Section IV: Businesses hope this year will have no more sudden shocks

Many people thought "the worst was over" after Covid, but its aftermath and subsequent global geopolitical turmoil left business owners even more exhausted, according to the Director of the Office of Board IV.

The Private Economic Development Research Board (Board IV) has just reported to the Prime Minister on the business situation. This survey was conducted by Board IV and VnExpress in December 2023, with the participation of more than 2,700 business representatives. Director of the Office of Board IV Pham Thi Ngoc Thuy, the main person in charge of the report, assessed that the results of this survey showed that business confidence has returned but "there are still many difficulties".

Ms. Pham Thi Ngoc Thuy, Director of Office IV. Photo: Provided by the character — Ms. Pham Thi Ngoc Thuy, Director of Office IV. Photo: *Provided by the character*

- If you had to name the difficulties businesses face in 2023, what would you say?

- Businesses are exhausted, that's the truth, especially after two years of Covid-19 and two years of facing global instability, although the difficulties for businesses are not actually new. They are difficulties with orders, access to capital, administrative procedures, the risk of criminalization...

Businesses are very concerned about risks at home and abroad. Outside, there are challenges and trends that no one can predict. War is only a part, but deeper than that is the trend of division instead of globalization as before. There are even times when sitting together to dissect the estimated defense budgets in major countries, businesses themselves see that the developments of the war are still very complicated, directly affecting the global trade chain. For example, tensions in the Red Sea are causing transportation costs to escalate. The recovery of major countries not as expected also affects Vietnam because we are an open economy.

Meanwhile, in the country, some businesses said they felt that they were not in the priority support of many agencies and local enforcement levels, even though they knew that businesses were always mentioned at the executive management levels. They said that many parties supported in a formal, mechanical way, with the mindset of protecting themselves in the context of many cases being brought to trial. This is shown in the report through the high number of negative assessments of local behavior.

- What are the concerns of each specific business group?

- Regarding agriculture , if only looking at the data, 2023 has many bright spots with continuous growth in markets and orders. Never before has agricultural export been so brilliant and had so many records. But behind that, businesses do not have good capital accumulation. In the stages where they need to raise money to buy and consume goods, their financial pressure is very large while the general context in 2023 is that the financial situation is eroded, accessing credit is not simple. When domestic businesses cannot consume in time, it will create opportunities for FDI groups with strong capital flows to purchase.

Enterprises are also under pressure when the market demands a change in quality. For the production group, the problem of improving quality is for each enterprise, but for agriculture, it is the story of the entire ecosystem with many subjects and different thinking on the same level. Therefore, this group is still facing many uncertainties.

In the manufacturing business group, their room to use cheap capital is decreasing terribly while quality requirements are getting tighter. It is not just a matter of digital transformation, they are now facing huge pressure to transform green as they are a high-emission industry. International buyers have recently continuously sent out messages and requirements on green production and procurement, otherwise they will lose market share. Change for businesses at this time is not very optimistic when financial resources are limited and the workforce is not prepared in time.

- As a companion of the activities of associations and businesses, what impressed you about how they overcame 2023?

- Every 6 months, Board IV conducts periodic surveys to report information on the practical activities of enterprises to the Prime Minister, along with sending policy advice to the Prime Minister. The results this time show relatively positive points compared to April. The difficult period for enterprises is continuing, but confidence has returned. For example, the rate of "positive" and "very positive" assessments of the macro economy is 2.7 times higher than before. Other indexes and indicators such as prospects for access to capital, markets, and effectiveness of local government support all have higher scores.

Basically, they returned to the circuit to focus on production and business. In mid-2023, the mood of business owners declined a lot, distracted by the economic disruptions and global crises. The shock at that time was relatively sudden for them because most thought that after Covid, the most difficult times were over.

Enterprises then also focused on restructuring to optimize operations. They also focused on finding new markets - something that had never been discussed so much. Previously, many enterprises were hesitant because it took a lot of time to find new partners, while the old market was still stable.

