding this forum?

The forum is aimed at helping private firms understand the policies of the Communist Party of Vietnam and state regulations more clearly. Thereby, participating private firms will become more confident with their investments and business in Vietnam.

This forum will be a place for participants to discuss the current situation of private firms and will look for solutions for them to flourish in the future when Vietnam is more deeply integrated into the world economy.

We expect that the forum will raise the business spirit of the entrepreneurs. They are the warriors at the forefront of developing the country.

What is the current situation of private businesses in Vietnam?

Over the last decades, private businesses have sharply increased in quantity and gradually increased in quality, which plays an important role in developing the national economy and stabilising Vietnamese politics and society.

At present, there are about 600,000 private enterprises and 3.5 million individual business households in Vietnam. These private businesses contribute 40 per cent of the overall GDP, 30 per cent of the export turnover, and create 50 per cent of domestic jobs. Private businesses are predominant in sectors like commerce, services, constructions, industry, and handicraft. Private businesses have developed all over the country, with the highest concentration in urban areas or localities with many favourable conditions for firms.

Most private enterprises operate at a small scale (96 per cent of private firms are small and medium-sized), have a limited capital, out of date manufacturing technology, weak corporate governance and competitive capacity. Not many Vietnamese private companies invest into manufacturing. Many of these do not seriously obey the Vietnamese labour code when hiring employees and there are rampant violations of the law, tax evasion, commercial fraud, and illegal business activities in the private sphere.

According to recent research, Vietnamese private companies’ percentage contribution to the GDP in recent years has been approximately ten per cent, a slight increase compared to the 8.5 per cent in 2006. Despite the three-decade development history, generally, Vietnamese companies in the private sector do not flourish as expected.

Meanwhile, informal non-farming individual business households have constrained the development of regional private businesses. The informality is demonstrated in the lack of detailed bookkeeping, legal violations, and the lack of transparent corporate governance.

So what are the solutions to promote private business in the future?

First of all, it is necessary to unify the Vietnamese business community. Also, we should promote cooperation and joint ventures among firms, including foreign-invested ones. Successful cooperation will become the strength of the Vietnamese business community, which can improve the national economy.

Besides, private firms should expand, they should join high value-added sectors. Moreover, they should expand their business areas, enter remote regions where people live in poverty, contribute partly to poverty reduction, create more job opportunities in rural areas, develop “new” rural areas, and enhance people’s standard of living.

New enterprises should develop based on their creativity to catch up with start-ups worldwide.

Enhancing competitive capacity is the only way to utilise opportunities and avoid risks when our country integrates deeper into the global economy and joins the new-generation free trade agreements (FTAs). To enhance competitive capacity, firms should have a suitable business strategy, invest more in human resources, and pay attention to corporate governance.

Regarding business culture, firms should build a transparent and honest corporate governance, develop through by their own abilities, obey the laws actively participate in social activities, and avoid commercial fraud, counterfeit production, tax evasion, speculation, and so on.

Lastly, individual business households should operate their business as stipulated in the law on enterprise and decrease informality.

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By By Thu Ha

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