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19 October 2009

Vietnam: Restructuring necessary as opportunities unfold

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The Vietnamese economy as well as companies should be restructured to grab the opportunities that could be thrown up by the global economic recovery in the next several months, quoted experts as telling a recent conference in Ho Chi Minh City.

Speaking at the "Increasing competitive ability for enterprises" conference organised by the Vietnam Economic Times, Tran Du Lich, deputy head of the city’s National Assembly delegation, said: "The global financial crisis has helped Vietnam realise its disadvantages: the low competitiveness of its economic structure and poor management of State administration."

If it learns from the crisis, the country would recover and achieve sustainable growth rather than experience the bubbles of the past, he pointed out.

"Competition happens at three levels: national, business, and products. And if Vietnam can’t improve its national competitiveness, it will be hard for its enterprises to succeed on the international market," he added.

Truong Dinh Tuyen, member of the National Monetary Policy Consulting Council, said: "Competitiveness is to know how to create the most suitable products for a company’s targeted customers."

Businesses should choose targeted customers, study what they need, find out what their competitors do, create different products, and set up distribution networks and a good marketing campaign, he said.

He advised them to "develop the local market and focus on rural areas where two thirds of Vietnam’s population live, offering a potentially huge market."

Lich agreed, saying international experience shows that an economy focused on its local market would recover faster than one focused on export. Tuyen said consumer spending in Vietnam this year is still higher than last year’s. Retail spending has topped $60 billion.

"However, many Vietnamese goods can sell in foreign markets but not at home," he added. While waiting for the Government to effect reforms, both Tuyen and Lich said enterprises should restructure themselves first, cutting all unnecessary expenditure and expanding capacity.

"Updating technology, fostering staff skills, and applying modern management will help a company develop," he said.

He also reminded participants about one major weakness of local businesses: poor co-operation.

"Co-operation won’t eliminate competition. It supports competition," he said.

Lich said: "We have suggested the Government provide money to help enterprises renovate their organisation to improve their competitiveness. We hope the funds will come soon."

Tran Phuong Lan of the Ministry of Industry and Trade’s Competition Management Bureau said a recent survey by the ministry found that nearly half of all enterprises knew Vietnam has a competition law but 99 per cent did not know how to get protection under the law.

"Vietnamese enterprises have suffered losses due to competition lawsuits by foreign companies but still don’t care about protecting themselves," she said.


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