A garment company in Thua Thien - Hue. Enterprises would need to pay more attention to boosting their resilience to unfavourable conditions and unexpected risks like the COVID-19 pandemic. — VNA/VNS Photo Mai Trang

Establishing value chains which were resilient to external shocks would be an important factor for enterprises to enhance their adaptability to crisis, according to a recent report by the Business Registration Agency under the Ministry of Planning and Investment which assesses Vietnamese enterprises’ responsiveness to the COVID-19 pandemic.

The pandemic has greatly affected production and business activities at Vietnamese enterprises, forcing many to suspend operations and even pushing them to the brink of bankruptcy, the agency’s director Bui Anh Tuan said at the report launching ceremony held with support from the Aus4Reform programme on Wednesday.

The majority of Vietnamese firms were small- and medium-sized enterprises (SMEs) and being relatively new, they often lack resources and experience in responding to crises with large-scale and long impacts such as the COVID-19 pandemic.

Global political and economic situations also witnessed complex and unpredictable developments recently, causing new risks and challenges to the recovery and development of economies, including Viet Nam, Tuan noted.

Given this, enterprises should plan their response to risks, uncertainties and crises to develop sustainably and enhance their immunity against crises, and also strengthen the economy’s resilience, he added.

The survey carried out with 630 enterprises found that 32.9 per cent said that it was the corporate governance capacity that helped enterprises overcome the COVID-19 pandemic successfully, 20.5 per cent said that the customer market was the major reason and 20 per cent said that the adaptability to crisis depended on the capital scale of enterprises.

Other factors included the business line in which enterprises operated, ability to raise capital, operation duration and the ability to apply information technology and digital transformation.

The agency’s deputy director Nguyen Thi Viet Anh said since the pandemic’s impacts had varied among sectors, there wasn’t a common formula for all businesses to follow.

Response to crisis was still something that was unfamiliar and unappreciated to Vietnamese enterprises, especially SMEs, which made enterprises not have timely preparations or suitable response plans when a crisis occurred, she said.

She stressed that enterprises would need to pay more attention to boosting their resilience to unfavourable conditions and unexpected risks by building response plans and making more intensive and extensive consideration of macro-impacts, instead of just focusing on micro-factors as in the past.

Establishing value chains that were resilient to external shocks would be an important factor for enterprises to enhance their adaptability to crisis. However, the focus must be placed on better controlling the potential increase in supply chain costs due to the diverse choice of supply sources to avoid disruption or unavailability.

According to Le Anh Van from the Viet Nam Association of SMEs, financial resource management and cash flow balance were considered a bloodline for the development of enterprises, especially in times of crisis.

Therefore, enterprises needed to prepare resources with cash and asset reserves suitable to the size of their operation to be able to maintain production and business activities even when the economy was negatively hit by the crisis.

Phan Duc Hieu, a standing member of the National Assembly’s Economic Committee, said that good governance was becoming increasingly important in the context of growing uncertainties in the global market, adding that good governance should be considered a criterion for businesses to adhere to.

The research group and experts also said that owners and managers of enterprises should raise their awareness of the importance of risk governance and form short-, medium- and long-term plans. — VNS