REVIEW
of
FINANCE -
November, 2018
53
while Malaysia and Thailand account for nearly
60%. For large domestic firms, entry into foreign
markets also very limited, only about 24%. The
cause of this situation is because enterprises are
still passive in finding customers, not actively
seeking information and participating in trade
promotion networks; The second reason is that the
competitiveness of enterprises is weak, product
quality does not meet the market demand.
Although the government has developed
many trade promotion programs, the three main
objectives are: export orientation, domestic market
and mountainous areas, border and islands.
The total state budget for this program is about
VND 90 billion/year. However, if compared with
other countries for funding investment in trade
promotion programs, the average annual budget
allocated by the Government only accounts for
about 0.003% of export turnover.
Fifthly,
the proportion of SMEs accessing land
in industrial zones is also modest due to the large
area of land and the high rent, which exceeds
the capacity of the enterprise. Thus, the access
to land and expansion of business premises of
private enterprises are still limited, not only due
to the limited capital of enterprises but also due
to some obstacles in the development of private
enterprises. Applying, implementing regimes and
policies in each locality.
Finally,
restrictions on size and management.
More than 90% of these enterprises are SMEs. In
general, the private sector enterprises are small,
fragmented, heavily family-oriented, and weak
in linkages in production and business. Most
businesses invest in trade and services with the
aim of finding immediate profits, lack of long-
term development strategy and participation
and global value chain, caused by the internal
governance of many joint ventures.
Some recommendations
In order to increase the competitiveness of
private sector enterprises many solutions should
be soon implant as folows:
Firstly,
the medium and long-term funds for
the private sector should be expanded, in which
the corporate bond market needs to be finalized
in order to support and create the best conditions
for medium-sized enterprises to mobilize
capital Therefore, a number of solutions need
to be implemented synchronously, including:
Legal framework to be improved, awareness of
enterprises on capital mobilization through bond
issuance, development and expansion of investor
base.
Secondly,
the state budget support mechanism
for the private sector needs to be renewed in
all areas: access to market expansion, human
resources training through private cooperation
policies;Removesubsidy; To formulatecentralized
and concentrated spending support mechanisms
(for example: research on establishment of start-
up areas, start-up areas, mechanism for setting
up research banks and scientific research works;
Public-private partnership in scientific research
and application of science in production; etc…
Thirdly,
investment and business environment
must be improved, creating more equality,
transparency and favorability for the private
sector. The legal system needs to be revised and
improved in the direction of: removing obstacles
related to taxation, customs and administrative
procedures while respecting the right to freedom
of business of enterprises. The system of
normative documents should be implemented
comprehensively, step by step in implementation
of Resolution No. 01/NQ-CP and Resolution No.
19-2017/NQ-CP of the Government.
References:
1. CIEM (2016), Business Environment in Vietnam: Survey of SMEs in 2015;
2. Dau Anh Tuan (2010), “Business Situation Report”, Vietnam Chamber of
Commerce and Industry (VCCI);
3. GSO (2016), Statistical Yearbook 2015;
4. HNX (2016), Project on the development and improvement of enterprises
in Vietnam;
5. ILO (2013), 2012/2013 Global Salary Report;
6. Nguyen Thi Cuc (2016), “Resource Governance in SMEs”, Journal of
Finance II, No. 6/2016;
7. Member Committee, 2016 Economic Outlook and 2017 Forecast;
8. Pham Ngoc Long (2015), “Mobilization and Use of Private Capital in the
Socio-Economic Development Sector”, Journal of Finance;
9. VCCI (2016), Strengthening Capital and Technology Capability for SMEs
in Ho Chi Minh City, Proceedings of the Workshop on November 22
nd
,
2016 by VCCI and Standard Chartered Bank Vietnam;
10. VCCI (2016), Report on Competitiveness in 2015;
11. VCCI (2016), Provincial Competitiveness Index Report 2016;
12. World Bank (2013), World Development Indicators.
