I had a chance to visit Meta, the owner of Facebook, recently. At discussion sessions they talked many times about Vietnam, together with Indonesia and India. Recently, I met a lot of Singaporean enterprises coming to Vietnam as they know that Vietnam has a good labor force in information technology (IT) and has competitive salaries.
In Southeast Asia, Vietnam is mentioned with much admiration for its high continued growth and population scale. Foreign investors see great potential. We have good human resources, a good market and good position in the region.
It is now the time to develop the private sector in Vietnam quickly and sustainably.
The important thing is maintaining the entrepreneurial spirit. Unlike their parents and grandparents, young people don’t want to work in the public sector. There is a brain drain from the public sector to the non-public sector.
Promoting entrepreneurship for youth, and creating an entrepreneurial environment is a necessity. The policies for starting a business need to be friendlier, safer and closer to international standards. The foundation for the development of enterprises and nurturing of an entrepreneurial spirit is ensuring a good and friendly business environment.
The top priority is reducing the percentage of business households, or the unofficial part of the private sector, which is now too high, 30 percent of gross domestic product (GDP).
The economic sector still has non-public activities in the ‘grey zone’.
To some extent, the ‘grey zone’ benefits them, helps them avoid attention from local state agencies. However, in the long term, only official business activities can bring high efficiency.
If businesses hide themselves in the unofficial ‘grey zone’, they will lose the opportunities to grow, and the state fails to collect tax.
Moreover, when trying to maintain unofficial businesses, they may easily become compromised and ignore good governance rules in operating their business.
PCI (provincial competitiveness index) surveys found that unofficial costs still exist in some essential procedural fields, such as joining markets and access to business premises.
The proportion of businesses paying unofficial fees are high for inspections of construction (67 percent) and conditional business licensing (61 percent).
Enterprises also have to pay unofficial fees for market management, environmental inspection, fire prevention and fighting, and inspections of land.
Vietnam has had more than two decades to encourage private enterprises to join the market more conveniently, but still has not succeeded in improving governance quality.
Many enterprises still don’t have a good administrative system and some of them follow the family-run management mode, which means that a wrong decision by one person could be enough to put the whole enterprise at risk. The recently discovered cases show this flaw about family-run management.
Better management will help businesses develop more sustainably. Private enterprises need to develop and have a business culture to transfer to the next generations. Businesses are not just the assets of one generation.
I think that many businesses nowadays feel insecure about the stability and consistency of policies. Therefore, we have to resolutely protect enterprises with authentic business. Policies need to be designed and implemented consistently towards the direction of creating favorable conditions for businesses. Private enterprises need the State’s guarantee in many aspects to feel secure to run business, and create assets for the country.
Foreign investors consider Vietnam as the attractive destination for investment and doing business. For entrepreneurs, they need a favorable environment to live and work, not to get rich and transfer assets to other places. Thus, good policies would protect authentic businesses from vacillation.
Dau Anh Tuan