Improving business climate critical to post-pandemic growth
Improving business climate critical to post-pandemic growth
Barriers in the business environment must be removed to promote the development of private enterprises, which is considered a push for post-pandemic economic growth, experts said.
Vu Tien Loc, Chairman of the Viet Nam Chamber of Commerce and Industry, said that Vietnamese firms were undergoing a crisis caused by the COVID-19 pandemic.
“It’s time to speed up reforms and create a favourable business environment for the private sector,” Loc said, adding that the focus would be on strengthening institutional reforms, simplifying administrative procedures and improving the investment climate.
The pandemic was spurring a wave of investment shift with signals that Viet Nam would have significant opportunities to become a global production centre. However, the opportunities would come and go quickly if Vietnamese enterprises did not improve their competitiveness drastically to participate in global value chains, Loc said.
Improving competitiveness of Vietnamese enterprises, especially those of small and medium size, to enable them to be capable of becoming partners of multinational corporations was the decisive factor behind the success of the Vietnamese economy, he stressed.
According to economic expert Ngo Tri Long, one obstacle was that most private firms (around 96 per cent) were of small and medium scale. The private sector also had around five million business households, but the process of transforming them into enterprises had not been efficient as expected.
Le Duy Binh, Director of Economica Viet Nam, said that compliance costs, in terms of time and money, remained high to enterprises as many business and investment procedures were too complicated.
Besides, unofficial charges were also a big problem, Binh said, citing the recent provincial competitiveness index survey’s finding that more than 50 per cent must pay unofficial charges, a significant financial burden to any enterprise.
In some localities, there was discrimination between private firms and State-owned and foreign-invested enterprises, in which private firms had more limited access to resources and business opportunities, he said.
The Government was striving to achieve an economic growth rate of more than five per cent this year – a challenging goal.
While the workload for disbursing public investment remained huge in the remaining months of this year, increasing private investment was considered another push to post-pandemic economic growth.
Binh said that barriers in the business climate must be removed to promote private investment for post-pandemic recovery.
“It is critical to improve the business environment to cut costs for enterprises,” he said, adding that officials who intended to cause difficulties to businesses must be strictly punished. Firms’ confidence in the business environment must be improved so that they would be willing to pour investment into the economy.
The private sector, including business households, contributed around 40 per cent to the country’s gross domestic product.
Viet Nam targeted to have at least one million enterprises by the end of this year which would contribute 50 per cent of GDP and at least two million by 2030 which would contribute 60-65 per cent of GDP.
