In 2023, businesses will implement synchronised solutions to overcome difficulties.

DNHN - To assist businesses in overcoming obstacles, increase exports, and accelerate the nation's economic development, each community will need to prioritise and concentrate on several innovative solutions shortly.

Positives and negatives for businesses in 2023

In 2023, Vietnam enjoys fundamental advantages as a result of 2022's impressive economic recovery. In terms of international trade, Vietnam is currently the fourth-largest economy in ASEAN and the fortieth-largest in the world. one of the world's most dynamic and open economies (with a GDP of nearly 740 billion USD) and a member of the world's top twenty largest economies. Vietnam's artificial intelligence (AI) readiness index in 2022 ranks 55 globally and 6/10 in ASEAN (up 7 places compared to 2021's world ranking of 62/160), according to the report "Government AI Readiness Index 2022" conducted by Oxford Insights (United Kingdom); this ranking is based on 39 indicators across three pillars (government, submission, technology, infrastructure and data) with 10 aspects of infrastructure group, data availability, data rep, and data rep. Vietnam is also ranked 30th in the ranking of the most powerful countries in the world in 2022 by US News & World Report (US News)), with an estimated GDP of $363 billion and GDP per capita of $11,553; the rankings are "based on an average score calculated from five factors related to a country's power: leadership, economic influence, political influence, strong international alliances, and a strong military.

In 2023, the government continued the Recovery Programme and national target programmes, controlling macro stability and the high growth of the domestic market via the total retail and retail sales index. Compared to the same period in 2022, revenue from consumer services increased by 13.9% (excluding the price factor of 10.3%). Vietnam continues to take advantage of economic opportunities associated with participation in new generation FTAs, and its "Global Happiness Index" rose 12 places in the United Nations ranking in 2023....,

Moreover, Vietnam and the global economy will face greater challenges than in 2022. In 2023, global economic growth reached 2.9% of GDP, according to the IMF, 2.6% according to the OECD, 2% according to Fitch Ratings, and only 1.5% according to the World Bank, with Thailand's economic growth reaching 3.6%, Malaysia and 4.0%, Indonesia 4.8%, Philippines 5.4%, and Vietnam 6.4%; inflation pressure and high public debt. The prices of certain strategic commodities and input materials are unstable (90% of Vietnam's total import turnover is to import production materials); The energy market and numerous regional geopolitical conflicts have caused unpredictable negative effects on the economies of all nations, including Vietnam.

Particularly, many businesses are experiencing a decline in orders, a decline in export market share, and an increase in technical barriers, as well as a tightening control over the quality and origin of exported goods; Many businesses have reported a lack of orders beginning in the fourth quarter of 2022, with only 35 to 50 per cent of production capacity covered. The remaining orders are also delayed by partners, and delivery delays are anticipated to continue. quarter 2-2023.

In the meantime, the majority of businesses are small or medium-sized, with low competitiveness and innovation capacity, low profit, vulnerability, and dependence on imported supplies; credit loans with high-interest rates, stagnant stock and real estate markets, and a slow improvement in informal expenses. By the end of 2022, the total outstanding credit balance for the real estate sector of credit institutions will be approximately VND 2.58 million billion, up 24% compared to 2021 and accounting for 21.2% of the total outstanding balance; 41 credit institutions hold VND 274,000 billion in corporate bonds, of which VND 117,016 billion is in the real estate sector and easily becomes bad debt. Consequently, many businesses are compelled to reduce labour and working hours, resulting in decreased economic growth motivation, increased income pressure, and the guarantee of social security...

According to the General Statistics Office, Vietnam's economy slowed in the first five months of 2023 due to a decline in the private sector, the FDI sector, and public investment growth drivers. Many important macroeconomic and local economic indicators, such as GDP (up 3.32%), industrial production (down 2%); newly registered and disbursed FDI (down 7.3% and 0.8% respectively); credit balance; total export turnover of goods (estimated at USD 136.17 billion, down 11.6%) and total import turnover of goods (estimated at USD 126.37 billion, down 17.6%); the number of enterprises that ceased operation and went bankrupt; and the number of enterprises that ceased operation and went In the meantime, state budget revenue and public investment disbursement remain sluggish, and unemployment and job relaxation have made life more difficult for a portion of the population, which is awaiting a sharp increase in millions of people...

