Vietnam’s private sector in need of support to weather Covid-19 difficulties

Truong Gia Binh, head of the Prime Minister’s private sector development research team, shares his views on the need for the government’s prompt support so that enterprises can fight the pandemic effectively and maintain production and business activities at the same time.

Many private enterprises have been struggling due to Covid-19 and are in need of government support.
Many private enterprises have been struggling due to Covid-19 and are in need of government support.

Q: How should the government provide support so that enterprises can weather this difficult period?

A: To describe the current state of the business community in general and private enterprises in particular in the wake of the fourth Covid wave, we can use phrases such as “a lack of health” or “a lack of immunity”. Already struggling from previous outbreaks, many are facing even more serious problems due to an imbalance in revenues and expenses, disrupted supply chains and the burden of costs preventing the pandemic such as testing, quarantine facility and goods transport rerouting. Some sectors such as tourism and air travel have almost frozen.

In this context, we have put forward several support measures that enterprises are looking forward to, one of which is vaccinating workers, the force that is keeping the economy going. We suggested that the government should allow the private sector to buy vaccine and inoculate their employees in accordance with the Ministry of Health’s guidelines. The Prime Minister’s recent decision to vaccinate 300,000 workers at industrial parks in Bac Giang and Bac Ninh Provinces as well as the call for resources from both the public and private sectors are a positive sign for the business community.

Next are policies to help enterprises restrict their spending and keep their already dwindling capital to maintain their operations and retain workers. This is the direction the government has implemented through the recent promulgation of various fiscal policies.

However the business community expects that the upcoming policies should take into consideration the recovery rate of each sector so that support is not only a wholesale action but also the booster for enterprises’ recovery. We also hope that the government will direct ministries, agencies and local authorities to clarify the need to impose new regulations that could incur significant costs for enterprises.

All the above mentioned issues are the challenges that enterprises themselves cannot deal with but need support from the government, ministries and agencies.

Q: Many state that private enterprises are at a disadvantage when they are given less favourable treatment than state-owned or foreign-invested enterprises. What should be done to support private enterprises more effectively?

A: If the government places confidence in the private sector and creates an equal playing field, private enterprises are entirely capable of undertaking major national projects. Placing confidence in private enterprises also means affording them an opportunity. The private sector is also expecting to have a more transparent and more open mechanism on access to land and other important resources as well as to be given the favourable conditions as enjoyed by state-owned and foreign enterprises so that they can compete effectively in the Vietnamese market and expand to other countries around the world.

The Party and State have expressed a clear and consistent policy on private sector development. But the key is to ensure the synchronicity between the policy and the actual implementation.

Q: Are private enterprises capable of competing directly with enterprises in other sectors if given equal support?

A: We are entirely confident that we are not only capable but also serious competitors of state-owned and foreign enterprises. Private enterprises have always had to look for growth opportunities themselves without much support, so there are no reasons they will retreat on a level playing field. In fact, many key sectors were previously held entirely by state enterprises but when private enterprises are allowed to join, they have all recorded impressive performance.

The air carrier VietJet, for example, is one of top ten private enterprises in Vietnam. Its revenue in 2019 (prior to Covid-19) was VND41 trillion (US$1.79 billion) and profit was VND4 trillion (US$174.3 million), compared with state-owned Vietnam Airlines, whose revenue was nearly double but profit was only VND2.7 trillion (US$117.7 million). Such figures show that VietJet outperformed Vietnam Airlines.

Another example is the automotive industry, when many state-owned mechanic and machinery factories were previously unable to develop a Vietnamese car brand. But when enabled, Vinfast took only 21 months to complete building its production facility and released a Vietnamese-made car in less than two years.
And there are myriad examples of private enterprises which are leaders in terms of revenue and profit in other sectors such as garment, footwear, seafood, timber and property.

With the attention and the private sector development policy of the Party and State, I believe that in the future, the problem we discuss is not about the competitiveness of state-owned and private enterprises in the domestic market. The matter that needs more attention is how to make the whole Vietnamese business community enhance their capacity so that they can compete in the international market, a large playing field for those daring to walk out of the comfort zone.

Thank you very much!