Vietnam: Worrying about small firms

A stallholder in Geylang Serai holding up two traditional Malay costumes which were made in Vietnam.
A stallholder in Geylang Serai holding up two traditional Malay costumes which were made in Vietnam.PHOTO: BERITA HARIAN FILE

HANOI • Small and medium-sized enterprises in Vietnam have paid little attention to the nearing formation of the Asean Economic Community (AEC).

Mr Le Thanh Hai, the deputy manager of the Vietnam Chamber of Commerce and Industry's Enterprise Development Foundation, said many enterprises were still little interested in the AEC.

Vietnam Retailers Association vice-chairman Pham Ninh Noan told a conference that domestic firms have not paid much attention to the AEC because their trade rotation inside the region accounted for only 20 per cent to 25 per cent of their turnover.

Vietnamese businesses have mainly depended on markets outside Asean, such as the United States, the European Union and Japan, he said.

Economist Pham Chi Lan believes that as many as 70 per cent of domestic SMEs are not involved in import-export, and thus do not feel the pressure of integration.

According to Mr Luong Hoang Thai, a director in the Ministry of Industry and Trade, while the AEC will create opportunities for robust enterprises, it will also put great pressure on the domestic business community, where up to 97 per cent of the 500,000 businesses are SMEs.

He warned that more fierce competition with imports, and stiffer competition in attracting investment against regional rivals might force some local enterprises and sectors to narrow production scales, and even quit the market.

This is a high risk for the competitiveness of Vietnam, and the country must improve the quality of its workforce and the level of production techniques for more effective integration.

VIET NAM NEWS/ASIA NEWS NETWORK

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A version of this article appeared in the print edition of The Straits Times on December 28, 2015, with the headline 'Worrying about small firms'. Print Edition | Subscribe