HCM CITY— Vietnamese enterprises should focus on exploiting the large domestic market to reduce risks amid the US-China trade war, Trương Đình Tuyển, the former Minister of Commerce and Industry (now the Ministry of Industry and Trade), said.

“Việt Nam has a large domestic market which many Vietnamese enterprises have ignored. This is a mistake,” he told a conference held on Friday in HCM City to discuss opportunities and challenges posed by the trade war.

Việt Nam has entered a demographic golden period in which the group of working-age people is nearly double that of dependent age, he said, adding that Việt Nam has seen a rapid rise of the middle class.

This has contributed to a shift in the economy from dependence on exports to domestic consumption, he said.

To do this, Vietnamese enterprises should expand their business throughout the domestic market, he added.

If local enterprises want to continue to expand their business to foreign markets, they should target European markets once the free trade agreement between Việt Nam and the EU takes effect, he said.

“These markets have a lot of potential,” Tuyển said, adding that Vietnamese enterprises’ exports to Eastern European countries remain very low.

Businesses should also target countries with which Việt Nam has signed free trade agreements, and update their production technologies and restructure business methods to tap those markets.  

To increase labour productivity and competitive capacity, they should also carry out digital transformation, which would improve business efficiency, Tuyển added.

Dr Phạm Sỹ Thành, director of the Chinese Economic Studies Program at Việt Nam Institute for Economic and Policy Research, said that Việt Nam should adjust its financial, monetary and foreign exchange policies to ensure that they react well to changes in the global economy.

Stable interest rates and the flexible adjustment of exchange rates are both important, Thành said.

Many Vietnamese enterprises lack sufficient information about the US-China trade war, he said.

“Associations play an important role in providing them with specific information and solutions for their problems. The associations also links them with the State organisations and research institutes that have deep understanding about the country’s macroeconomic policies,” Thành said.

These associations also can help them understand the legal implications of free trade agreements that Việt Nam has signed, he added.

The conference was organised by Sài Gòn Times in co-operation with Yuanta Securities Việt Nam Joint Stock Company.  VNS