Businesses resilient but grow too slowly

After every 10 years, the country’s GDP growth speed has reduced 1% compared to the previous period, said Thien, former head of the Vietnam Institute of Economics, at the "Raising strength, clearing resources and helping businesses" conference. The event was part of the Vietnam Socio-Economic Forum 2023 on Tuesday.

The economist told the conference that one major cause of business sluggishness was that Vietnamese businesses have to pay interest rates two or three times higher than other countries.

Another reason was firms’ limited access to bank loans, he said.

Thien noted that by the end of August, credit growth was only 5.5%, less than half of this year’s goal (14%).

On the matter of slow growth, director of the legal department of the Vietnam Confederation of Commerce and Industry Dau Anh Tuan said low quality infrastructure in Vietnam is still not able to meet the demands of economic growth.

Moreover, he said high production costs have lowered competitiveness. This was demonstrated through 15,600 firms ceasing operations in the year’s first eight months.

The registered capital of new and re-opening companies also reduced by 20% over the period compared to 2022. Tuan said this reflected a trend of newly established firms choosing to start out small.

Thien agreed: "The private sector is an important driver, but it is currently weakened. It is a great concern."

Le Hong Thuy Tien, CEO of United Pacific Corp, also voiced his opinion that the government needs to support businesses more.

"Firms are in need of breakthrough policies to increase internal strength and see leaping growth," she said.

Economist Tran Du Lich said there needs to be a secure trading and legal environment so governing bodies and businesses can operate harmoniously.

To Trung Thanh of the National Economics University suggested authorities reduce the number of administrative procedures that are complicating business in Vietnam.