Trần Du Lịch, a member of the Economic Commission of the Việt Nam National Assembly, spoke to the news site Hải quan (Customs) about how Vietnamese enterprises can utilise advantages and eliminate disadvantages in the international integration process.
Many people have complained that Vietnamese enterprises have been facing many difficulties and challenges during international integration. How do you respond to these complaints?
In my opinion, Vietnamese enterprises have faced many challenges, many of which come from our policies. They include high interest rates for mid-term and long-term interest rates; high transportation costs, particularly logistics; and a big shortage of trained human resources, coupled by poor matching between supply and demand.
Another challenge Vietnamese enterprises are facing today is their weakness in international competition, particularly in the fields of advanced technology and high-end services.
At present, there are about 550,000 Vietnamese enterprises operating under the Enterprise Law and nearly three million production households. However, more than 90 percent of the enterprises are small- and medium-sized. What’s more important, products from just a fourth of the enterprises are qualified for export, while products from 55 percent of the enterprises are not qualified for export.
Last but not least, Vietnamese enterprises are very slow in responding to market demands, aside from export activities. Meanwhile, about 63,000 multi-national companies with some 800,000 branches spread across all five continents are now in active operation. They now hold 80 percent of international trade and 90 percent of the world’s capital in investment and technology. In such a context, it is a big challenge for Vietnamese enterprises. Besides, most Vietnamese enterprises have little knowledge about legal requirements relating to international integration. This will be one of the biggest challenges for Vietnamese enterprises ìf lawsuits occur during export.
Will you please be more specific about the challenges that Vietnamese enterprises are facing during international integration?
Here I want to list three key challenges.
First, Việt Nam is facing a severe possibility of losing its domestic market as the country opens its door to foreign trade corporations, particularly those from Thailand and China.
Second, most Vietnamese enterprises are short on capital, as they are newcomers and have less experience than their foreign peers. In addition, during the process of integration, Vietnamese banks will also face tough competition from foreign banks. Coupled with that, our banks must follow the international lending norms. This will become a big challenge for Vietnamese enterprises, as most of them don’t have good business strategies.
And finally, how to utilise opportunities presented to them is also a big challenge for many Vietnamese enterprises. In real life, opportunities and challenges are often intertwined. If an opportunity is presented to them but they don’t seize it, that opportunity might become a challenge. Vice versa, a challenge may turn to be an opportunity if the enterprises have good strategies.
So what should Việt Nam do to seize opportunities presented to it?
I should say, preparation is a good step for enterprises to seize opportunities that are presented to them. For example, opportunities in 2016 are only reserved for enterprises that have prepared for the past two to three years. That’s why, right now, Vietnamese enterprises should start preparations for the year 2018 when the Trans Pacific Partnership Agreement (TPP) comes into force.
We are now in the era of a “win or lose” situation in the market. But it does not depend on the size of the enterprise. It depends on the enterprises’ market strategies and creativity. Việt Nam is a member of many Free Trade Agreements (FTAs), particularly the TPP, so Vietnamese enterprises should utilise opportunities presented to them to speed up their penetration into the world economy.
As the country is integrating deeper and deeper into the international market, Vietnamese enterprises will have to compete in three markets: the domestic market, partners’ markets and third countries’ markets.
More specifically, the production costs will have a tendency to reduce as the raw material and material markets will be more open and face fierce competition. As a result, our national economy will have an opportunity to switch from the extraction of raw materials or work as sub-contractors to develop our own supporting industry, or improve our products’ added value. This is how Việt Nam can raise the competitiveness of its economy and of Vietnamese enterprises. This will help our capital market develop quickly, in both scope and scale, and it will open up an opportunity for the capital market to link up with regional and international markets.
There’s no doubt that when our capital market is strong, it will have a strong impact on the commodity market, service market and capital market.
Last but not least, the high-tẹch market in Việt Nam will have an opportunity to catch up with those of other countries. — VNS