Businesses’ fear of failure stifles startup culture

The government in 2014-2015 gradually restored business confidence, helping reduce the ‘fear-of-failure’ index to 45.6% in 2015. 

However, according to Global Entrepreneurship Monitor (GEM), the index has always been high. It was 56.7% in 2013, the second highest level among 70 surveyed economies.

The government’s efforts helped Vietnam rise to the eighth position among 60 surveyed economies in 2015.

Vietnam’s business environment index in 2017 went up nine notches, from 91st to 82nd, with Vietnam among the economies with the most considerable improvement, just after Brunei (+25 grades) and Indonesia (+15 grades), according to the World Bank. 

“Embezzlement, copyright abuse and lengthy administrative procedures, however, are the three biggest problems,” Nguyen Mai, chair of VAFIEs (the Vietnam Association of Foreign Invested Enterprises), said.

The total FDI (foreign direct investment) registered capital in Vietnam in the first six months of the year increased by 54.8% compared with the same period last year, according to an MPI report. 

However, analysts noted the absence of strong investments from American and European investors.

Western investors are cautious when making investments, especially in developing countries like Vietnam. A delegation of representatives from 29 US leading conglomerates came to Vietnam last March, just to learn about the government of Vietnam’s reform of investment environment and make proposals on amending current policies.

The US has never been the No 1 foreign direct investor in Vietnam. It ranks seventh among the biggest foreign investors in the country.

The fear of failure has negative impact on Vietnam’s business startup index, which, according to the World Bank, has fallen by 10 grades.

Luong Minh Huan from the Enterprise Development Institute believes that the fear of failure is the reason why many people still have not started their business though they can see opportunities.

At least 56.8% of polled people in 2015 said they had sufficient knowledge and experience to start a business. The figure was lower than the 58.2% in 2014, though higher than 48.7% of 2013.

A survey conducted by Huan’s institute found that more than 1/3 of Vietnamese start businesses because they don’t have a better opportunity for jobs.

Vietnam had 110,000 businesses by 2016.  Analysts believe that the goal of having 1 million businesses by 2020 will be a difficult task because of the fear of failure.