Local firms benefit little from economic recovery
Local firms benefit little from economic recovery
The economy has seen clear signs of recovery but this has yet to bring significant benefits for domestic firms, heard at a meeting of the Ministry of Planning and Investment in Hanoi City on March 25.
An interim report by the ministry’s Department for National Economic Issues showed that industrial production has continued picking up, especially manufacturing, processing and export goods production.
March’s Index of Industrial Production (IIP) has jumped 25.8% against the previous month and 9.1% over the same period last year. In the first quarter of 2015, IIP is estimated to rise 9.1% year-on-year versus 5.2% and 5% in the first quarter of 2014 and 2013 respectively.
Besides, total retail and service revenue in the Jan-Mar period is expected to rise nearly 10% year-on-year. Last year, the figure rose 5.1%.
The nation’s export value is estimated at nearly US$35.7 billion, up 6.9% year-on-year. Exports by foreign direct investment (FDI) firms (excluding crude oil) are expected at US$24 billion, rising 16.2% and accounting for 67.5% of the total.
Meanwhile, exports by domestic firms are down 5.1% to around US$10.6 billion.
Deputy Minister of Planning and Investment Bui Quang Thu said that data announced by local authorities and agencies shows that the local economy has made positive growth. The agriculture sector has still reported positive growth despite the current drought in the central region.
Power consumption has increased while domestic budget collections have improved thanks to better production and business activities. Therefore, the Government’s target for 6.2% gross domestic product (GDP) growth is achievable this year, Thu added.
However, a representative of the Business Development Bureau said FDI firms have contributed nearly 70% of export value and domestic enterprises, mostly medium-d ones, make up only 30%. These figures suggest local companies are facing challenges to approach export markets.
While the country will sign many free trade agreements (FTAs) and the Trans-Pacific Partnership (TPP), up to 80% of local enterprises are not prepared for this.
In addition, the ratio of micro businesses is up to 97% and they are still struggling to access export markets. Local firms even have failed to deep integration into the ASEAN community.
Ministries and agencies are still speeding up equitization of State-owned enterprises (SOEs) but basically, the State still holds a huge stake at these firms, she said.
Deputy Minister Thu also agreed that local firms are still in great hardship. Therefore, the Government is considering two major programs to help them with integration while boosting support funds for small and medium-d enterprises.
