Target of 1.5 million enterprises unreasonable

Illustrative photo.

These operating enterprises will also closely reflect the health of the economy as well as provide a favorable business investment environment in Vietnam.

At first glance, this proposal by VCCI seems quite reasonable, but if careful thought is given to such a plan, then it looks very flawed. Because the fact is that we cannot determine how many operational businesses can closely reflect the so-called health of the economy. It is impossible to give a correct figure as to how many enterprises can determine and provide a favorable environment for investment in the country.

If an enterprise is operating but is very small or if it operates for only a short time, and then suspends or withdraws from the market, then it will not make the economy strong in any way. Vietnam needs only healthy and well-developed businesses, especially if the number is limited to only 1.5 million businesses. Actually, the quantity may seem right, but the quality also must be a determining factor.

In 2016, Resolution 35/2016 / NQ-CP was set for the development of one million enterprises by 2020. However, by the end of 2020, Vietnam had only 810,000 operating businesses. Now it is to be seen whether the goal of 1.5 million enterprises by 2025 can be achieved.

There are two lines of opinions raised in achieving this goal. One side says that it is very difficult to complete such a goal, whereas the other side says that it can be done if we create a good business environment, remove barriers in administrative procedures, improve the relationship between state agencies and enterprises, and also reduce compliance costs of enterprises in business investment activities.

Up until now, the Government has made several concerted efforts in reducing lengthy and tedious administrative procedures. Ministries and sectors also confirmed that they have cut down on many unnecessary business regulations. But the reality is that businesses still have many complaints when they are in the process of establishing or running a business in Vietnam.

In a dialogue held at the end of August between the leaders of Ho Chi Minh City and domestic and foreign enterprises, many of the businesses complained about the endless and tedious administrative procedures. They spoke of lengthy procedures and delays between processes with several agencies, which all cause a waste of time, an increase in costs, and much loss of confidence in enterprises.

These cumbersome administrative procedures are most likely one of the reasons why many business households do not want to expand into bigger enterprises, even though this is one of the most important factors to fulfill the target of establishing 1.5 million enterprises. Therefore, there is a dire need for stronger reforms in the current business environment as well as in administrative procedures.

As per business analysis, the quality of enterprises is more important than quantity. Right from the time of setting the target of 1 million enterprises, many experts affirmed that the goal of having really large enterprises is much more important than the number of established enterprises. This time, the VCCI has proposed a number of specific goals to be included in the Resolution. These include the content that Vietnam will have at least ten large-scale domestic private corporations in the industrial sector, as well as ten large-scale domestic private corporations in the service sector.

This is probably a goal that needs to be considered more because so far Vietnam has not had many large-scale private corporations that have far-reaching influence in the region or the world. We also do not have well-known brands that people can identify with immediately as products of Vietnam. If we keep chasing numbers, we will not get anywhere and numbers such as 1.5 million enterprises in future are meaningless if they do not enhance the region where they are established.

Saigon Investment