Speaking at a forum on business development held by the Institute for Brand and Competitiveness Strategy in Ha Noi on Tuesday, Hung said domestic enterprises are still small with limited production capacity.

“Enterprise development is vital for operational efficiency, job creation and prosperity of the economy,” Hung said.

The dynamics of the business sector depend on the quality of the regulatory environment. If there are effective regulations, it will help businesses save money and participate in the market fairly, contributing to cutting transaction costs, protecting investors and promoting competition,” he added.

According to Le Thi Xuan Hue, a representative from the Ministry of Planning and Investment’s Department for Business Registration Management, in the first five months of this year, there were nearly 74,000 enterprises joining and re-entering the market, of which, nearly 54,000 were newly established businesses and nearly 20,000 businesses returned to operation.

However, she said more than 44,000 businesses withdrew from the market, of which more than 19,000 enterprises registered to suspend operations, more than 19,000 enterprises were waiting for dissolution and more than 6,000 enterprises completed dissolution procedures.

“In terms of capital size, nearly 89 per cent of newly established enterprises in the period have capital of less than VND10 billion each and less than 3 per cent have capital of between VND50 billion and VND100 billion,” Hue said.

Hue said the reason for the increase in the number of enterprises withdrawing from the market is mainly due to weak capacity and competitive pressure, in addition to existing shortcomings in the business and investment environment.

“With the current development of the business community, the Government’s goal of reaching one million businesses from now to 2020 is not feasible,” Hue said.

In term of start-up development, Director of V-startup Vietnam Nguyen Thy Nga said that the business policy and environment greatly affected the development of enterprises.

She said there were many barriers for small- and medium-sized enterprises, especially start-ups, to expand operations, including access to capital, financial and tax procedures. “The banking sector is still very reluctant to grant credit.”

At the forum, which was attended by about 300 representatives from relevant ministries, agencies, businesses and economists, many experts proposed methods to support the development of businesses.

They said it’s important to promote the reform of policies to enhance the development of the private sector, making them the main driving force of the economy, increasing productivity and economic growth. This required the Government to continue efforts to eliminate obstacles for private businesses and enhance the legal environment.

At the same time, the reform of State-owned enterprises should focus on applying the best international practices in corporate governance and promote equitisation and divestment.

Vietnamese businesses’ capacity to adapt to the digital economy is still limited, especially for small- and medium-sized enterprises. They are facing difficulties when they want to develop, including access to the internet.

The participants also agreed that the understanding of cyber security and the solving of problems online, technical infrastructure systems, technological level and basic knowledge of online development are still limited.

According to experts, Vietnamese enterprises need to aim at sustainable development and self-reliance, not wholly depending on digital technology.

With the opportunities and challenges brought about by the digital economy, Vietnamese enterprises need to actively invest in advanced technology and research, applying new business models and methods in order to develop faster. — VNS