(MPI) - On July 24th, 2020, a Conference on supporting Vietnamese businesses to develop a sustainable value chain took place in Hanoi, co-chaired by the Minister of Planning and Investment Nguyen Chi Dzung and Director of the United States Agency for International Development (USAID) in Vietnam Michael Greene.
Attending the conference were representatives of ministries, line ministries, leaders of the People's Committees of provinces and cities and a number of departments and agencies of 30 provinces and centrally run cities in the North and Central regions;business support units and agencies, business associations, trade associations, leading enterprises and small and medium enterprises (SMEs).
The conference aims to support enterprises to restore production and business after the Covid-19 pandemic, helping enterprises, especially small and medium enterprises adapt to shifts of the global supply chain and create new and sustainable supply chains.The conference is one of a series of cooperation activities between the Ministry of Planning and Investment and USAID within the framework of the Project Promoting Reform and Enhancing Connectivity of SMEs (LinkSME).This is a very timely and practical action not only for the business community but also for the state management agencies themselves in enterprises support and economic recovery and development.
Grasping opportunities, creating momentum for business development and stimulating economic growth
Minister Nguyen Chi Dzung speaking at the Conference.Photo: MPI
Speaking at the conference, Minister Nguyen Chi Dzung said that, Vietnam has initially successfully controlled the Covid-19 pandemic, domestic production and business activities are gradually restored.The country is facing a new opportunity.The Ministry of Planning and Investment and USAID organized the Conference to promote inner resources and the creative spirit of the business community, resonate the strength, capture opportunities, create momentum for business development and stimulate business growth.
Vietnam has achieved remarkable results in FDI attraction and domestic private sector development over the past time, yet there are still some shortcomings, that are: the linkage of Vietnamese enterprises is still fragmentary and incohesive, especially little linkage between small and bigger-sized firms, between Vietnamese enterprises and FDI firms;The level of participation of Vietnamese enterprises in the global value chain is still very modest in both quantity and quality.
We also need to openly acknowledge the fact that the linkage and interaction with other areas of the economy are not tight, the spillover effect on productivity and technology is not high,and the localization rate stays low.Vietnamese enterprises’ level of participation in the global production networks and value chains of remains very limited, said Minister Nguyen Chi Dzung.
According to Minister Nguyen Chi Dzung, there are 02 main reasons.Firstly, FDI enterprises and large enterprises often have their own ecosystems available to follow and have a ready supply chain or develop a closed chain by themselves.Therefore, the opportunities for other Vietnamese enterprises to participate in the value chains led by these enterprises are very difficult.Second, due to the small size, most SMEs in Vietnam have low management skills, limited human resources in both quantity and quality, almost unable to accumulate and concentrate capital for investment, innovate technologies, expand production scale,improve productivity and product quality in order to meet the increasingly demanding requirements of large local and international customers.Sometimes businesses are hesitant and dare not accept risks to invest in upgrading their standards, therefore, unable to make breakthroughs.
Strengthening linkages between FDI enterprises and the local private sector
The weak and fragmentary linkages between business sectors not only affect the sustainable development of enterprises, but also reduce FDI efficiency.This is a problem that the Government is always concerned about, that is, how to attract and use effectively FDI capital and how to strengthen linkages between FDI enterprises and local private sector in order to stop the situation of two unrelated business sectors;at the same time, promoting the support of strong Vietnamese SMEs so that they can actively participate and move up in global value chains.
To do that, the support of ministries, line ministries, localities and associations is important and the orientation of the state is decisive besides the efforts of businesses.On June 17th, 2020, the Prime Minister established a Working Group to promote foreign investment cooperation under Decision No. 850/QD-TTg.In which, Deputy Prime Minister Pham Binh Minh is assigned to be the leader.The standing deputy leader is the Minister of Planning and Investment and the deputy leader isDeputy Minister of Planning and Investment.In addition, the 14th National Assembly has passed the Investment Law (amended) specifying policies for investment incentives, investment support, and adding industries and occupations with investment incentives to ensure selective and high-quality investment attraction for the purpose of economic efficiency.
Resolution No. 50-NQ/TW issued by the Politburo aims at improving the quality and efficiency of foreign investment cooperation, creating a spillover effect, connecting between Vietnamese businesses and the global production and supply chains.One of three main contents of the Law on SMEs Support is to support SMEs to further participate in domestic and international networks and value chains.
Close coordination and collaboration of stakeholders is needed
Minister Nguyen Chi Dzung said that in the coming time, the Ministry of Planning and Investment would act as the focal point, in coordination with ministries, line ministries, localities and business associations to continue promoting effective implementation of the Law on Support for SMEs, with a focus on the SME support program to participate in the value chain;and together with USAID - LinkSME Project to implement a plan to support digital transformation businesses, improve competitiveness, and participate more deeply in the global production networks and value chains.
This process requires a close coordination of all stakeholders: the role of the State, the Government, ministries, line ministries and localities in identifying strategic priorities, creating key policy frameworks, improving the business investment environment;the role of investors and enterprises in development of capacity building, seeking opportunities from new trends;the role of business associations, intermediaries, experts, institutes and schools in supporting and enhancing competitiveness, promoting links between enterprises, Minister Nguyen Chi Dzung emphasized.
