Under the direction of Prime Minister Nguyen Xuan Phuc, the restructure and equitization process of state-owned enterprises (SOEs) are actively conducted and show positive signs, thereby, contributing to the status of Vietnam as an attractive destination for foreign investors.
TheLEADER had a brief interview with Shosuke Mori - Senior Managing Executive Officer/ Deputy Head of International Banking Unit, Sumimoto Mitsui Banking Corporation (SMBC) on this issue.
Why has Vietnam become more and more attractive for foreign investors in general and for Japanese enterprises in particurlar?
Shosuke Mori: According to a survey of Japanese corporates conducted by JETRO last year, Vietnam is ranked third after China and Thailand as a country where they’d like to expand their business in the future.
Vietnam’s attractiveness for Japanese corporates are centered on 6 key factors, namely, demographic advantage, abundant labour force, geographic advantage, open and favourable business environment for foreign companies, cultural similarity between Vietnam and Japan, and a stable political and economic environment.
Along with the transformation of the economic structure, trade dynamics have also evolved dramatically. The trade surplus of Vietnam indicates that this country has become an essential part of the global supply chain. The amount of trade with Japan has increased more than 10 times over the last two decades, reaching about US$30 billion in 2016.
Besides, the SOE sector accounts for about 30% of GDP in Vietnam, and is linked to many industries. The number of SOEs in which the government has more than 50% ownership decreased from 4,000 to 2,800 over the past 10 years due to the government's efforts. Those are the growth engines attracting foreign investors.
What is your opinion on the ongoing restructure of State-owned enterprises (SOEs) of Vietnam?
Shosuke Mori: I think the SOEs reform is very important and will be the key in driving the evolution of the Vietnam economy.
SOEs are key drivers of Vietnam’s economic growth, and with these reforms, I believe they can help transform Vietnam’s domestic industries. We look forward to being given the opportunity to work closely with the government to help realize this transformation.
The privatization of SOEs and the foreign investment in particular sector will generate more efficiency for Vietnam economy. So I am looking forward to the development and willing to support that development as well.
As the government is aiming to become a “modern-oriented industrialized country” by 2020, as laid out in the socio-economic development plan from 2016 to 2020, we expect the share of the industry sector will rise further in coming years.
Do you have any advice from your expertise perspective to Vietnam’s Government to push up the process of privatization?
Shosuke Mori: I think first and foremost, you have to create and improve the transparency of business activities and westernize the balance sheet and accounting policy.
The authorities also need to streamline administrative procedures. Of course, we acknowledge that complicated administrative procedures are very common in many countries and they are not just in Vietnam alone. This means that, if you successfully implement a more streamlined process in your country, your competitiveness can be further strengthened.
Besides, we also highly appreciate the current action of Vietnamese government in opening up more investment opportunities for foreign investors. And we will continue to fully support the acceleration of reforms under the government’s leadership so that Vietnam may successfully overcome these challenges.