In the period 2016-2020, the average investment capital for manufacturing and business of Vietnamese enterprises reached about VND 34.3 trillion per year and about 15,000 enterprises were dissolved annually.
The Ministry of Planning and Investment is preparing a resolution to support and develop Vietnamese businesses for 2021-2025, replacing Resolution No. 35/NQ-CP of 16 May 2016.
###: How to register a company in Vietnam as foreign investors?
In a review of business development in Vietnam in 2016-2020, the Ministry of Planning and Investment revealed that the growth rate of the number of newly created enterprises reached an average of 10.5% per year, double from 2011-2015; and the growth rate of active companies during this period was 15%, an increase of about 80% compared to the 2011-2015 period.
The average investment capital for manufacturing and business of Vietnamese enterprises in 2016-2020 reached about VND 34.3 trillion/year, an increase of 82% compared to 2011-2015. Currently, there are about 31 items with an export turnover of more than $1 billion per year.
The number of employees working in these enterprises represented about 27% of the labor force of society as a whole, attracting an average of 14.5 million workers/year, an increase of 24.4% compared to 2011-2015.
However, Vietnamese companies have not yet fully promoted their role and potential. Private sector enterprises are mainly small and micro-scale, the level of corporate governance is still poor and there is a lack of a high-quality skilled workforce.
According to the Vietnam Business White Paper 2020, about 15,000 companies in the country were wound up annually during the period 2016-2020, an increase of 58.4% from 2014-2015.
Since early 2020, Vietnamese companies have been severely affected by the Covid-19 pandemic. In addition to short-term support, it is also necessary to have medium and long-term assistance, which lays a foundation for business to adapt to the new situation and recover production activities.
Setting big, bold goals for the next 3 years
By 2020, Vietnam has failed to reach the target of 1 million enterprises. However, the Ministry of Planning and Investment has set another ambitious target, which is to gather more than 2.1 million companies by 2025, of which approximately 710,000 are newly registered companies in the period 2021-2025. This target is based on the average growth rate of newly established firms from 2016 to 2020 and the impact of the pandemic on firms’ ability to recover manufacturing and business.
Since Vietnam still has no internationally competitive companies, the Ministry of Planning and Investment aims to have about 70 groups with a capitalized stock market value of more than $1 billion USD, and about 10 innovative startups with a value of more than $1 billion. . And every year, the number of companies named by prestigious organizations in the world rankings for the highest brand value increases by 10%.
To achieve these goals, the draft resolution prepared by the Ministry of Planning and Investment proposes solutions for reforming administrative procedures, improving the investment climate for companies, solving bottlenecks and deficiencies that hinder business development, and creating an equal business environment.
The Ministry of Planning and Investment is proposing research into policies to support interest rates for businesses in a number of sectors hit hard by Covid-19. Accordingly, these companies will enjoy a borrowing rate lower than the market rate of 3-4%/year for a period of one year. With an interest-rate support budget of about VND 3 trillion, companies have access to a credit package of about VND 100 trillion with a preferential interest rate of about 3-4%/year, compared to the current level of about 7-8%/year.
For the hardest hit sectors, such as aviation, tourism and education, the ministry believes that adequate aid packages are needed. The government should have a preferential credit package with preferential interest rates in the form of 0% interest refinancing for businesses in these areas from 6 months to 1 year. The credit package for airlines alone is estimated at approximately VND 10,000 billion.
State-owned enterprises (SOEs) also have their own solutions to promote efficiency. The Ministry of Planning and Investment proposes a mechanism for recruiting and appointing managers of state-owned enterprises through competitive, public and transparent recruitment exams; renewal of the management of personnel, especially senior personnel, by recruiting or hiring high-quality personnel, including foreign CEOs; and developing a mechanism for selecting and paying salary to CEOs of SOEs according to the market rules and business performance of SOEs.
By Luong Bang @ vietnamnet
