Policies give preferences to FIEs, neglect domestic enterprises

Meanwhile, there is no fund to support foreign invested enterprises (FIEs), but they still can receive big preferences.

Inequality among businesses distorts economy

Nguyen Van Hung, CEO of CMC, a technology solution provider, complained to the Deputy Prime Minister Vuong Dinh Hue who met 100 young entrepreneurs in early June that the current business environment is uneven for enterprises from different economic sectors.

Hung said his firm employs 300 workers, but it has not received any support or preferences from the state since the establishment. While FIE factories in industrial zones (IZs) get many investment incentives in tax and land, Vietnamese private enterprises cannot receive any incentives.

Vietnamese private enterprises mostly have small scale of operation and limited resources, and do not receive support from the state and don’t know where to look for support. Therefore, they cannot grow and compete with FIEs.

Hung complained that his firm has lost many talents to the hands of foreign enterprises, which pays more to attract trained workers.

Le Phuoc Vu, president of Hoa Sen Group, also said that big investment incentives to foreign investors have led to inequality in the national economy. 

“FIEs, empowered by investment incentives, have great strength to compete with Vietnamese private enterprises and block them,” he said.

Sandeep Mahajan from the World Bank commented that Vietnam’s economy is running in accordance with the rules of the market economy, but the rules are not perfect. 

The resources such as capital and land are not allocated based on business efficiency, but are done on relationships. As a result, the allocation process lacks transparency and equality. 

Numerous funds, little support

According to the Ministry of Finance, there are about 40 state financial funds aiming to support enterprises. However, experts say it is very difficult to access support.

The majority of businesses asked about their opinion during surveys conducted by VCCI and other organizations, said they cannot receive any support.

“I wonder for what reason do the funds exist if they don’t support enterprises?” the director of a small mechanical engineering company in Hanoi asked.

Truong Gia Binh, CEO of FPT, the largest information technology group, warned that the fourth revolution in industry – the digital revolution - is taking place, and Vietnam would be left behind if the government cannot create a favorable environment for businesses to develop. 

And in order to do this, the most important thing Vietnam needs to do is set up a fair business environment for all.