Transform business households into enterprises: Do not force them to transform

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Thus, among many measures, the Government required to issue policies to facilitate, support and encourage individual business households to transform and register in accordance with the Law on Enterprises. Regarding this, according to Dr. Pham Tat Thang, a senior advisor of the Vietnam Institute for Trade Research (the Ministry of Industry and Trade), this is a necessary measure but should be imposed by administrative orders to run after the indicator on the number of enterprises.

According to the Vietnam Chamber of Commerce and Industry (VCCI), there are 8 million individual household businesses in the country. What is the correct view for encouraging transformation of business households to enterprises, Sir?

The transformation of business households into enterprises reach the number of enterprises, but these enterprises do not perform as real enterprises, they should be let to operate under the form of business households. They still can borrow loans as individual in accordance with the recent circular of the State Bank. We should not boost business households to register as enterprises for the indicator on the numbers.

Previously, Vietnam had bad experiences and failed when running after this form. That was when our country wanted to have a series of large corporations like the Korean model, but instead of letting the enterprises develop to be corporations, we changed them by policies, decision and integrating many State-owned corporations into the State owned Groups. It was true that the number of State owned groups rose rapidly but their operations cost the State’s money more than they operated as corporations to send and show the strength of the State in market stability.

As for you, how will the transformation be?

As stated above, the managing authorities should let business households develop by themselves, not impose administrative orders. Therefore, if a business household feels necessary and qualified they will automatically move up. This is their self-development, the authorities should not set targets and focus on formality. Hence, the authorities should issue encouraging policies, particularly criteria to become enterprises for business households, thereby the managing authorities can see which conditions the business households met to become enterprises.

We can see that besides advantages of transformation into enterprises, the business households also were under great competitive pressure. Thus, for many current business households, the transformation into enterprises does not bring benefits more than operations as individual business households. So the transformation must be decided by the market and the entities should self-identify their trade mode and organization form fitting their capacity and scale.

Which policies should the managing authorities issue to support and develop business households, Sir?

The individual business household’s forces may not only contribute to solve the jobs for many people and many rural areas but also create a premise for large enterprises to be born. But now, business households still use and supply material facilities and places and means in person for business. So with 8 million business households, the managing authorities should issue support and development policies.

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Although, the support policies are necessary, those policies must be reasonable and suitable with the market’s economy. In my opinion, the above policies should let business households develop gradually as “convenience stores”, “super markets” or large groups. And the large domestic and international enterprises will turn business households which are qualified and meet the criteria into their convenience stores, factories and sub-enterprises. This is a smooth transformation, facilitating sustainable development of the enterprises.

Thank You,