A series of substantial promotions were opened with partners from new markets such as India, Canada, the Arab bloc, and the Middle East. Many businesses have thus compensated for the shortage caused by the decrease in orders in traditional markets.

Nguyen Quoc Khanh, Chairman of AA Corporation, told us that Cambodia is a "rescue market" because thanks to that, the company's revenue last year was not less than in 2022. This country has no fluctuations in the real estate industry, so their demand and purchasing power for furniture and wooden products are very stable.

Another point is that businesses are also more active in green transformation. If at the beginning of 2023 they were still very confused, not knowing what to do, by the end of the year, some had improved their awareness, understanding, and even started doing it. Some of them also benefited to a certain extent.

For example, in the context of the difficult growth of the textile and garment industry, Ho Guom Garment Joint Stock Company, after achieving the international sustainable green certificate, has taken advantage to maintain and expand exports in a number of demanding, high-standard markets.

Mr. Dinh Hong Ky's Secoin also focuses on developing sustainable construction material product lines, so it has a very solid position and expands its customer network following the green shopping trend.

In general, throughout 2023, what I think about and admire the business owners is the spirit of perseverance and overcoming difficulties. Even in the most difficult times, although they wavered, even lost confidence, they still told each other "must keep the business, keep the workers, no matter how difficult, there will be a way if you stay calm and united". That spirit has been gradually strengthened and helped many businesses break through at the end of the year, shown through macro indexes or each industry. This is also a great internal force to help businesses master the situation in 2024 because no matter how difficult it is, it will probably not be more than the past 3 years.

- If so, is 2023 the bottom of the business?

- Looking at the macro numbers, we hope that 2023 will be the bottom of the difficulties. However, international and domestic experts also believe that 2024 will have many complicated and unpredictable developments, so we cannot be subjective. I think we still have to maintain the spirit of self-rescue, find a way to live, and no matter what, we have to smile to keep fighting.

- How do you evaluate the Government's solutions over the past year?

- Through the process of working with businesses and through the recent survey, we see that the community highly appreciates the direction and management of the Government when it is resolute and closely follows the developments of the economy. GDP growth or the speed of public investment disbursement all show that. We ourselves have also attended many meetings of the Prime Minister and Government leaders to urge and remove difficulties for businesses and the economy, so we have the same feeling.

The assessment of businesses in this survey is better than the first one (in March 2023) in all indicators, which continues to confirm this. In particular, many notes related to policies whose support can be put into practice immediately, without having to go through approval processes and procedures such as extending VAT and corporate income tax payment deadlines, and reducing VAT by 2% for some goods and services.

However, it should be noted that the survey results still show that businesses do not appreciate policies that force them to go through many approval procedures, and may even have to go through a request-grant mechanism (such as VAT refunds and preferential interest rate support of 2%).

They also gave quite negative assessments of the implementation of support policies between businesses and local authorities.

- To continue supporting businesses this year, what should the Government pay attention to?

- Overall, I think 2024 is still the year the Government needs to maintain strong and timely support for businesses because they are really being eroded. If not nurtured, their strength will be exhausted. But this support must spread from the Government to ministries, branches, and grassroots levels. We must have an active government, a creative government, not just the government. In addition, we believe that the more policies minimize processes and procedures, the more effective they are.

At the same time, as Vietnam's role is constantly being strengthened in the international arena, this is the "golden time" for reform, thoroughly solving the internal problems of the economy as well as the development model to create new development drivers. It is time to transform the economic development model, from one based on resource and resource intensiveness to one based on efficiency and creativity with green and digital trends. Vietnam has the position and strength to take advantage of opportunities, developing the economy based on innovation and technology.

Regarding solution orientation, I think we still need to "relax the people", including creating cash flow; reducing and extending taxes and fees, developing national enterprises, and taking advantage of opportunities from the country's new position.

Phuong Anh

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