Thursday, August 16 2018


Small enterprises lack voice in reform process

Update: July, 18/2012 - 09:42

HA NOI – Although both national and foreign enterprises played a role in the economic reform in Viet Nam's provinces, small enterprises tended to be marginalised from the process.

This was one of the findings of research on the economic reform's drivers jointly conducted by the UK Institute of Development Studies and the Viet Nam Chamber of Commerce and Industry in four provinces of Bac Ninh, Hung Yen, Dong Thap and Ca Mau.

According to chamber general secretary Pham Thi Thu Hang, small enterprises found it difficult to engage in the reform process and felt government officials prioritised large enterprises.

The research found that small and medium-sized enterprises (SMEs) had very little influence on the reform process while big firms were influential but only over issues of their concern.

The situation could be clearly seen in Ca Mau Province whose authorities had a low opinion of the potential or actual role of the SMEs in the local economy.

Hang said one of the reason was that priority given to large enterprises would provide opportunities for complementing government officials' formal income with informal charges.

"This raises the question of whether personal enrichment is a hidden driver of economic reform," Hang said, stressing that the financial gain based on corruption ties would likely hinder the reform.

"Still, the evidence is not very clear in Viet Nam."

Hang said that most respondents of the research were reluctant to engage in discussions of this topic and those who were willing to answer admitted that the families of public officials often gained financially from large-sized firms.

The report also pointed out that the ignorance of SMEs among public officials was due to the weakness of business associations which drew little participation from large firms.

Participating in these associations was time consuming to large enterprises which found it easier to exert influence by contacting government officials directly and individually.

"Large firm bias and ignorance of SMEs were barriers slowing down the economic reform in provinces," Hang said.

Meanwhile, institute legal department deputy director Dau Anh Tuan said it was controversial that decentralising government was criticised for leading to wasteful public investment which would block the reform.

Most informants of the research said there was visible evidence of wasteful public investment with too many airports, seaports and industrial zones built in the country but with low utilisation and rice fields destroyed to be converted into golf courses.

A representative from Dong Thap Department of Investment and Planning also pointed out that seafood and feed processing were key industries of the provinces with 42 projects and a total investment of VND5.1 trillion (US$243 million). However, these projects operated at 50 per cent of their capacity only, causing a huge waste.

The researchers suggested the role of the private sector needed better attention in the economic reform process in Viet Nam's provinces, saying that reform happened fastest in places where government had a good understanding of the problems hitting the private sector as a whole without the division of large and small enterprises and was responsive to their needs.

The enhancement of government officials capacity and the private sector's organisation would contribute to the success of the economic reform, experts agreed, while still highlighting both formal and informal dialogue between the private sector and government. — VNS

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