Up to 38.5% of survey respondents in the processing and manufacturing industry anticipated difficulties in the first quarter of 2023 compared to the fourth quarter of 2022, and 20.6% anticipated that the second quarter of 2023 would be more challenging than the first. The total foreign investment capital registered in Vietnam as of March 20, 2023 (including newly registered capital, adjusted registered capital, and the value of capital contribution and share purchase by foreign investors) amounted to USD 5.45 billion, a decrease of 38.8% compared to the same period in the previous year, and actual FDI also decreased…

In the first four months of 2023, the leather and footwear industry's export turnover decreased by 14.7% compared to the same period in 2022. Other markets, such as Europe and Oceania, were in a similar situation with decreases of -12% and -2.2%, respectively. North America continued to experience the largest decline, at -29.1%. Asia and South America are the markets with positive growth, increasing by 10.6% and 2.0%, respectively.

According to the Vietnam Textile and Apparel Association (Vitas), the total export turnover of Vietnam's textiles and apparel in the first three months of 2023 was over $8.7 billion, a decrease of 18.63% compared to the same period in 2022. The main export markets of Vietnam, such as the United States and the European Union, all decreased sharply due to decreased consumer demand, and people tightened their spending. The increase in inventories has had a significant impact on the production activities of businesses. Vietnam must also contend with textile and garment giants such as China, Bangladesh, India, Indonesia, Pakistan, and Turkey. Bangladesh, Vietnam's current rival, has several advantages: Labour costs are only half of those in Vietnam. Europe imposes no import tax, whereas Vietnam must comply with the rule beginning with the fabric. With the expectation that the market will recover in the second half of 2023, textile and garment exports are projected to reach 47-48 billion USD in 2023, or 45-46 billion USD at most.

According to the Vietnam Wood and Forest Products Association, the export value of wood and forest products will decrease by nearly 30 per cent beginning in the first quarter of 2023 compared to the same period in 2022. It is anticipated that the export value will remain unchanged in 2023. in 2022. The number of orders decreased sharply, and businesses were forced to produce with restraint, which had a significant impact on production and business, as well as the lives of nearly tens of millions of workers. According to Hung Thanh Wood Company (Binh Duong), the current situation is worse than during the Covid-19 epidemic, as Japanese partners have ceased purchasing and Korean partners have reduced output by up to 70%. Hundreds of dollars in revenue have been reduced to tens of billions of dollars. More than half of employees quit, and those who remain must take turns being on leave. This condition persisted from the start of 2023. The price has also decreased significantly, from 190 USD/ton at the end of the fourth quarter of 2022 to approximately 130 USD/ton at present. Orders plummeted, impacting not only workers but also the company's survival. The biggest problem now is that corporate capital is depleted, while bank interest rates are nearly double what they were before...

Many of the stated cause associated with the context of epidemics, natural disasters, and climate change continue to be complex, with many unanticipated developments exceeding forecasts, causing complications, and placing a great deal of pressure on the government's work. executive leadership; the world market has many rapid and unpredictable fluctuations; Consumers tighten their spending and the decline in orders is widespread, particularly in the textile, footwear, and processing sectors; interest rates are high and credit sources are difficult to access; the decline in confidence and difficulties in liquidity and cash flow in the corporate bond market and the real estate market; the situation of avoidance, fear of the responsibilities of office; the situation of avoidance, fear of the responsibilities of office; the situation of avoidance, fear of the responsibilities of the office

In addition, Vietnam will continue to experience monetary inflation, cost-push inflation, and high foreign inflation in 2023. Comparing the first quarter of 2023 to the same period the previous year, the average CPI increased by 4.18 per cent. While the credit growth of the economy was only 1.61% compared to the same period in 2022, it increased by 4.03% (according to the State Bank, as of March 28, 2023, the credit of the entire economy increased by 2.06.% compared to the end of 2022, a rise of 11.7% compared to the same period in 2022). This is a modest increase and is only slightly greater than the 3.21 per cent growth rate of the first quarter of 2021 (during the peak of the Covid-19 pandemic). The total realised investment capital of the entire society was estimated at 583,1 trillion dongs (current price), an increase of 3.7% over the same period last year (state capital accounted for 26.2% and grew by 11.5%). %; non-state sector contributed 56.4%, up 1.8%; FDI sector contributed 17.4%, down 1.1%.

