Boosting the efficient operation of enterprises

Tuesday, 2020-05-05 17:57:04
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The FDI sector posts 51.5% of enterprises seeing profit, 1.9% of enterprises at breakeven and 46.6% with losses. (Illustrative image)
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NDO - Comprehensive information on the situation of enterprises in Vietnam just released by the General Statistics Office in the White Book 2020 shows that, even while some enterprises have yet to be affected by the COVID-19 pandemic, their production and business activities have also encountered many difficulties.

There were 610,637 enterprises in Vietnam as of December 31, 2018, up 9% over the same period in the previous year. Among them, 44.1% were generating profit, 7.5% posted a breakeven situation while 48.4% were operating at a loss.

About 78.5% of State-owned enterprises were operating profitably, 2.2% of enterprises confirmed breakeven and 19.3% of enterprises reported losses.

Meanwhile, the foreign direct investment (FDI) sector posted 51.5% of enterprises seeing profit, 1.9% of enterprises at breakeven and 46.6% with losses.

The private sector occupied 96.9% of total enterprises but it was the least efficient business sector. Only 43.7% of private enterprises made a profit while 7.7% of enterprises reported at breakeven and 48.6% of enterprises suffered losses.

Therefore, the revenue of the private sector and income of workers in this sector were at a lower level compared to the State sector and foreign sector.

However, the private sector is the only sector that generated a two-digit increase in pre-tax profit compared to the previous year.

The private sector has grown rapidly in the past two years, contributing greatly to the country's GDP growth. But the productivity, quality and efficiency of this sector are lower than that of State and FDI sectors for many reasons.

An important reason is that private enterprises mainly are micro and small scale, so they do not have sufficient ability regarding capital, labour, advanced technology, and management capacity in order to meet development requirements.

The majority of private enterprises are operating in the field of wholesale, retail, restaurants and catering services which are vulnerable areas.

Notably, since early 2020, this business line has been badly affected and suspended due to the COVID-19 pandemic. Thus, the "health" of Vietnamese enterprises continues to weaken compared to the overall picture published in the White Book 2020.

Enterprises are the main growth engine of the Vietnamese economy, contributing up to 60% to national GDP. Therefore, promoting the growth, productivity, quality and efficiency of enterprises is also necessary to boost sustainable economic growth.

Experts recommend that State agencies should continue to improve the legal environment, mechanisms and policies for enterprises towards a reduction in business costs and a simplification of procedures related to investment, land, construction, tax payment and social insurance as well as the building of economic policies in support of enterprises’ investment in technology, productivity and competitiveness.

In the context of the coronavirus outbreak, the Government has developed specific measures to remove bottlenecks and push back difficulties in order to stabilise production and business activities with the focus on promoting the domestic market.

Meanwhile, localities should identify their advantages and potential to guide the development of enterprises and create them as a driving force for sustainable and breakthrough growth.

In addition, it is necessary for enterprises to enhance their innovation and application of advanced science and technology in production and business, especially core and pioneering technologies.

They should proactively renew business thinking and improve governance capacity, productivity, quality, and competitiveness of products and services while standardising production to meet the requirements and standards of international markets.