Vietnamese firms need improvement in corporate governance - VCCI

Increasingly more domestic companies have been entering the Vietnamese market over the past decade, but they need to improve management capacity in order to raise competitiveness and better respond to business environment changes, the Vietnam Chamber of Commerce and Industry (VCCI) said.

More than 800,000 companies registered in Vietnam in the 2007-2016 period, bringing the total number to over 1 million enterprises. Last year alone, the number of newly registered firms rose beyond 100,000 for the first time, according to the Vietnam Business Annual Report 2016/17 compiled by VCCI and the State Securities Commission and released Friday. 

“The number of newly established enterprises has increased sharply in the past two years, breaking the upward trend in the 2011-2014 period,” said Pham Thi Thu Hang, VCCI’s general secretary.

But the annual report, focusing on corporate governance, suggested more is needed to be done to improve business performance.

"Many business leaders still considered corporate governance a puzzle," said VCCI Vice President Doan Duy Khuong.

Improper management practices and a lack of effective corporate governance are hindering Vietnamese firms’ competitiveness, making them "slow" to respond to changes in business environment, Khuong added. Improving corporate governance is a must for Vietnamese enterprises to bridge the gap and catch up with other countries in the region.

Officials have recommended several administrative tools for improvement, including following developed countries' model for board of directors, applying international accounting standards and enhancing the role of business associations.

The government should offer solutions on corporate governance to support small and medium-sized enterprises and help them improve competitiveness, VCCI's Hang added.