VietNamNet Bridge - The latest report of the Vietnam Chamber of Commerce and Industry (VCCI) shows that Vietnam now lacks many medium-sized enterprises, making it difficult to participate in global value chains.

VCCI report said in early 2014 there were 764,374 enterprises established under the Enterprise Law, and of these, only 391,547 were operating.

In the period from January to October, 60,023 new enterprises were formed, with total registered capital of VND352 trillion ($16.7 billion). Compared to the same period last year, the number of newly established enterprises decreased by 6.5%, but were up 9.5% in terms of registered capital.

Among the operating enterprises, non-state enterprises accounted for 96%. The large-scale and medium-sized enterprises made up only 2% each and the remaining 96% were small and super-small enterprises.

The micro enterprises (with less than 10 employees) accounted for 67%. Due to their small scale, most of Vietnamese enterprises cannot join the global production network.

Notably, the lack of medium-sized enterprises continued to increase, according to the report. In the 2007 - 2012 period, the average number of employees in medium-sized enterprises decreased from 47 to 32 people, equivalent to the size of small-scale enterprises.

In 2012, for the first time in 10 years, the average capital of enterprises fell.

The capital scale of state-owned enterprises (SOEs) decreased by 26%, from VND1.58 trillion ($61.1 million) to VND1.17 trillion ($55.7 million). The average capital of non-state enterprises also reduced by 3.6%, to only VND25 billion ($1.19 million).

Meanwhile, the average capital of foreign-invested enterprises (FDI) rose from VND207 billion ($9.85 million) to VND307 billion ($14.6 million). This suggests that the FDI sector was not affected much by the economy.

Minister of Planning and Investment Bui Quang Vinh said in 2015 the government would give priority in the reform of SOEs.

According to the new perspective, an enterprise will be considered an SOE if the state holds 100% of capital instead of 50% at present.

In the January-October period, 100 SOEs were privatized and 153 others were evaluated. It is expected that approximately 200 SOEs have been privatized in 2014, three times higher than 2013, with only 74 SOEs.

The government has also approved the restructuring plans of 108 state-owned corporations.

Linh Hang