Fierce competition forces firms to innovate

Enterprises must innovate to adapt to the changing business environment and tougher competition or they will find themselves out of the game, said Phan Duc Hieu, Deputy Director of the Central Institute for Economic Management (CIEM).

The number of newly established firms climbs to a record high, at more than 100,000, in 2017 (Illustrative image)
The number of newly established firms climbs to a record high, at more than 100,000, in 2017 (Illustrative image)

Hieu made the remarks at the Business Forum 2018 held by the Vietnam Business Forum magazine on December 7.

He noted that enterprises are now facing two great opportunities and a big challenge. The first opportunity is the clear message from the Government on developing the private sector, a motivation for the national economy, and the second opportunity is the Government's efforts and directives to create a facilitating business environment for enterprises, Hieu stated.

However, more favourable business conditions will create fiercer competition which is also the biggest challenge for enterprises, the expert said.

Thus, Hieu advised enterprises to actively improve their competitiveness, to innovate and seize opportunities from the economic restructuring process.

According to Hoang Quang Phong, vice chairman of the Vietnam Chamber of Commerce and Industry (VCCI), statistics show that Vietnam's economic picture in 2017 was bright with almost all of its set targets being fulfilled.

Particularly, the Government has promoted the removal of barriers and the reduction of costs for enterprises, in addition to the issuance of an action programme to develop the private sector, which also signals further prosperity in the near future.

The number of newly established firms also climbed to a record high, at more than 100,000, in 2017.

However, the VCCI Vice Chairman pointed out many challenges in 2018 in relation to internal weaknesses of the economy, including the economic model based on low wage labour, low technology levels, and the exhaustion of natural resources aligned with low efficiency of natural resources use, as well as the limited size and governance capacity of domestic firms, among others.

Phong noted that over 60% of 700,000 active firms in Vietnam report losses, in addition to a large number of firms being dissolved and suspended.

Meanwhile, economist Vu Dinh Anh said that all signals and statistics show that the business environment and opportunities for enterprises in 2018 will be better than in 2017, recommending that the Government sets a higher economic growth rate for 2018, instead of 6.5-6.7%.