Fueling the entrepreneurial spirit

Electronic components production line at Sun Tech Joint Stock Company in Thanh Van Industrial Park, Bac Giang province. Photo: DANH LAM

And now, history once again calls the name of the business and entrepreneur force in the process of building a prosperous Vietnam by 2045, especially when the Covid-19 pandemic has affected the rapid growth of the Vietnamese economy and pushed back the achievements of global economic development.

After a year of lifting social distancing to gradually return to a new normal, the Vietnamese economy has received good news that the gross domestic product (GDP) in the third quarter increased by 13.67%; bringing the GDP growth in the first nine months to 8.83% over the same period, the highest level since 2011 and becoming a bright spot in the growth of the region and the world. This is an indication that the Vietnamese economy is returning to a high growth trajectory.

Not just pink

Despite unprecedented difficulties due to the negative impact of the pandemic, a record number of newly registered businesses was still set, demonstrating the efforts and entrepreneurial spirit of the business community, and showing that in difficult times, many new business opportunities still appear.

To date, although the target of one million enterprises has not been reached, the whole country has nearly 900 thousand enterprises in operation, of which 124 enterprises and 283 products are national brands. The business team is up to 4 million entrepreneurs, of which 7 entrepreneurs are in the global USD billionaires list.

However, the business picture is not all rosy. Analysis of multi-year data series shows worrying issues regarding business development. According to the Vietnam Chamber of Commerce and Industry (VCCI) Special Report on Business Development in the 2011-2020 period, an average of 103,529 new businesses were established each year, but 76,140 businesses withdrew from the market.

The average growth rate of newly established enterprises is only 6.35%, lower than that of enterprises withdrawn from the market, which is 7.29%. The growth rate of newly established enterprises tends to decrease even in the context of Vietnam actively improving the business environment and maintaining macroeconomic stability. The very high number of bankrupt enterprises in the early period of 2010-2020 also shows that the policy focuses on developing the quantity of enterprises rather than the quality.

The number of bankruptcies and business suspensions is unusually high, no longer a "purification" but has gone beyond the market's elimination rules.

Economic experts say that the number of bankrupt and inactive enterprises is unusually high, no longer a "purification" but has gone beyond the market's elimination rules. Therefore, in-depth analysis is needed to find appropriate solutions in the work of building policies for enterprise development in the coming time.

If we fully calculate the number of enterprises leaving the market in the business registration report, the overall picture of enterprises is clearly not good and looking at the economic picture, we must look at enterprises because they are the main subjects of the economy. Associate Professor, Dr. Tran Dinh Thien, former Director of the Vietnam Economic Institute, commented: 70% of enterprises have to leave the market with an average "lifespan" of only about 4-5 years. That process of operation has almost no contribution, which is a huge waste of resources in society. 30% of the remaining enterprises need 30-40 years to reach the world market because of their low starting point, small capital and labor scale.

Fear of reduced business motivation

The bigger concern now is entrepreneurship. The slowdown in business environment reform, the fear of making mistakes and being held accountable by regulatory agencies, and overlapping legal regulations are reducing the motivation of entrepreneurs and businesses. A report from the Ministry of Planning and Investment shows that in the past five years, very few new projects and works of state-owned enterprises have been started. Most businesses have only implemented unfinished projects or handled backlog projects from previous periods.

Dr. Nguyen Dinh Cung is concerned that the business environment is facing unprecedented obstacles since the implementation of the Enterprise Law 2000. Previously, each sector handled its own work, but recently there has been an increasing number of cases of "passing the buck" because civil servants are afraid of making mistakes and do not want or dare to properly perform their duties and responsibilities. Ministries and sectors will send official dispatches to consult with all agencies to make decisions based on consensus. However, in many cases, only general responses are received, with the time being extended indefinitely without a final decision being made.

The construction of Long Thanh passenger terminal phase 1 is also stuck in this situation. Mr. Lai Xuan Thanh - Chairman of Vietnam Airports Corporation (ACV) said that compared to the basic design documents approved in Decision No. 1777/QD-TTg, the technical design documents have been adjusted in some contents: The height of the passenger terminal body has been adjusted to increase from 45m to 45.55m, the usable area has been increased from 373 thousand m2 to 376 thousand m2.

This adjustment is completely normal in construction work to be more suitable, more effective and ensure that the scope, function and scale of the station are not changed. In practice, there are always situations in implementing investment and construction activities, no project is the same, so whenever a difficult problem arises, we always struggle to find and innovate to make the project go smoothly. This should be more motivating in national key projects, but I feel that motivation is decreasing," said Mr. Lai Xuan Thanh.

These invisible barriers are also the reason why the Government's Economic Recovery and Development Program has been implemented more slowly than required, with only over VND61 trillion disbursed out of a total of nearly VND350 trillion. Dr. Nguyen Dinh Cung is concerned that the consequences of the decline in motivation are immeasurable as the production capacity and medium- and long-term growth potential of the economy may be reduced.

Nurturing the spirit of service entrepreneurship

The entrepreneurial spirit of Vietnamese entrepreneurs is very strong, but there is a lack of conditions to nurture, promote ideas and develop them into the market. That explains why startups still find it difficult to become unicorns while the transformation of businesses from micro to medium scale takes too long, and businesses cannot even grow, or do not want to grow. This issue needs to be raised when looking at the upcoming development path of Vietnamese businesses and entrepreneurs.

The summary of 10 years of implementing Resolution 09-NQ/TW of the Politburo on building and promoting the role of Vietnamese entrepreneurs in the period of accelerating industrialization, modernization and international integration shows that the most difficult times are also the times when billion-dollar enterprises such as Vietjet, TH True Milk start up, or Vingroup, Thaco take new steps to rise up.

Those were the early years of the 2010-2020 period, when Vietnam's macro economy was unstable in the global economic recession, coupled with unresolved internal difficulties. The similarity was that the task of building and developing the Vietnamese business community as the goal set out in the Resolution of the 13th National Party Congress was also a historic moment, when the business community had just emerged from the Covid-19 pandemic. There will be a next generation of businesses born in this particularly difficult period, including the leading cranes who have grown up and a team of new entrepreneurs starting out from passion, will, and aspirations of the times.

Mr. Vu Tien Loc - Chairman of the Vietnam International Arbitration Center called this a generation of serving businessmen, those who put the interests of the nation and the country above all else, as they responsibly share their responsibility with society and the country during the pandemic and the pain of development models, restructuring, and sustainable development goals of the economy.

“The most important thing right now is to encourage and maintain the entrepreneurial spirit with the message of re-establishing a healthy and transparent business environment to motivate state-owned enterprises to develop, private enterprises to do business with peace of mind and pass on to their successors. I believe that if we go to the end of our efforts, determination and creative ways, we will achieve the goal as the Government quickly found a source of vaccines during the Covid-19 pandemic,” Mr. Dau Anh Tuan, Head of the VCCI Legal Department, expected.

The most important thing now is to encourage and maintain the entrepreneurial spirit with the message of re-establishing a healthy and transparent business environment.

Dr. Nguyen Dinh Cung's wish is that the Government urgently finds the motivation to reform and improve the business environment to restore the economy and achieve sustainable growth, including the issue of "dispelling the fear" of making mistakes among civil servants as well as among business leaders.

Vietnam has gone through a fierce period for both the economy and businesses. It is the times of decline that need to recharge new energy for the next boom period to make up for the time that the Covid-19 pandemic has delayed development. From the business side, the new energy comes from the will to overcome difficulties, innovate, and accept risks to pursue the goal to the end; from the Government is the determination to fulfill the commitment to accompany, taking people and businesses as the center.