UN: Viet Nam’s largest firms play key role in economy but need help with skills and markets to remain competitive

Oct 1, 2007

HA NOI - UN Development Programme research into Viet Nam’s 200 largest firms reveals Vietnamese companies are dynamic and ambitious but need more help from government to access export markets, acquire new technologies and train workers.

“Large firms have played important roles in the development of newly industrialised countries like Japan, South Korea and Thailand,” said UNDP Country Director Setsuko Yamazaki. “As this study shows, this is no less true in Viet Nam. Big companies have a major impact on the economy and can pioneer the development of technologies, products, and increase the need for infrastructure, capital and a skilled workforce. But they will need support to compete as the economy opens up.”

Research began on “Top 200: Industrial Strategies of Viet Nam’s Largest Firms” last year. Using data from the General Statistics Office Enterprise Survey, the top 200 companies (state, private, foreign) in the country were identified based on labour, assets, turnover and tax. This included joint ventures, but not 100% owned foreign owned firms. From there, the research team of Scott Cheshier, Jago Penrose and Nguyen Thi Thanh Nga visited and interviewed the senior management of 86 of the country’s largest companies to hear directly from Viet Nam’s large firms about where they come from, the growth strategies they have adopted and the constraints that they face.

“What we found in the firms we interviewed was three broad strategies to adapt to increasing competition, namely, upgrading core business activities; expanding export markets; and diversifying into new business areas, frequently real estate, tourism and investments in the emerging capital markets,”  said Penrose at the Report’s launch. “Yet the success of these strategies is dependent on access to technology, a skilled workforce and in the case of new business areas, volatile, speculative investments.”

Though Vietnamese labour was seen as highly trainable and hard-working, many firms were dissatisfied with the education and training received from Vietnamese educational and training institutions. This has serious consequences for companies forced to bear the cost of training for employees who often leave, taking their skills and the company’s investment with them.

A separate list of Vietnamese-owned firms was complied for a Domestic Top 200 list, made primarily of state owned enterprises. These firms account for nearly 30 per cent of workers employed by state firms in the Enterprise Survey. The domestic private sector is not well represented in either Top 200 list.

Large foreign companies dominate manufacturing and are particularly important in terms of employment. Of the Top 200 manufacturing firms, foreign companies account for nearly one-half of the firms, almost two-thirds of employment, over half of assets, nearly 60 per cent of turnover and 45 per cent of taxes paid.

“In global terms Viet Nam’s largest firms are closer to small and medium sized enterprises,” said UNDP Country Economist Jonathan Pincus. “But they have an enormous influence on the development of the Vietnamese economy. What this research shows is that Viet Nam’s companies are responding to increased competition and diversifying into high quality products in complex new markets. To do this, they need more support from Viet Nam in education and training. The Government should also structure incentives so that large firms do not depend too heavily on speculative investments to meet profit targets.”

For the full text of “Top 200: Industrial Strategies of Viet Nam’s Largest Firms” please visit: http://www.undp.org.vn

Contact information

Ms. Nguyen Viet Lan, UN Communications
Tel: (84 4) 822 4383 ext. 121 

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