Vietnam seeks optimal size for emerging businesses

April 20, 2016

Vietnam’s impressive growth since the 1990s has propelled the country to middle-income status and attracted increased attention from foreign investors. However, this growth has not been without its challenges. Most of Vietnam’s enterprises remain small, with the majority employing fewer than 50 workers.

Experts on small and medium enterprises gathered in Ho Chi Minh City on September 18 at a workshop titled “Vietnam in the new economic context: Labour and small and medium-sized enterprises.” Attendees included IDRC grantee Nguyen Thang, director of the Centre for Analysis and Forecast at the Vietnamese Academy of Social Sciences in Hanoi, who noted that the country’s enterprises still tend to be smaller than optimal.

Firms in Vietnam continue to face challenges in terms of productivity, efficiency, and links to global value chains due to their small size. Some observers chalk up the difficulties to foreign companies’ lack of interest in working with small firms, although this may not be the whole story.

“Vietnamese firms have succeeded in quantity — producing more, exporting more — but the quality of Vietnamese firms still lags behind,” said Anthony Nezic, president of the Canadian Chamber of Commerce in Vietnam.

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Van Phuc, Vice-Chairman of ECNA; Anthony Nezic (back), President of the Canadian Chamber of Commerce in Vietnam

 

Brighter prospects

 

To tackle these challenges, Vietnamese entrepreneurs are demanding greater representation through business associations. They want to share best practices, gain a better understanding of their common problems, and stay up-to-date with changes in government policy.

“Small businesses contribute to the Vietnamese economy and want to have a strong representation in society,” said To Hoai Nam, vice-chairman of the Vietnam Association of SMEs.

Prospects for small businesses are looking up. Recent legal changes that have better defined the government’s role will reduce the number of state-owned enterprises, said Tran Du Lich of the National Assembly’s Economic Committee.

Switching the focus from state-owned firms to the emerging small business sector represents a major shift in Vietnam’s reform process. The National Assembly is considering introducing legislation to support small businesses in 2016.

Read the 2014-15 Global Entrepreneurship Monitor (GEM) report
Learn about the GEM report launch and remarks by the Canadian Ambassador to Vietnam

Photo (at right): Van Phuc, Vice-Chairman of ECNA; Anthony Nezic (back), President of the Canadian Chamber of Commerce in Vietnam

Credit: Edgard Rodriguez