Creating motivation for businesses before difficulties

Enterprises need to restructure both in terms of strategy, organization, operation, finance and corporate governance in order to improve competitiveness, growth in assets, and financial transparency. Photo: H.Diu

Uncertainty

As an enterprise in the field of manufacturing and exporting construction materials, Dinh Hoai Giang, General Director of Secoin Building Materials Joint Stock Company said Japan is the export market of enterprises from from 1999 to present, but now many orders are suddenly stopped.

According to Giang, inflation has caused a serious market demand drop. Not only Japan, many other orders for other Secoin products to America or Europe also decreased.

Previously, leather, footwear and textile enterprises also "lamented" when orders fell, along with pressure on increased input costs, supply chain disruptions, and lack of capital for production activities. Therefore, many businesses have had to cut workers, temporarily suspend a part of production lines, and even have to close down.

Commenting on this, Dr. Nguyen Quoc Viet, Deputy Director of the Institute for Economic and Policy Research, said that at present, external uncertainties are causing general difficulties for the Vietnamese economy, and at the same time have had impacts on macro operating policy and the business environment. According to data from the General Statistics Office, in the first 10 months of 2022, the number of enterprises withdrawing from the market increased by 25.8% over the same period in 2021. Most of them are businesses that choose to suspend in the short term.

However, the good news is that Vietnamese enterprises still do not falter, still looking for all measures to overcome difficulties, maintain production and business activities, seek new orders and expand markets.

But entering 2023, many forecasters said that the instability would persist. Specifically, the price of input materials has increased, and logistics and shipping costs are still high. Along with that, the import policies of some countries have changed when the requirements for quality standards of the countries are increasing and difficult to predict. In particular, high inflation in many countries makes people tend to tighten their spending. Therefore, businesses need fundamental and long-term solutions for sustainable development goals.

Maintain initiative

Analyzing 21 financial indicators of enterprises in the two years 2021-2022 of 26 industries with enterprises participating in Vietnam's stock market, Assoc. Prof. Dr. Nguyen Manh Quan, Director of the Institute of Business Research and Development (INBUS), Hanoi University of Business and Technology, said that 18 out of 26 industries (accounting for 69%) had a share price increase of more than 10,000 VND/share; many industries have good improvement in governance capacity.

Therefore, he said, Vietnam's economic picture in recent years still has many positive signs. That means the ability of Vietnamese enterprises to cope with difficulties caused by natural disasters is quite good. It is also a driving force for the economy to continue to grow.

Therefore, in order to create a breakthrough in development, Assoc. Professor Nguyen Manh Quan said that it is necessary to have a breakthrough in thinking, and a different vision than the traditional approach. Along with that, it is necessary to expand and increase access to the world economy faster and easier.

Also analyzing the development of enterprises in the economy, Le Duy Binh, Managing Director of Economica Vietnam, said that the period of relying on capital growth to increase productivity has passed, and the private sector needs to look for other drivers to contribute to the increase in output and growth such as technology and human resources.

Moreover, according to Binh, the question we must answer in 2023 is how to bring the meager capital to create added value for the economy.

"What measures should be taken so that small and micro enterprises can access capital in the face of pressure and overwhelm large enterprises and corporations," said Le Duy Binh.

Also according to Dr. Nguyen Quoc Viet, reform measures are necessary when there are difficulties and uncertainties that need to be faced. However, these policies should not have sudden interventions, especially non-market interventions should rely on international practices, trade agreements and investment agreements signed by Vietnam.

In addition, according to experts, in order to partially overcome difficulties for businesses, especially to reduce the passivity of market signals, Ministries need to periodically provide updates on fluctuations and trends in major import and export markets, along with assessments of opportunities and challenges so that businesses can have appropriate adaptation plans.

But at the same time, enterprises themselves also need to maintain the spirit of starting a business, promoting the spirit of autonomy and self-reliance alongside the support of the State to maintain the initiative in the face of "turbulence".