Firms blamed for choosing personal relationships over improved efficiency

Vietnamese enterprises tend to pay too much attention to developing personal relations instead of their technology and administration, leading to poor results, experts said.

Experts said Vietnamese enterprises still lack management skills

Vu Tien Loc, Chairman of the Vietnam Chamber of Commerce and Industry (VCCI) said at a press conference to introduce the Consortium of Vietnam Business Forum (VBF) 2012 that business environment in the country had yet to encourage enterprises to enhance their competitiveness.

He said that most enterprises spent too much time on developing relations rather than focusing on improving their technology and administration. This resulted in a large number of local companies filing for bankruptcy despite foreign-invested companies being able to develop despite the economic difficulties.

Alain Cany, Co-chairman of VBF Consortium, said after nearly 30 years of renewal, Vietnam was regarded as a country that had great development potential but it still lacked skills to manage enterprises.

Even though the country’s productivity had remarkably improved, its enterprise management capacity was well below par, he emphasised.

According to Cany, Vietnam’s business environment remained unstable due to capital shortages and a heavy dependence on banks.

Vietnamese businesses get bank loans by guaranteeing their assets while banks seem not to pay enough attention to their business capacity to make a profit prior to providing the loan. When opportunities to access low-interest loans become narrower, Vietnamese enterprises should improve their management capacity, along with making better preparations for the worst case in case of bank bankruptcy, he recommended.

“One reason why FDI firms operate more effectively than Vietnamese ones is that they borrow less, have good management capacity and well-developed recruitment policies,” Cany noted.

Vu Tien Loc said that even though the country has seen a considerable decrease in inflation and the trade deficit, enterprises are still facing a lot of unexpected difficulties. FDI firms have better competitiveness amid economic difficulties due to their more competent management.

Vietnamese small-and-medium sized enterprises (SMEs) seem to have better management capacity than larger ones, Loc assessed.

Long-term tight monetary policies may drive firms to bankruptcy

Concerning the upcoming Vietnam Business Forum scheduled for December 2, Cany said that partners will share a dialogue with the government and make suitable recommendations to deal with banking crisis and support SMEs.

He said that Vietnam has applied tight monetary policies for a period and has achieved positive results. However, he said that such policies should not be maintained for a long time as it could result in more enterprises filing for bankruptcy in the time to come.

Loc said that recommendations would focus on three major issues, maintaining macroeconomic stability, saving and supporting enterprises and enhancing corporate management competency.

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renewal: /rinjuơl/: make st newer after a pause or an interruption

below par: less well, good…than is usual or expected

unstable: not fixed

recommend: to tell s.o that sth is good or useful, or that sb would be suitable for particular job

recruitment: finding new people to join a company

trade deficit: the amount which money spent or owed is greater than money earned in a particular period of time

amid: in the middle or during sth

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