More measures needed to help domestic enterprises improve competitive advantages

February 17, 2023 - 08:41
The attraction of foreign direct investment (FDI) capital into Hà Nội has contributed to the city’s economic development and social security. However, local enterprises find themselves grappling with intensified competition from foreign investors. Vice President and General Secretary of the Hà Nội Association of Small and Medium Enterprises (Hanoisme) Mạc Quốc Anh speaks with Chính phủ (The Government) online newspaper about the issue.

 

Vice President and General Secretary of the Hà Nội Association of Small and Medium Enterprises (Hanoisme) Mạc Quốc Anh. Photo chinhphu.vn

The attraction of foreign direct investment (FDI) capital into Hà Nội has contributed to the city’s economic development and social security. However, local enterprises find themselves grappling with intensified competition from foreign investors. Vice President and General Secretary of the Hà Nội Association of Small and Medium Enterprises (Hanoisme) Mạc Quốc Anh speaks with Chính phủ (The Government) online newspaper about the issue.

How do you evaluate the situation of attracting FDI investment in Hà Nội?

Hà Nội is always in the country's leading group in attracting FDI thanks to the open investment environment, stable politics, favourable infrastructure, and abundant and high-quality human resources.

The city’s growth is reflected in the fact that its total budget revenue has increased by 1.5 times compared to the same period in 2021, and the number of investors and the growth in capital of investors has increased by double digits.

Hà Nội's business environment now approaches modern economies in the region and the world. At least 70 per cent of administrative procedures have been upgraded to the highest level, allowing users to fill in and send application forms to the ward people’s committees entirely online. Paperless administrative procedures have been implemented using only technology, scan codes and barcodes. Information on planning, projects, licensing procedures, certificates, and support for investors in the procedures are all accelerated.

In addition, complicated procedures have been quickly resolved by State management agencies, people's committee offices, and departments in the city. This has saved time and reduced costs.

Hà Nội has improved its investment environment to continue attracting more foreign investors. However, domestic enterprises are facing great competition from foreign investors. What is your point of view on this issue?

The domestic market faces great competition from foreign investors because they have great financial, management and international trade potential. When brought into the Vietnamese market, foreign investment capital is often cheap or favourable because those countries often prioritise enterprises investing outside their territories and focusing on export activities to a third country.

Secondly, foreign enterprises always have more priority in a supply value chain. They always set up a system of enterprises from their home country in their supply chain. Therefore, it is tough for Vietnamese enterprises to bring their products and services into that supply chain.

Thirdly, their legality is also relatively tight and protective regarding bilateral and multilateral issues. When concluding trade and investment cooperation, they will have more priority. Thus, they have more competitive advantages.

What should domestic enterprises, especially small and medium enterprises, do to overcome these challenges?

Domestic businesses should take advantage of policies and guidelines of the Party, National Assembly and Government, as well as the action plans of ministries, branches, and localities, to develop their production.

They also should take advantage of tax and fee reduction policies, carry out customs clearance procedures and market access programmes, and actively participate in dialogue conferences to get support and solve difficulties.

Domestic businesses must take advantage of the domestic market of nearly 100 million people. This market should be fully exploited as it helps domestic enterprises reach regional and international markets. At the same time, promoting trade activities in the digital environment and developing commercial infrastructures is necessary.

Domestic enterprises must also make bold and drastic changes in the business process, personnel, financial transparency, and market work to promote cooperation with FDI enterprises.

In particular, perfecting products from coarseness and fineness in FDI cooperation must be a long process. Each product must be more refined, meeting the standards set by FDI enterprises.

Co-operation with FDI enterprises will elevate Vietnamese enterprises as we have access to core technology and international trade management process of FDI enterprises and expand the market internationally.

What measures should be taken to help domestic enterprises develop their production and business?

Under the current monetary and fiscal policies, there are tax reduction policies for enterprises. For example, last year’s VAT was reduced from 10 per cent to 8 per cent, and Corporate Income Tax was reduced from 25 per cent to 20-17 per cent.

The Ministry of Industry and Trade, the Ministry of Planning and Investment, departments, agencies and sectors should advise, support training and transfer consulting to help enterprises participate more deeply in the global supply chain.

At the same time, domestic enterprises need to ensure their goods, from input materials and production to the sale process will form a strong value chain. This will reduce the selling price and production value, and the competitive capacity will increase.

It is necessary to promote the domestic market and give priority to export markets for enterprises whose products and services are exported to international markets. – VNS

 

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