Creating a business environment to support businesses

Enterprises need more support to overcome challenges. In the photo: Processing tra fish for export at South Vina Company Limited ( Can Tho City).

Transformation but still barriers

The Vietnam Confederation of Commerce and Industry (VCCI) has just released the PCI 2024 report, showing that the quality of economic management continues to improve, and business confidence of the business community is maintained. The PCI 2024 survey with 9,267 domestic private enterprises responding to the survey results out of a total of 10,821 enterprises responded, 33% of private enterprises said they plan to expand their business in the next 2 years, an improvement compared to 27% in 2023 but still not back to pre-pandemic levels (usually around 50%).

Of these, there are 10 industries with the highest proportion of planned business expansion, including: chemicals (47%); agriculture - forestry, fishery (43%); food processing (40%), metal products (39%), health -education - administration (38%), wood products (37%), garment (37%), information technology (35%); wholesale, retail and repair of motorbikes and motorbikes (34%) and construction (33%). The proportion of medium and large-sized enterprises with the highest level of optimism about business expansion is 46% (scale of 50-200 billion VND), enterprises from 200 billion VND or more with a rate of 56%; enterprises with a scale of less than 3 billion VND have 27% saying they have plans to expand their business.

The PCI 2024 survey also listed 15 issues covering all aspects of business for businesses to choose from. The positive result is that businesses believe that difficulties have decreased compared to 2023. Accordingly, the rate of businesses facing difficulties in accessing credit is only 54% (57% in 2023), however, accessing credit is still the difficulty with the highest selection rate continuously since 2022. In addition, global market fluctuations in the past 2 consecutive years have significantly affected businesses, 49% of businesses have difficulty finding customers, up to 38% of businesses have difficulty due to market fluctuations. In 2024, the number of enterprises withdrawing from the market will reach 197,861, the highest ever (100,098 enterprises temporarily suspending business, 76,155 enterprises waiting for dissolution procedures and 21,608 enterprises dissolving, the increase rates compared to 2023 are 12%, 16% and 20% respectively).

The PCI 2024 report also outlines eight notable points in improving the quality of economic management through the lens of enterprises. The report states: labor quality has improved, transparency has increased significantly, market entry is easier, legal institutions and security and order continue to be maintained at a high level. However, the dynamism and pioneering nature of the local government apparatus shows signs of decline; the quality of administrative procedure settlement needs to be improved; access to land remains a challenge for private enterprises; public agencies need to continue to promote cutting informal costs.

Strengthening business confidence

Regarding the Labor Training component index in the PCI 2024 scale, enterprises rated well the general education and vocational education in localities, which increased compared to 2023. 54% of enterprises said that the quality of local labor fully/mostly met the labor needs of enterprises (this rate in 2023 was 47%); recruiting general laborers, technical staff and management staff was also more favorable, with the rates being 63% and 37% respectively (in 2023, this rate was 58% and 31% respectively). Enterprises responding to the survey also assessed that transparency had increased significantly. In 2024, only 31% of enterprises said that they needed "relationships" to obtain provincial documents, down nearly half from 61% in 2021. In 2024, enterprises continued to highly appreciate the quality of handling business registration procedures, such as public procedures (93%), clear and complete instructions (91%), knowledgeable and professional staff, and enthusiastic and friendly business registration staff (86%). The group of procedures for granting conditional business licenses also improved in the 2024 survey compared to 2023. However, in the 2024 survey, less than 50% of enterprises were still satisfied with the procedures for granting conditional business licenses, so this index needs to be improved.

In 2024, only 77% of enterprises felt that the provincial government was flexible within the legal framework to create a more favorable environment for enterprises (in 2023, this figure was 82%) and only 71% of enterprises said that the Provincial People's Committee was proactive and creative in solving newly arising problems (in 2023, this rate was 77%); only 53% of enterprises observed that the provincial government's attitude towards the private sector was positive, a significant decrease compared to 64% in 2021. In 2024, 76.3% of enterprises agreed with the statement "Difficulties and obstacles are promptly resolved through dialogues and contacts with enterprises in the province", while in 2023 it was 84.1%...

The PCI 2024 results also show that access to land remains a challenge for businesses, with the score of the Access to Land component index reaching only 6.54 points (6.75 points in 2023). The rate of businesses having to delay or cancel business plans due to difficulties in carrying out administrative procedures related to land continues to be high, nearly 74% in 2024. In the Informal Cost component index, nearly 37% of businesses said they paid informal costs, up slightly from 33% in 2023; The rate of enterprises paying informal costs when carrying out procedures for granting conditional business licenses reached nearly 55%, a significant increase compared to 2023. Similarly, about 50% of enterprises when carrying out land administrative procedures admitted to paying informal costs, while in 2023 it was only nearly 38%... However, the survey results in 2024 recorded some positive aspects of efforts to cut informal costs for enterprises, that is, only nearly 2.3% of enterprises said they had to spend more than 10% of revenue on informal costs, continuing the continuous decline from 2010 to present. Compared to the peak of nearly 13% in 2006, the first year of surveying this indicator, the burden of informal costs for enterprises in 2024 has decreased significantly...

Although the PCI 2024 survey recorded positive signals about the business environment and business expansion plans, the report results also recognized that the survey ended in December 2024, while new difficulties have begun to increase in the first months of 2025. This is a huge challenge, especially global economic fluctuations and the new US tariff policy. This requires public agencies to intervene more strongly to promote improvements in the business environment, support businesses, and create momentum for the private economic sector to overcome the current difficult period.

Article and photos: GIA BAO

Source: https://baocantho.com.vn/kien-tao-moi-truong-kinh-doanh-de-ho-tro-doanh-nghiep-a186301.html