The fourth industrial revolution has given opportunities to businesses in digital transformation, supporting businesses to "grow up" through improving production lines, technologies, human resources, productivity and quality and competitiveness to have better position to participate in the value chain.Implementing this process requires strong stakeholder cooperation in identifying strategic priorities such as improving the business investment environment, capacity building, and finding new opportunities, building up promotion capability.
Minister Nguyen Chi Dzung emphasized that the impact of the Covid-19 pandemic has created new awareness, new consumption trends,new business models, bringing about market opportunities to form new value chains and links.This is really an opportunity to help Vietnamese businesses recognize and re-examine their true capacity, resilience, ability to adapt to market events, and restructure their businesses in a more efficient and sustainable way.
In addition, countries in the world are now looking for ways to reduce dependence on a market, leading to a trend in which large FDI enterprises restructure their raw material supply system, selecting new investment locations that satisfy the conditions of efficiency,safetyand sustainability.New free trade agreements such as CPTPP, EVFTA, and so on, officially coming into effect will create great advantages for Vietnamese enterprises to participate in the global value chain, innovate equipment and technology at better costs to improve capacity and competitiveness.
However, the epidemic situation and the world economy are still going through very complicated developments, especially in the partner countries and important markets of Vietnam.Thus, there are still many potential risks and challenges ahead. Supply chain and value chain fracture that cannot be overcome immediately in the coming time, will continue to cause a great impact on businesses, especially SMEs.New free trade agreements offer opportunities but also come with many challenges.If businesses do not actively improve their competitiveness, they will lose at home.
Taking the once in a lifetime chance
Minister Nguyen Chi Dzung emphasized that Vietnamese enterprises needed to make full use of their creativity to seek new opportunities in a changing and supply-chain-shifting state like today, reaching out to the offshore market in order to acquire enterprises with advanced technology.All ministries, line ministries and local authorities need to take quick and strong actions to support enterprises to seize the one in a lifetime chance in order to restore and develop the value chain sustainably, create a breakthrough, and promote economic growth.
In the context that the domestic and international economies still hint many unpredictable changes, promoting the development of a sustainable value chain is considered one of the decisive pathways to recover the economy and create momentum for the private sector to make breakthroughs.At the same time, Minister Nguyen Chi Dzung suggested ministries, localities and business associations continue to work closely with the Ministry of Planning and Investment to effectively implement policies and solutions to support business development and create fair and favorable business investment environment for investors and enterprises of all economic sectors.
For the private sector, especially SMEs, they should continue to promote their creativity and flexibility in adapting to new circumstances, quickly take advantage of market opportunities,dare to accept risks, invest in upgrading themselves to be able to meet the requirements of partner businesses and participate more deeply in the domestic and international value chains.
Large corporations and enterprises need to strengthen inner resources, continuously innovate, promote their leading role, and give priority to creating opportunities for domestic SMEs to participate in their production networks and value chains.It is necessary to develop a strategy and a great vision with the aim of establishing a new position for Vietnamese brands in the domestic and foreign markets.
For FDI enterprises, it should be identified as an indispensable component of the Vietnamese economy.The Government has policies to encourage attraction but also requires FDI enterprises to build mutual relationship with other local enterprises with the motto of mutual growth and development,strengthening links with domestic businesses, transfering knowledge and technology to Vietnamese businesses to create an efficient and sustainable business ecosystem.
Promoting reforms and enhancing connectivity for SMEs
Mr. Michael Greene speaking at the Conference.Photo: MPI
Speaking at the Conference, USAID Director Michael Greene highly appreciated Vietnam's achievements in the prevention of the Covid-19 pandemic as well as the timely issuance of policies to support people and businesses.The Covid-19 pandemic has seriously affected the global economy. Many businesses, especially SMEs, are being negatively affected, facing difficulties in regaining their business momentum or maintaining operations.
Mr. Micheal Greene said that as a country with extensive integration, Vietnam was also affected by the Covid-19 pandemic; economic growth in the first 6 months of 2020 reached 1.81%; growth rate in 10 years stayed at the lowest. At the same time, USAID will always accompany, support and cooperate closely with the Government of Vietnam and the Ministry of Planning and Investment in the development of the private economic sector in general and SMEs in particular, contributing to the goal of becoming a high-middle-income country.
Through the project Promoting Reform and Enhancing the Connectivity of SMEs, USAID will continue to work closely with the Ministry of Planning and Investment to support other types of businesses in enhancing global supply chains,developing a plan to support SMEs for the period of 2021-2025, focusing on assisting Vietnamese enterprises to actively grasp new technologies and participate in the global value chain in a sustainable way.
In the framework of the conference, there was a session to discuss difficulties and challenges - opportunities, potentials for developing supply chains and value chains for Vietnamese enterprises;promoting SMEs to join value clusters and chains; preparing the SME support plan in the period 2021-2025.Representatives of suppliers and Vietnamese SMEs directly participated in the discussion sessions./.
Ministry of Planning and Investment