Limited export markets, difficult access to new technology and unqualified human resources have restricted Vietnam’s large enterprises in improving their competitiveness on the market. This is the comment of Mr Jago Penrose, UNDP’s Vietnam Economic Chamber in the UNDP’s research release, relayed to more than 200 of Vietnam’s largest companies on October 1 in Hanoi.
Key importance to the economy
In a year of research under the theme "Top 200: Industrial Strategies of Vietnamese Largest Enterprises", 200 leading businesses were surveyed and ranked by GSO (including state-owned, private and foreign-invested enterprises in Vietnam) on four categories: labour force, assets, revenue and contribution to the state budget. "The research also had an eye on joint venture companies, excluding wholly foreign-invested firms. UNDP’s research group had interviews with the directorates of 86 enterprises about their development strategies as well as difficulties in their business process," said Mr Jonathan Picus, UNDP’s Chief Economist.
Ms Setsuko Yamazaki, Country Director of UN Development Programmes in Vietnam, said big companies have played an important role in the development of newly-industrialised countries such as South Korea, Japan and Thailand. Vietnam is no exception, the research showed. Big businesses have a great influence on the economy and may take the lead in technology and product renovation. They have helped create demand for infrastructure, capital and a qualified labour force. However, while the economy has been opened, it is still necessary to support these companies to raise their competitiveness on the market.
Most of Vietnam’s large enterprises are owned by the state. According to the research, these businesses are using nearly 30 per cent of workers. Big foreign-invested companies have a key role in production and job creation. Among 200 leading producers, foreign companies account for nearly half, using two thirds of the labour force, possessing more than half of total assets, nearly 60 per cent of revenue and paying 45 per cent of tax. However, no local private companies are mentioned in the Top 200.
"Unqualified human resources"
This is one of big obstacles for Vietnam’s large companies in the process of improving their competitiveness. "During interviews with businesses, we realised that they have applied three big strategies to raise their competitiveness capacity: improving major business activities, expanding export markets and diversifying to new business fields such as real estate, tourism or investment in the booming capital market," said Mr Penrose. "However, the success of these strategies depends on businesses’ ability to access new technology and qualified human resources, because new business operations and speculative investments are both unstable."
Although Vietnamese workers are acknowledged to be hard-working and trainable, many businesses are still not pleased with the training quality in education units in Vietnam. Consequently, enterprises have to spend money retraining their employees, and then workers move to another job if possible, taking skills and investment from the old business. This situation discourages company investment in retraining.
International appraisals show that Vietnam’s largest enterprises are only equal to small and medium-sized businesses in the world, Mr Picus added. However, they still have a great impact on the development of Vietnam’s economy. The research argued that Vietnam’s companies are improving themselves to raise their competitiveness. They have tried to diversify products and improve product quality to export to new demanding markets. In order to do this, they need more support from the government in the education and training sector. "The Vietnamese government should reform preferential policies to encourage big companies not to depend on speculative investments to reach the profit target," emphasised Mr Picus.
Lan Anh
Vietnamese
