Businesses' confidence has returned, how to sustain it?

Survey reports show a gradual return of business confidence.

Many positive indicators

Information regarding the resurgence of business confidence was reported to the Prime Minister by the Private Economic Development Research Board (Board IV under the Prime Minister's Administrative Reform Advisory Council), based on a survey conducted in collaboration with VnExpress.

The survey conducted by Council IV revealed an optimistic outlook for businesses compared to the April 2023 survey. The proportion of businesses with positive/very positive evaluations of the macroeconomic situation was 2.7 times higher than the April survey. Positive evaluations of the industry's economic situation were 2.5 times higher, positive outlooks for the macroeconomic prospects in the next 12 months were nearly three times higher, businesses planning significant scale expansions were twice as high, and those planning moderate expansions were 2.5 times higher.

Other indicators related to access to capital, market prospects, and assessments of the effectiveness of local government support were higher than those surveyed in April.

However, according to Board IV, the economic situation and prospects from the perspective of businesses still face many difficulties and challenges. Among the 2,734 businesses surveyed, 82.4% had a negative/very negative assessment of the economic situation in the last six months of 2023, and 69.1% had a negative/very negative outlook for the economic prospects in 2024.

Regarding internal strength and business expectations, 72.8% of businesses planned to reduce scale, temporarily suspend or cease operations in 2024. Among the businesses planning to operate in 2024, 58.9% could reduce the labor scale by over 5%, with 16.6% reducing by over 50%. Furthermore, 60.2% of businesses expected a decrease in revenue, with 17.3% expecting a reduction of over 50%.

Given the practical demands in 2024 with many variables, Board IV suggested that, in addition to resolute guidance from the Government, ministries, and local authorities need to make greater efforts, especially in supporting businesses in overcoming five main difficulties: order-related issues; cash flow issues; administrative procedure compliance and legal regulation compliance; the risk of criminalizing economic transactions; and access to loans.

“Golden time” of reform

Considering the current situation, Board IV believed that as the world faced numerous uncertainties, Vietnam's role was continuously strengthened internationally. This is a "golden opportunity" for comprehensive reforms, addressing internal issues in the economy and the development model to create new development drivers.

The economic development model, relying on the exploitation of resources and resources, is now the time to transition to an economy based on efficiency and innovation, with green and digital trends. Vietnam has the potential and capability to seize opportunities and develop an economy based on innovation and technology.

Therefore, Board IV proposed that the Government and the Prime Minister continued to promote public investment to improve the quality of the country's key infrastructure and connecting infrastructure to create long-term competitive capacity. The focus should be on developing high-tech human resources, especially for the semiconductor ecosystem and modern green and digital technology trends, to take advantage of opportunities arising from the global shift in supply chains, production chains, and value chains.

Additionally, building a disciplined administrative system that serves efficiently, with an emphasis on mechanisms for selecting and using human resources, establishing substantive support policies for private economic regions, and promoting the development of ethnic minority-led businesses are crucial. This is an essential driving force for Vietnam to escape the middle-income trap and achieve the goal of becoming a high-income country by 2045, particularly by transitioning the economy towards green and circular development in harmony with the sustainable development trends of the world.