Brian Jeffrey
Editorial Insight
October 13, 2024, marks two decades since Vietnamese Entrepreneurs Day was established. Throughout these years, the private sector has evolved into a dynamic contributor to the country’s economic growth.
Once viewed as opportunists, entrepreneurs now have a dedicated day to acknowledge their impact, similar to various other professions. Many start from scratch and ascend to become business leaders, thereby fostering wealth and job opportunities in their communities. Nonetheless, the entrepreneurial energy has diminished recently due to COVID-19 lockdowns and a pervasive fear of bureaucratic repercussions.
It’s crucial to reignite the entrepreneurial passion, promote the pursuit of prosperity, and dismantle the fear culture. Vietnamese entrepreneurs have exhibited remarkable adaptability and resolve, establishing their essential role in the economic landscape.
They are instrumental in achieving the nation’s vision for prosperity by 2045.
To commemorate this day, VietNamNet is releasing a series of articles to inspire entrepreneurship while tackling existing challenges, aiming for a vibrant “Era of National Ascendancy.”
VietNamNet presents the concluding segment of a discussion with Tran Si Chuong, an established economic expert, reflecting on the entrepreneurial culture in Vietnam.
Vietnam is in an unprecedentedly favorable situation. The pressing question is how we can capitalize on it. Opportunities are fleeting and may be lost if not seized promptly. I am optimistic that Vietnam can harness these chances effectively over the next three years; otherwise, these opportunities may gradually disappear.
Can we unite to fortify our internal capabilities and seize this historic moment, which may not present itself again? How can local businesses gain the trust required to cultivate a globally recognized culture of integrity? When trust is established, it leads to the creation of “social capital,” which could empower the nation to thrive. Vietnam then has the potential to emerge as a stable and prosperous nation.
At that stage, we can aspire to fulfill the vision of a wealthy and influential Vietnam.
In 1965, Singapore emerged from a state of chaos, divided by ethnic and religious lines. Thanks to visionary leadership like Lee Kuan Yew’s, the nation has transformed significantly.
Lee Kuan Yew once stated, “Entrepreneurs are the backbone of the nation. The only expectation from you is: ‘Say what you mean and do what you say.’”
This perspective laid the groundwork for national culture, overseeing governance, cultivating trust, and developing social capital. It molded the mindset across Singapore’s public and private sectors, creating an environment where entrepreneurs are trusted and integral to nation-building.
Conversely, social trust remains low in Vietnam. Local entrepreneurs often struggle to trust one another and have yet to establish a disciplined and trustworthy governance system.
Therefore, it’s essential for entrepreneurs to be transparent with their partners, employees, and local communities. Social trust can only flourish when all parties adhere to this standard.
People’s behavior is heavily influenced by the environments they inhabit. As the saying goes, “In a round container, you are round; in a long container, you are long.” Another adage states, “The system shapes the enterprise.” The State plays an essential role in providing a predictable environment for businesses. For example, businesses should have clarity on how long it will take to process a permit application. Nonetheless, private enterprises are hesitant to invest or commit to opportunities due to systemic uncertainties.
Nearly three decades ago, I reported to the World Bank about challenges facing private enterprises, many of which persist today, according to VCCI.
Why have these issues lingered for so long? The administrative processes remain convoluted and sluggish, with many avoiding decision-making. Recently, Ho Chi Minh City had to send over 600 documents to central ministries seeking clarification on regulations. What chance do local businesses have in such an environment?
In the current global economic climate, growth is stalling, exports are challenging, and market shrinkage is evident, leading to reduced business profits and reluctance to borrow from financial institutions. Even when profits hit 15%, high interest rates can diminish those gains.
Vietnamese businesses should explore collaborations with foreign enterprises (FDI) to secure capital at more favorable interest rates. For instance, engaging with Japanese firms may enable access to loans at 3-4% interest. This strategy not only yields financial benefits but also enhances management practices and introduces new technologies.
With a robust and feasible project, businesses can also obtain long-term loans with competitive rates from international bodies such as the IFC.
Vietnam’s per capita GDP has attained approximately $4,300 over nearly 40 years of reforms. During this period, countries like Japan, South Korea, and Singapore have surged ahead with significantly higher GDPs…
Achieving over 10% growth could elevate our status. For instance, Singapore, founded in 1965, made remarkable gains by 1985, and Japan and South Korea experienced rapid advances in the mid-20th century. All of these nations rebuilt remarkably after conflict.
Can we elevate our status? Can we navigate beyond the middle-income trap? My concern lies with our aging population.
For an airplane to take off, it requires sufficient acceleration on the runway. Without enough speed, it may crash.
A study we conducted illustrated that a nation must experience 10% growth in the initial decade to take off successfully.
Looking at the five Asian Tigers, including China, they all achieved over 10% growth during their first 10-15 years. Economic takeoff resembles an airplane – it cannot merely roll slowly before lifting off. Adequate acceleration is necessary for a successful takeoff; failure leads to the “crash” of the middle-income trap.
During our early efforts, we realized 8-9% growth. However, this momentum waned, resulting in a stall and preventing takeoff.
We must assess what factors are hindering us from achieving rapid growth. Are we equipped for this challenge?
This necessitates a reevaluation of our strategy. It’s unrealistic to expect every individual to become an elite athlete. With limited resources, equitable growth should be our focus. It isn’t essential to reach a per capita GDP of $40,000 if it compromises our environment or social trust. Wouldn’t it be preferable to attain $10,000 per capita while ensuring robust healthcare, education, and environmental health? That is what genuinely matters.
When discussing a market economy, resources must flow naturally to sectors and individuals where they are most effectively utilized. Administrative interference leads to inefficiencies and waste of resources.
* Mr. Tran Si Chuong is a strategic development and corporate governance consultant and a Senior Partner at 3 Horizons, a UK-based consulting firm. He has formerly served as an economic and banking advisor for the U.S. Congressional Banking Committee. Since 1995, he has collaborated regularly with Vietnam and various regional countries, advising international financial institutions and domestic and foreign companies on macroeconomics, governance, and business development strategies.
