Sustainable development of the private sector is an urgent requirement for Viet Nam in the context of the trade war between the US and China and fourth industrial revolution, a seminar heard in HCM City on Thursday.

Deputy Minister of Planning and Investment Nguyen Van Hieu told the 5th Forbes Business Forum on ‘Building Sustainable Growth’: “In recent years the private sector has contributed significantly to the nation’s economic growth.

“The Party and State strongly encourage the sector since it is a major driver of economic development by creating an attractive business environment with various incentives.”

Nguyen Thi Phuong Thao, CEO of VietjetAir, said: “Viet Nam has many challenges and opportunities in this new era.”

She listed trade wars, exchange rate fluctuations, petrol price, exports, FDI, and lagging behind in technology as factors that would impact the economy.

To achieve sustainable growth, she said enterprises must invest in human resources and technology to maintain their competitiveness and continue to grow.

“It is time to both mobilise enterprises’strength and usher in strong administrative reform.”

She cited an example, saying VietjetAir needed two years just to get permission to make changes to its counters at Tan Son Nhat Airport in HCM City, while a private investor completed construction of Van Don Airport in Quang Ninh in the same two years.

“The private sector needs equitable treatment from authorities.”

Nguyen Xuan Thanh, development director of the Public Policy Program at the Fulbright School, said: “A level playing field is needed for all private companies, especially with regard to registration of new businesses and access to credit and other resources like land.

“The trade war and exchange rate volatility are unexpected threats to the Vietnamese economy.”

He also noted that a currency war seems likely as the Chinese yuan lost 8 per cent immediately after the US slapped tariffs on Chinese products and the Chinese central bank refused to interfere.

He was happy the State Bank of Viet Nam (SBV) reacted with alacrity and devalued the dong.

“The SBV should maintain a gap of 5 percentage points with the Chinese central bank. If they devalue the yuan by 8 per cent, the dong should be devalued by 3 per cent.”

He said the Government should hold regular discussions with the enterprise community on all issues.

Vu Tien Loc, chairman of the Viet Nam Chamber of Commerce and Industry, said: “Everyone knew in advance, though not the severity of the impact.”

Conflicts, trade wars, climate change, natural disasters, unemployment, and lack of cyber security are six possible threats Viet Nam faces, he quoted the World Economic Forum as saying.

Referring to the trade war, Loc pointed out that the US is Viet Nam’s biggest export market while Chine is its biggest supplier of goods.

“US investors could pull out and Chinese products could flood Southeast Asia. It is a chance for the international market to adjust.

“The Government should promote renovation while enterprises must adopt and exploit new technologies. The biggest problem is not changing.”

Pham Hong Hai, CEO of HSBC Viet Nam, said the legal framework can never catch up with the evolution of technology.

“Sustainable development must enable Vietnamese enterprises to join the international supply chain.”

Now 95 per cent of domestic companies are small or tiny, he said.

VinGroup deputy general director Vo Quang Hue said for sustainable development of automation and manufacturing, large scale and huge investments are required.

“For a very long time Viet Nam was unable to create an automobile industry because it lacked supporting industries. But how can we set up supporting industries when the automobile industry is so small?”

VinGroup plans to achieve 50 per cent local content rate by setting up research and development centres with the involvement of German companies, establishing a vocational training school, and developing eight supporting industry projects, he said.

“For the supporting industry, VinFast will produce itself, collaborate with partners or build plants and invite producers to use them for manufacturing.”

Noppadol Dej-Udom, sustainable development director at Thailand-based CP Group, said: “We have changed our business model to conserve natural resources for the next generation.”

In the past the company depended on many intermediaries to link up with farmers, but now, thanks to technology, they are no longer required, and a part of the resultant saving is passed back to farmers, he said.

“Farmers are directly suffering losses due to natural disasters, and for sustainable development we must closely co-operate with them and help them mitigate the consequences.”

Nguyen Quoc Ky, CEO of Vietravel, said Viet Nam has been going about developing its tourism in the wrong way.

“In recent times Viet Nam has paid a lot of attention to developing infrastructure for tourism like hotels, resorts and restaurants. But infrastructure only accounts for 30 per cent of the income; the rest comes from services, but we have not focused on developing services.”

He warned that tourism poses a threat to the environment.

“Authorities must carefully calculate and restrict the number of tourists so that it does not harm the environment.

“When making master plans, managers should not move local residents away because they reflect culture, their lives are unique things that tourists would like to discover.”

Dang Minh Truong, CEO of SunGroup, said: “Sustainable development of tourism must balance economic growth and environmental protection.

“Let’s respect society, culture and environment when we develop tourism.”

When he travelled around the world looking for good tourism models, he once visited a huge six-star resort where no trees had been felled and many of them even grew through buildings.

“To protect the environment, we took five years to build the InterContinental Da Nang Sun Peninsula Resort instead of the usual two.”

The private sector contributes nearly 50 per cent of the country’s GDP and creates 500,000 jobs every year.

In 2016 Viet Nam had ranked 82nd out of 182 nations in the World Bank’s Doing Business 2017 report, and improved to 68th out of 190 a year later for business environment.

Last year the number of newly-established private companies reached a record 125,000.

The Government has pledged to speed up administrative reform to achieve a goal of one million new companies a year by 2020.— VNS