Essential solutions for businesses

In this challenging environment, the National Assembly and the Government have issued numerous resolutions and positive support measures for businesses, including Resolutions No. 43/2022/QH15 of the National Assembly: On fiscal and monetary policies to support the socio-economic recovery and development programme; Resolution 84/NQ-CP, Resolution No. 42/NQ-CP, Resolution No. 68/NQ-CP, Resolution No. 01/NQ-CP; Decree 52, Decree 75, Socio-economic recovery and Decree 08/2023/ND-CP; On February 3, 2023, the Prime Minister issued Decision No. 02/2023/QD-TTg on the price bracket of the average retail electricity price; reducing land and water surface rents of 2022 for subjects affected by the Covid-19 epidemic in accordance with Decision No. 01/2023/QD-TTg dated January 31, 2023; and maintaining the tuition fee rate for the academic year 2022-2023 at the same level as the school year 2021-2022 Monetary and fiscal policies must maintain macroeconomic stability; State resources must lead and activate non-state resources. Government demonstrates and affirms the spirit of innovation, integrity, action, serving people and businesses, speaking less and doing more, speaking and acting, and paying attention at all times, but especially in difficult times. Focus on efficiency, not an ostentatious formality, and view people and businesses as subjects and service hubs... All for the welfare and happiness of the populace.

Some business support policies, such as corporate lending policies (deferred debt, debt repayment term restructuring, interest and fee exemption and reduction), have produced favourable outcomes.

To assist businesses in overcoming obstacles, increase exports, and accelerate the nation's economic growth, each community should prioritise and concentrate on the following exceptional solutions shortly:

First, continue exempting and reducing taxes, fees, land rents, and land use fees, and exempt, extend, or delay payment of certain types of social insurance fees to assist businesses and employees in overcoming the current challenging period and ensuring stable production and business activities.

Implementing expeditiously VAT refund procedures so that businesses have more capital for production.

The government will soon review and amend Decree No. 111/2015/ND-CP on the development of supporting industries to encourage enterprises to invest in the development of the domestic raw materials industry.

Second, the State Bank should continue to aim at lowering interest rates to support people and businesses, maintain a stable currency value, strive to control inflation and stabilise exchange rates; actively use open market operations, lower operating interest rates and some lending interest rates, support liquidity, expand credit room, and encourage credit institutions to improve lending interest rates, and quickly disburse to businesses that meet the conditions or borrow a substantial amount of money. According to many business owners, to invest in expanding production and anticipate the anticipated improvement in market demand beginning in the third quarter of 2023, businesses require a 7- to 10-year capital infusion with an annual interest rate of no more than 10%.

The official reduction of the State Bank's operating interest rates from 1%/year (excluding interest rates) to 0.3-0.5%/year, effective April 3, 2023. In this spirit, the refinancing date of March 15, 2023, is very welcome. The State Bank of Vietnam must immediately implement the VND 120,000 billion credit programme, directing commercial banks to provide investors and homebuyers with social housing projects, worker housing and projects. Renovating and rebuilding old apartment buildings with preferential interest rates; reviewing and classifying real estate projects to take appropriate handling measures (such as rescheduling principal, interest, debt restructuring, etc.), ensuring the operational safety of the banking system... and real estate projects that contribute to resolving difficulties in enterprise credit capital.

