It is possible that foreign companies will exit from emerging markets like Vietnam to return to their countries, surely affecting its economy which is greatly depending on FDI contribution, according to Nguyen Thi Phuong Thao, CEO of VietJet Air.
At the recent Vietnam Business Forum 2018 held by Forbes in Ho Chi Minh City, Nguyen Thi Phuong Thao, CEO of VietJet Air shared about the role of the private sector as a potential drive of Vietnam economy.
What is your evaluation of the current economy in Vietnam?
Nguyen Thi Phuong Thao: Vietnam’s economy is growing rapidly with a strong vitality, which is expressed clearly through the aviation sector.
In particular, in the first six months of 2018, Vietnam's aviation sector grew by 10 per cent to 12 per cent, corresponding to GDP growth of nearly 7 per cent, a very positive figure.
It is forecasted that in the second half of this year, the economy will be able to maintain this growth momentum at about 6.8 per cent.
In your opinion, what challenges is Vietnam’s economy currently dealing with?
Nguyen Thi Phuong Thao: Vietnam’s economy is enduring many adversities. We will certainly be influenced by the US-China trade war and exchange rate fluctuations, though not significantly as Vietnam is prepared to deal with these impacts.
However, if the US-China trade war escalates, many sectors will be affected as Vietnamese firms will incur higher manufacturing costs and competition with low-cost Chinese goods will become more cutthroat.
FDI is another important issue requiring special attention because our economy still depends greatly on FDI contribution. In the future, it is possible that foreign companies will exit from emerging markets like Vietnam to return to their countries. For instance, the US government is calling on its multinational corporations to repatriate.
Furthermore, the risk in technology lag is also worth concerning, especially in today 4.0 industrial revolution, the application of technology in management and business operation is becoming a trend.
Without the active participation of enterprises in this transition, the economy growth of Vietnam will surely be affected.
However, these challenges also come with many opportunities. Impressive GDP growth together with stable macroeconomy are the foundation for businesses to move forward.
Especially, it is a great opportunity for enterprises to invest in human resources and technology. The private sector is the one who holds the bright future of Vietnam.
What should the Government do to support private enterprises to overcome these challenges?
Nguyen Thi Phuong Thao: In my opinion, it is necessary to have more reforms from the Government, which promotes a more open and renovated institution.
Private enterprises are still unable to enjoy the achievements of the reforms, liberalization of mechanisms, tax preferences or support programs on human resources of the government.
Thus, the Government needs more drastic reform of the mechanism, administrative procedures and more practical actions to help businesses.
Furthermore, the process of banking restructuring must be urgently implemented in order to create healthy competition among all economic sectors, promoting fairness in accessing capital.
As for enterprises, what strategies should they follow to deal with these challenges?
Nguyen Thi Phuong Thao: The private sector must renew itself, not only attracting and improving human resources inside but also outside Vietnam.
Enterprises should quickly apply technology and reform the process to step over time to truly integrate technology into the business as well as the daily life.
In addition, niche market with low risk and high profit should also be exploited by enterprises to fully tap the potential of the domestic market.
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