Reviewing enterprise development in Vietnam in 2016-2020, the Ministry of Planning and Investment revealed that on average the growth rate of the number of newly established enterprises reached 10.5%/year, double that of 2011-2015; and the growth rate of active enterprises in this period was 15%, up about 80% compared to the 2011-2015 period.

The average investment capital for production and business of Vietnamese enterprises in 2016-2020 reached about VND34.3 quadrillion/year, an increase of 82% compared to 2011-2015. Currently, there are about 31 items with export turnover of over $1 billion/year.

The number of employees working in these enterprises accounted for about 27% of the labor force of the whole society, attracting an average of 14.5 million laborers/year, an increase of 24.4% compared to 2011 2015.

However, Vietnamese businesses have not yet fully promoted their role and potential. The private sector enterprises are mainly small and micro scale, the level of corporate governance is still poor, and there is a lack of high quality, skilled labor.

According to the Vietnam Business White Paper 2020, in the period 2016-2020, about 15,000 entreprises were dissolved yearly in the country, an increase of 58.4% compared to 2014-2015.

Since the beginning of 2020, Vietnamese enterprises have been seriously affected by the Covid-19 pandemic. Besides, short-term support solutions, it is also necessary to have medium- and long-term assistance, creating a foundation for the business sector to be able to adapt to the new situation and restore production activities.

In 2020, Vietnam did not reach the target of having 1 million enterprises. However, the Ministry of Planning and Investment still set another ambitious goal, which is to accumulate more than 2.1 million businesses by 2025, of which about 710,000 would be newly registered in the 2021- 2025 period. This goal is based on the average growth rate of newly established enterprises from 2016 to 2020 and the impact of the pandemic on the enterprises’ ability to recover production and business.

As Vietnam still lacks internationally-competitive corporations, the Ministry of Planning and Investment wants to have about 70 groups with capitalized value on the stock market reaching over $1 billion USD, and about 10 innovative startups valued at over $1 billion. And every year, the number of enterprises named by world prestigious ranking organizations for the highest brand value would rise by 10%.

To achieve these goals, the draft Resolution compiled by the Ministry of Planning and Investment highlights solutions on administrative procedure reform, improving the business investment environment, focusing on solving bottlenecks and inadequacies that hinder business development, creating an equal business environment.

The Ministry of Planning and Investment proposes research in policies to support interest rates for businesses in a number of industries heavily affected by Covid-19. Accordingly, these firms will enjoy a lending interest rate lower than the market interest rate of 3-4%/year for a period of a year. With an interest rate support budget of about VND 3 trillion, businesses can access a credit package of about VND100 trillion with a preferential interest rate of about 3-4%/year, compared to the current level of about 7-8%/year.

For industries most seriously affected such as aviation, tourism, and education, the Ministry believes that it is necessary to have adequate relief packages. The Government needs to have a preferential loan credit package with preferential interest rates in the form of refinancing with 0% interest rate for businesses in these fields from 6 months to 1 year. It is estimated that the credit package for aviation enterprises alone is about 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 SOEs through competitive, public and transparent recruitment exams; renewing the management of staff, especially senior staff, by recruiting or hiring high-quality staff, including foreign CEOs; and developing a mechanism for selecting and paying salary to CEOs of SOEs according to market rules and business performance of SOEs.

Luong Bang

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