Developing the growth and capabilities of small- and medium-sizedenterprises (SMEs), which make up most of the business sector, iscrucial for the country to create sustainable economic growth, expertssaid at a recent conference held in Ho Chi Minh City.
PhamHoang Tien, Director of the Vietnam Chamber of Commerce and Industry'sSmall and Medium-sized Enterprises Support Centre, said the proportionof small and micro businesses in the country has increasedsignificantly.
Of the more than 347,000 enterprises in thecountry, medium-size and large firms account for only 1.96 percent and2.25 percent, respectively. The remaining 95-96 percent include microand small enterprises.
The country lacks leadingenterprises and a sufficient number of medium-sized firms, who arecapable of using new technology and becoming partners of transnationalcorporations.
SMEs are generally at a disadvantage inproduction networks compared to large firms, Tien said, adding that thegrowth quality of the private sector has not been sustainable, andproductivity and cost-effectiveness has not been high.
Heattributed the problems to ineffective support policies for the privatesector, unequal access to land and credit, and poor development ofsupport industries.
Major international manufacturing firmsassemble and produce relatively advanced products for the internationalmarket, but most local firms remain oriented towards the domesticmarket only, or export commodities with little added value.
Thedomestic private sector, mainly SMEs, account for the majority of firmsand employment in the country, but their participation in globalproduction networks through linkages with multinationals and directexports has been limited, according to Dominic Mellor of the AsianDevelopment Bank.
The percentage of Vietnamese enterprisesin the global value chain production networks is relatively low comparedto other similar sized ASEAN economies, he said.
Vietnam needs to create companies that can fill in the "missingmiddle" by serving larger export-focused foreign investors and workingwith smaller companies to develop an effective "pyramid" of companies.
Hesaid that greater participation of Vietnam 's domestic privatesector in global production networks through closer linkages withmultinational companies and direct exports could be a potent means ofaccelerating technology transfer.
Tien said the countryshould restructure institutions to be transparent, as well as develop apolicy framework to help SMEs access land, credit and markets.
Itis also necessary to develop a policy on support industry developmentthat creates favourable conditions for the private sector to enable SMEsto be involved in that industry, he noted.
Many of theconference delegates said the Government should consider providinglong-term loans to enterprises and build a training centre to trainmanagers and workers.
Dang Duc Thanh, Deputy Chairman ofthe HCM City Union of Business Associations, said private companiesshould devise appropriate business strategies based on market researchand upgrade their production technology.
They should alsodevelop an advanced corporate managerial force as well as skilful humanresources. The private sector will continue to be the major driverbehind Vietnam 's economic development in the future.
PhamHoang Tien, Director of the Vietnam Chamber of Commerce and Industry'sSmall and Medium-sized Enterprises Support Centre, said the proportionof small and micro businesses in the country has increasedsignificantly.
Of the more than 347,000 enterprises in thecountry, medium-size and large firms account for only 1.96 percent and2.25 percent, respectively. The remaining 95-96 percent include microand small enterprises.
The country lacks leadingenterprises and a sufficient number of medium-sized firms, who arecapable of using new technology and becoming partners of transnationalcorporations.
SMEs are generally at a disadvantage inproduction networks compared to large firms, Tien said, adding that thegrowth quality of the private sector has not been sustainable, andproductivity and cost-effectiveness has not been high.
Heattributed the problems to ineffective support policies for the privatesector, unequal access to land and credit, and poor development ofsupport industries.
Major international manufacturing firmsassemble and produce relatively advanced products for the internationalmarket, but most local firms remain oriented towards the domesticmarket only, or export commodities with little added value.
Thedomestic private sector, mainly SMEs, account for the majority of firmsand employment in the country, but their participation in globalproduction networks through linkages with multinationals and directexports has been limited, according to Dominic Mellor of the AsianDevelopment Bank.
The percentage of Vietnamese enterprisesin the global value chain production networks is relatively low comparedto other similar sized ASEAN economies, he said.
Vietnam needs to create companies that can fill in the "missingmiddle" by serving larger export-focused foreign investors and workingwith smaller companies to develop an effective "pyramid" of companies.
Hesaid that greater participation of Vietnam 's domestic privatesector in global production networks through closer linkages withmultinational companies and direct exports could be a potent means ofaccelerating technology transfer.
Tien said the countryshould restructure institutions to be transparent, as well as develop apolicy framework to help SMEs access land, credit and markets.
Itis also necessary to develop a policy on support industry developmentthat creates favourable conditions for the private sector to enable SMEsto be involved in that industry, he noted.
Many of theconference delegates said the Government should consider providinglong-term loans to enterprises and build a training centre to trainmanagers and workers.
Dang Duc Thanh, Deputy Chairman ofthe HCM City Union of Business Associations, said private companiesshould devise appropriate business strategies based on market researchand upgrade their production technology.
They should alsodevelop an advanced corporate managerial force as well as skilful humanresources. The private sector will continue to be the major driverbehind Vietnam 's economic development in the future.
