The number of small and medium-sized enterprises (SMEs) leaving the market is smaller than micro enterprises. This shows that starting up a business is difficult, but raising business capability for micro enterprises is more important, according to Professor John Rand, University of Copenhagen (Denmark). Recently, the Central Institute for Economic Management (CIEM) under the Ministry of Planning and Investment hosted a conference to announce its report on characteristics of the business environment in Vietnam, from surveys in 2011. Mr Vu Xuan Nguyet Hong, CIEM Deputy Director, said, like previous SME surveys, the survey in 2011 was coordinated and implemented by four agencies, include CIEM, the Institute of Labour Science and Social Affairs, Economics Faculty (University of Copenhagen) and the Institute for World Development Economics Research (United Nations University) with the support of the Danish International Development Agency. According to Professor Finn Tarp, University of Copenhagen, the Vietnamese SME community plays an important role in national construction and economic development. This sort of survey is essential when Vietnam is changing economic model. Accordingly, since Vietnam initiated the doi moi (renovation) period, the transformation of production structures takes place together with the change in labour market (low speed). Besides, the SME sector performs a huge role in creating jobs and output. Therefore, it is important to understand the potential drawbacks of this particular economic sector to devise policies. A new point of this report is informal studies. Professor John Rand said: One major obstacle that this report presents is that only dynamic growth and innovation can help declining businesses to grow up. Another outstanding problem is limited access to credit sources for Vietnamese businesses. According to the report, the number of enterprises with informal loans is more than double the number of enterprises with formal loans. This reconfirms that SMEs have a huge demand for credit, and barriers to credit for this business sector have not been lifted by State agencies. Or, in other words, policies in support of SMEs to overcome these barriers are not adequate. A notable point in this conclusion is that businesses reporting high unofficial costs, in the form of kickbacks and bribes, do not create more jobs than those without giving bribes. This proves ethical enterprises can develop normally, as the Vietnamese business environment has greatly improved in recent years. Dr Pham Thi Thu Hang, Secretary General of the Vietnam Chamber of Commerce and Industry (VCCI), said this is one of the most sophisticated and systematic research works on SMEs in Vietnam, with a valuable approach: The study delves into business environment issues from the perspective of enterprise scale, and compares the business environment impacts on each business sector. The research also shows that the development of enterprises over time. In addition, the research incorporates gender aspects in analytical works, not simply assessing the growth of women-led enterprises, but also evaluating the competitiveness of men-led or women-led businesses. Another alarming issue is the declining rate of companies improving products. This carries risk when the market of SMEs is the domestic market, where counterfeiting and piracy is rife. Therefore, improving product designs to occupy this market and niche markets is essential. On the other hand, there is a significant reduction of trade unions and the number of small and medium enterprises without trade unions tends to increase. Specifically, the role of trade unions at these enterprises is faint, while this business sector generates jobs for 60 – 70 per cent of non-agricultural workers. “This leads to the very low quality of jobs in small and medium enterprises,” she concluded. Van Nam
Posted on: Sun, 25 Aug 2013 10:03:34 +0000
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