Continue to provide 2% interest rate support from the state budget to enterprises, cooperatives, and business households by Directive No. 03/CT-NHNN dated August 16, 2022, on the 2% interest rate support. according to Government Decree No. 31/2022/ND-CP and State Bank of Vietnam Circular No. 03/2022/TT-NHNN;

Thirdly, the government, ministries, branches, and authorities at all levels must concentrate on assisting businesses to exploit the domestic market, diversify export markets, expand the export list, and enhance the conditions for official export to China. China has expanded its export markets to Africa, Latin America, and the Eurasian Economic Union while deftly avoiding the economic sanctions imposed by the United States and Western Europe. Particularly for Russia, it is necessary to make substantial and synchronised efforts to promote administrative reform and improve the business investment environment; strengthen dialogue, consultation, companionship, listening, sharing, and decisive resolution, as well as the handling of difficulties, problems, and suggestions from businesses, and repel the situation of enterprise harassment. entrepreneurship, stimulating internal resources, building a startup and innovation ecosystem, and strongly encouraging the development of the domestic private business community, particularly in the fields of manufacturing and high-tech industries., information technology industry, formation of domestic and international supply chains and value chains, quality assurance, and regulations on traceability.

To ensure the practicality and responsiveness of businesses, the ministries of Construction, Science, Technology, Environment, and Public Security must simultaneously review the regulations on fire prevention and fighting. Shortly, it is proposed to suspend the implementation of new fire prevention and fighting regulations to assist businesses in reducing excessive costs. Early research into eliminating the requirement to pay import tax on-site for goods used in export production and export processing. Reducing the rate of payment of social insurance premiums to reflect actual conditions; reviewing retirement age and conditions for pension enjoyment to avoid the situation of employees applying for leave in succession to withdraw one-time social insurance, thereby causing enterprises to experience massive labour fluctuations. Reduce the rate of payment of union dues to a maximum of 1% by amending and supplementing the Law on Trade Union. Modify the regulations regarding unemployment benefits to prevent young workers from switching jobs.

Fourth, enterprises must actively innovate production and business models, restructure in the direction of modern governance, promote the spirit of national pride, and strictly comply with the law, ethics, and business culture; improve the bravery and ability to react to the market, proactively seize opportunities and adapt options to the rapid and unpredictable changes in the market today, preventing enterprises from falling into a state of loss of control; and build prestige and competitiveness.

Fifth, it is necessary to improve the capacity and operational efficiency of Vietnam's private business associations and associations, not only in participating in the development of laws and policies, but also in coordination with relevant agencies to promote the improvement of the investment and business environment, as well as actively researching, evaluating, and forecasting opportunities, challenges, market trends, technologies, and requirements for sustainable development, to swiftly shatter the bottlenecks that are impeding the country's sustainable development. The whole system will develop sustainably if businesses and entrepreneurs are healthy...

Particular attention must be paid to helping businesses diversify and expand their markets. Implement trade promotion programmes to assist businesses in gaining access to additional export and import markets in Asia, South America, and the Middle East.

Promote programmes to stimulate consumer demand, mobilise "Vietnamese people give priority to using Vietnamese goods", exploit the domestic market, and develop Vietnamese brands Implement policies to reduce the value-added tax and extend the deadline for paying corporate income tax and land use levy; rescheduling debt repayment, debt rescheduling for enterprises; improving loan interest rates and actual conditions for accessing capital; harmonising interests in credit activities; ensuring safety and sustainability for the credit system in the face of mounting bad debts and bad debts. promoting the connection of domestic firms with FDI firms and participation in regional and global supply chains to a greater degree;

In addition, continue to promote the prevention and fight against corruption and negativity, and promptly remove obstacles in regulations on fire prevention and fighting, motor vehicle inspection, and petrol and oil trading; improve the efficiency of foreign affairs and international integration; perfecting the mechanism for encouraging and protecting dynamic, creative, daring to think, daring to act, and daring to make breakthroughs for the common good; and strictly dealing with cadres who en Promoting the centrality and orientation of the central government, the initiative and adaptability of localities, people, and businesses, with people and businesses as the focus, subject, driving force, and objective of development.

In addition, it is necessary to promote communication and create social consensus in the spirit of "First call for support", "First call for response", "Above and under unanimity", and "According to horizontal and vertical"; adhering to reality, respecting reality, using practice as a measuring stick, promptly detecting inadequacies and newly emerging problems, and having timely, flexible, and appropriate policy and market responses. The National Assembly and the Government have established a growth target of 6.5% of GDP for the entire year of 2023, which ADB and the Central Committee have confirmed in newly updated projects for April 5-2023.

Dr. Nguyen Minh Phong