What does the report evaluating the 500 largest private enterprises in Vietnam show?

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	Assessment of top 500 private enterprises released
	Assessment of top 500 private enterprises released

Vietnam still lacks leading businesses

Speaking at the conference announcing the report on Evaluation of the 500 largest private enterprises in Vietnam (VPE500-Report 2023) taking place on August 31, Dr. Tran Toan Thang, Head of the International Department of the Institute of Development Strategy, said that as of December 31, 2021, Vietnam had 694,200 domestic private enterprises (VPE), accounting for 96.6% of the total number of active working enterprises; attracts 58.1% of employees, accounts for 59.3% of assets and generates 57.8% of net revenue of the business sector.

VPEs are mostly small and medium-sized enterprises established after innovation. At the end of 2021, only 0.22% of enterprises had 500 or more employees, lower than the general rate of 0.52%, 8.29% of enterprises with foreign direct investment (FDI) and 19.52% of state-owned enterprises.

Although appearing in 53/63 provinces/cities, VPE500 is concentrated in the Red River Delta and Southeast (accounting for about 75%) and has a slight increasing trend. Ho Chi Minh City and Hanoi are two major economic centres, and some localities with high business density such as Binh Duong, Dong Nai, and Hung Yen, account for about 50-52% of the total. In general, VPE500 is being formed based on the infrastructure, resources and market advantages of localities. VPE500 is distributed in 21/21 level 1 industries, with the highest concentration in the manufacturing, processing, trade and construction industries.

Service businesses dominate in number in the VPE500, especially in the group of 11 largest enterprises. The finance, banking, and insurance industries dominate, followed by the commerce industry. Enterprises in the manufacturing and processing industry on the VPE500 list have fluctuated quite a bit, at one point accounting for 49% of the VPE500 list (in 2000), but their ranking in the list is not high.

On the contrary, the group of businesses operating in the real estate and construction industry accounts for a high proportion in the VPE500 list but is rapidly decreasing in both number and position due to many difficulties during the Covid-19 period.

"Although private enterprises in Vietnam have continuously grown, Vietnam still does not have many large private enterprises that have achieved world-class. Vietnamese brands are still worth less than brands from many Southeast Asian countries. To grow, small and medium-sized private enterprises encounter many obstacles (both objective and subjective) in the development process", Dr. Tran Toan Thang emphasized.

Comparing the two years of Covid-19 and the previous year, there were quite large fluctuations in the number of businesses entering and leaving the VPE500 list. Illustration photo: H.D

158 businesses were excluded from VPE500 because of Covid -19

Regarding the performance results of Vietnam's largest private enterprises, Dr. Tran Toan Thang said that the COVID-19 pandemic had reduced the labor size of businesses, and the impact on small businesses is greater than that of large businesses. During the 2 years of the pandemic outbreak, the businesses with a large decrease in scale belonged to the entertainment, construction, accommodation and food service groups. Meanwhile, the industry groups with quite good growth are electricity, healthcare, transportation, and warehousing.

Comparing the two years of Covid-19 and the previous year, there were quite large fluctuations in the number of businesses entering and leaving the VPE500 list. In 2020, up to 97/500 businesses (19.4%) were no longer in the VPE500 ranking of 2019. These businesses focus on industry groups heavily affected by COVID-19, such as real estate and construction (23/89), trade (15/73), textile and garment (7/32), and food processing (9/70). Only a few industries still retain the VPE500, which are considered to benefit from COVID-19, such as information and communication, postal, electricity production and distribution.

By 2021, up to 61 more businesses will leave the list, bringing the total number of departures after 2 years to 158, equivalent to 31.6%, and still focusing on the heavily affected industry groups above. Besides, even for businesses that are still maintained in the rankings, the rankings of these businesses also decrease rapidly. The rate of reduction over 50 places is over 60%. The exit rate from the general category of the manufacturing and processing industry is 25.3%, lower than the general rate of 28.0%.

Most businesses in the banking and insurance sectors still maintain high positions in the rankings and have few changes in rankings. Similarly, businesses in the TOP50 still retain their rankings, and their rankings also change less.

Obviously, during the COVID-19 period, the stability level of VPE500 is higher; this shows that large enterprises still maintain their position in the market compared to small and medium-sized enterprises.

To build a force of large private enterprises, develop stably, withstand major external shocks, and increase the efficiency of the entire economy, Mr Nguyen Tu Anh, Director of the General Department of (Central Economic Committee) said that to build private enterprises to lead the market, the Government must introduce policies to support business development.

"However, we need to filter these 500 businesses and continue surveying to see their needs so our report will be more meaningful. Whether a business wants to expand its market or scale or how to have a solution, even though this depends on the business's resources," Mr. Nguyen Tu Anh said.