Enterprises in the face of indispensable requirements

VGP – Vietnamese businesses need to quickly restructure themselves to improve performance and competitive capacity in the current context of the country’s comprehensive international integration.

According to the Ministry of Planning and Investment, during 11 months of 2013, there were 71,018 newly-established registered companies with the total registered capital of VND 359,470 billion, up 9.5% against the same period in 2012. Meanwhile, 54,932 companies completed dissolution procedures and suspended operations, an increase of 8.4% compared to the same period in 2012.

Also during this time, the number of suspended firms back to operation is 12,709, up 8.2% compared with 2012. This shows that the number of newly registered enterprises and back-to-operation ones in 2013 have been no longer one-way movement with a large proportion of dissolved and suspended companies as 2012.

However, according to Mr. Huynh Van Minh, the Chairman of Ho Chi Minh City’s business association, in 2013, many businesses, especially small ones did not really attach enough importance to restructuring so they have been dislodged from the market under the pressure of competition.

This situation is likely to occur more severely as the country is joining a number of free trade agreement talk, including TPP. Therefore, restructuring is not just the work of small and medium-sized enterprises, struggling businesses but also large ones in the quest of sustainable development.

“The power” of FDI enterprises should also be mentioned here. According to Dr. Tran Du Lich, deputy head of Ho Chi Minh City National Assembly Delegation, the sector have many advantages in which administration capacity and resilience are among the most dominant.

On the other hand, while TPP is under negotiations, many foreign enterprises have energetically poured capital in the areas of Viet Nam’s competitive advantages in order to wait in front for the opportunities while most of Vietnamese companies are still ambiguous about TPP.

Against this background, domestic companies have no choice but to rapidly restructure themselves keep up with modern economic trends.

One restructuring solution, favored by small and medium-sized enterprises, is finding partners, sharing financial burdens. Recent public and non-public mergers and acquisitions (M&A) have shown that enterprises are active in restructuring operations.

The two typical acquisition cases are the world leading investment fund Warburg Pincus and Bank of Tokyo Mitsubishi which buy shares of Vincom Retails and Vietinbank, respectively.

According to Mr. David Blackhall, the CEO of Vinaland Limited (an affiliate of Vinacapital Group), those are the important and meaningful mergers and acquisitions (M&A) deals which reinforce foreign investors’ confidence in Viet Nam’s business environment, concurrently impulse the investment capital inflows, supporting Vietnamese enterprises in restructuring./.

By Cam Nhung

To develop and integrate in this present context, the requirements set out for Vietnam is the need to restructure promptly in order to improve the business performance and increase the competitive capacity.

According to the Ministry of Planning and Investment, during 11 months of 2013, there were 71,018 newly-established registered companies with the total registered capital of 359,470 billion, raised 9.5% compared to the same period in 2012, there are 54,932 companies that have completed the procedure for dissolution and suspension of operations, increased 8.4% compared to the same period in 2012.

Also during this time, the number of suspended firms back to operation is 12,709, up 8.2% compared with 2012. This shows that the number of newly registered enterprises and back-to-operation ones in 2013 have been no longer one-way movement with a large proportion of dissolved and suspended companies as 2012.

However, according to Mr. Huynh Van Minh, the Chairman of Ho Chi Minh City’s business association, in 2013 many businesses, especially small businesses did not really attach enough importance to restructuring so they have been ejected from the market under the pressure of competition.

This situation is likely to occur more severely when our country is in the progress of negotiating to join many large agreements, including the TPP agreement with the participation of many major economies in the world. Therefore, not only small and struggling businesses but also large enterprises have to face with the problems posed by restructuring in the sustainable development goals.

“The power” of FDI enterprises also should be mentioned here. According to Dr. Tran Du Lich, deputy head in charge of the HCMC National Assembly’s economic union delegation, FDI enterprises have many advantages. However, the most notable is that the ability of administration and adaptation to the business environment of these FDI enterprises is much better than Vietnamese companies.

On the other hand, while we are still negotiating TPP agreement, many foreign enterprises have energetically invested in the areas that Vietnam gains competitive advantages in order to wait in front for the opportunity. In the meanwhile, most of Vietnamese companies are still ambiguous about TPP and have not really transformed; in which restructuring is the first move of the reform progress to catch the opportunities.

In this context, the domestic companies have no choice but to rapidly implement restructuring if they want to survive and keep up with the development trends of the modern economy.

One restructuring solution, which small and medium enterprises are promoting and taking advantage of, is finding partners, sharing the burden based on new resources. The public and non-public acquisitions and merges that have noisily taken place recently have shown the enterprises’ active movements in implementing restructuring.

The typical cases are the acquisitions such as the world leading investment fund Warburg Pincus buys shares of Vincom Retails, and Bank of Tokyo Mitsubishi buys shares of Vietinbank.

According to Mr. David Blackhall, the CEO of Vinaland Limited (belongs to Vinacapital Group), those are the important and meaningful merge and acquisition (M&A) cases. They bring the belief of the foreign investors to the Vietnamese investment environment, concurrently impulse the investment capital flows, supporting Vietnamese enterprises in restructuring.

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