'Self-determination' with 3rd pillar for sustainable growth
Local firms are being affected by today’s changing world because of the openness of the Vietnamese economy.
Very impressed with Vietnam’s economic growth in the past nine months of the year, Mr. Vu Tien Loc, a member of the National Assembly Economic Committee, still wondered why up to 112,600 enterprises withdrew from the market. Of the number, 62,500 businesses (55.5%) suspended business in the short term, up 38.7% year on year, 36,300 enterprises stopped operation for dissolution procedures, and 13,800 units completed dissolution procedures.
“This shows that businesses still face difficulties. It is necessary to carefully consider why the number of businesses withdrawing from the market is so high, more than the same period in 2021, when Covid-19 was still rampant," said Mr. Loc.
Ms. Bui Thu Thuy, Deputy Director of the Department of Enterprise Development, Ministry of Planning and Investment, explained that local firms are being affected by today’s changing world because of the openness of the Vietnamese economy.
For example, price fluctuations have placed great pressure on many businesses. The increase in input material prices directly affects their production costs. The increase in revenue is not enough to compensate cost increase. Challenges to businesses in particular and the economy in general are evolving very quickly.
Expert Nguyen Dinh Cung said that world economic growth in general and that of Vietnam's major trading partners in particular will decline sharply in 2022, reducing import demand from Vietnam. International organizations, besides positive forecasts for 2022, also predicted GDP growth in 2023 with a downward trend, creating an increasingly distant gap to the 2021-2025 plan target.
The third pillar
Mr. Cung said that in this situation, Vietnam must rely on the third pillar, which is micro-reforms, supply-side reforms, promoting growth and increasing sustainable growth potential. Priority should be given to institutional reform, improvement and improvement of the quality of the business environment, accelerating disbursement and improving the efficiency of public investment... Change in these areas is absolutely not influenced by external factors, is entirely within Vietnam’s determination.
To support businesses, Ms. Nguyen Thi Huong, General Director of the General Statistics Office suggested, it is necessary to reduce taxes and fees of all kinds to support businesses and people, thereby helping to stimulate consumption.
Ministries and state agencies need to ensure adequate supply of raw materials, energy, capital... to meet the requirements of production and business recovery and socio-economic development; remove difficulties and obstacles for important industrial projects; give maximum support to factories to maintain and restore production to keep orders, supply chain. Along with that, in the context of deep integration, rapid increase in export turnover, the trend of using trade remedies, it is necessary to support Vietnamese exporters to cope with these measures to protect and develop export markets.
For businesses, expert Dinh The Hien gave advice: to try to keep orders and customers, and the uninterrupted cash flow. In financial management, it is necessary to reduce all costs, to structure the safest cash flow, to apply technology to manage closed production chain to avoid high inventory.
Vietnamese enterprises should also focus on the home market. Depending on specific characteristics, two scenarios can be developed from now to 2023, with non-recession and recessionary markets. Management solutions need to follow these two scenarios and monitor any changes to proactively respond.