Expecting a new generation of large enterprises to 'come out'

Lack of medium-sized enterprises...

Dr. Le Duy Binh - Director of Economica Vietnam informed that among 940,000 Vietnamese enterprises currently operating, the majority are still small and micro enterprises, while the number of medium-sized enterprises is still limited. Specifically, about 97% of domestic private enterprises are micro and small in scale. Large enterprises only account for 1.5% of the total. Notably, according to Dr. Le Duy Binh, the fact that medium-sized enterprises only account for 1.5% creates an "abnormal" enterprise structure when compared to the structure of other enterprise sectors.

The phenomenon of “lack of medium-sized enterprises”, that is, the situation where medium-sized enterprises are very few in number, is a cause for concern. Dr. Binh assessed that “lack of medium-sized enterprises” is a sign that very few small enterprises have grown to become medium-sized enterprises. Small enterprises lack the capacity as well as the motivation and ambition to grow in size. The phenomenon of “lack of medium-sized enterprises” also shows that not many medium-sized enterprises will develop into large-sized enterprises in the medium term.

This is also the concern that Mr. Hoang Dinh Kien - General Director of Hoa Phat Logistics Joint Stock Company (Hoa Phat Logistics) shared with PLVN. Mr. Kien said that at this time, Vietnam's economy has many conditions for development but private enterprises have not yet met the story in terms of scale. Meanwhile, in reality, with the fierce competition as it is today, the advantage in terms of scale is one of the factors that create momentum and facilitate the development of enterprises.

“If we remain small-scale private enterprises, we will never have the advantage to compete in the market, especially in the current open market. If the private sector is still satisfied with being small and medium-sized enterprises, then at some point, the competition of Vietnamese private enterprises will no longer exist when we integrate more deeply and become an economy with great openness,” said Mr. Kien.

Citing an example in the logistics sector, Mr. Kien affirmed: “If we continue to maintain a small and medium scale, then gradually large warehouse and yard areas will be in the hands of foreign investors. If Vietnamese warehouse investors are only satisfied with small scale, then we can only work with small, fragmented customers. Therefore, it must be affirmed that the advantage of large scale will change the situation of private enterprises in each industry. We need to “dare to be big” to be able to compete in the current period and in the future.”

Ms. Pham Thi Ngoc Thuy - Director of Office IV (Private Economic Development Research Board) once shared with PLVN about the story of how to have more large enterprises because for many years, over and over again, only a few familiar names appeared in the dialogues with the Prime Minister . "How to have more faces like that is always a difficult question and especially, when looking at macro data, we see that the number of large and medium-sized enterprises has almost not changed over many years. Why are medium-sized enterprises not large? Why are small enterprises not medium-sized? Those are the questions we always have to think about" - Ms. Thuy said.

Creating momentum for entrepreneurs and businesses to contribute

It seems that all the above concerns have been resolved by one answer: Resolution 68!

Economist Nguyen Bich Lam assessed that Resolution 68 has resolved all the long-standing shortcomings of the private economy. First, the shortcomings in the treatment of the private economy. If in the past, public opinion often commented that the policy was considering state-owned enterprises (SOEs) as "offspring", foreign direct investment (FDI) enterprises as "adopted children", and private enterprises as "stepchildren", this Resolution has completely erased the above comments with the affirmation that "the private economy is equal to all other economic sectors".

Mr. Nguyen Bich Lam.

“It is necessary to impose very strict sanctions to force civil servants and those responsible to strictly implement and when implementing, to implement correctly. There must be a mechanism so that if civil servants do not perform their duties, they will be disciplined. In the action plan, it is also necessary to assign specific tasks to relevant ministries, branches and localities, linked to the personal responsibility of the head in implementing the goals; There must be an assessment of implementation results by month, quarter, 6 months and year” - economic expert Nguyen Bich Lam.

More specifically, from now on, private enterprises are equal to state-owned enterprises and FDI enterprises, which is reflected in all viewpoints, goals and solutions for private enterprises. Private enterprises are guaranteed equal competition with other economic sectors in accessing business opportunities and economic resources, especially capital, land, technology, human resources, data and other legitimate resources of the country according to the provisions of law.

According to Mr. Lam, this viewpoint has given private enterprises the right to access land capital, resources, very specific solutions and create capital sources for private enterprises. That is the first important thing. The second important thing is to create trust for private enterprises when respecting "property rights and freedom of business".

“To be honest, property rights, property autonomy and business freedom have been stipulated in the 2013 Constitution, but in fact, they have not been implemented for a long time. Resolution 68 has been very specifically stipulated,” Mr. Lam said and analyzed: “First of all, we must ensure ownership rights and property autonomy so that if something happens, the private sector can still secure their assets and not have their assets confiscated as happened to some businessmen and businesses in the past. This guarantee is very important, creating trust, creating momentum for businesses to contribute and from there will promote private enterprises and businessmen to devote all their mind, intelligence, strength and wealth to doing business.”

Unblocking the flow of "administrative procedures"

Expert Nguyen Bich Lam commented that in reality, up to now, the policies that Vietnam has put forth have been very good but the implementation has been ineffective. The causes of inefficiency have been identified but are not easy to solve. However, Resolution 68 has contributed to unblocking this flow when mentioning the sense of responsibility of the public service enforcement team as well as the goals of cutting administrative procedures.

Specifically, the Resolution requires “Creating all favorable conditions in handling administrative procedures; At the same time, there is a mechanism to exempt liability for cases that have fully implemented related processes and regulations, without personal gain in the process of performing tasks, but there are damages due to objective risks”. According to Mr. Lam, this is extremely important because currently there is a phenomenon of “cadres and civil servants not doing things because they do not dare to do things, because they do things because they are afraid of making mistakes”.

But Mr. Lam also said that it is necessary to impose very strict sanctions to force civil servants and those responsible to strictly implement and when implementing, they must implement correctly; There must be a mechanism so that if civil servants do not perform their duties, they will be disciplined. The action plan also needs to assign specific tasks to relevant ministries, branches and localities, linked to the personal responsibility of the head in implementing the goals; There must be an assessment of implementation results by month, quarter, 6 months and year.

Many enterprises that PLVN has discussed also believe that in order for Resolution 68 to promote all the breakthroughs and remove all the obstacles and long-standing systemic problems with the private economy, there must be mechanisms to regularly inspect and evaluate the management agencies and civil servants implementing administrative procedures. Most of them expressed their hope that through the conference to implement Resolution 68, the business community will believe that cadres and civil servants will have more awareness and actions to perform their functions and tasks well to create conditions for private enterprises to develop.

Mr. Hoang Dinh Kien.
“It is necessary to evaluate the quality and effectiveness of state management officials in handling their work and operations. Currently, bank employees and officers are evaluated according to KPIs, how many transactions they must process in a day, how many hours a transaction takes. Therefore, the state management system must also develop similar management standards - Mr. Hoang Dinh Kien, General Director of Hoa Phat Logistics Joint Stock Company.