SMEs need to revamp strategy for integration

They stressed the need for SMEs to take advantage of internal human and financial resources to overcome difficulties and challenges posed by both regional and global integration.

Moreover, they suggested the State should provide more incentives to facilitate them making the transition.

Opening up market

The ASEAN Economic Community (AEC) is set to be formally established by the end of 2015 in the context of a year in which the nation is also expected to sign six other important free trade agreements (FTAs).

Speakers at the conference said these FTAs will force SMEs to become more competitive or else they simply will go out of business. The other alternative is that they will be stuck in the lowest rung of the chain doing assembly and outsourcing for foreign companies.

They said the lackadaisical attitude by many SMEs is why there is so much concern by businesses and government agencies about the nation’s preparedness for integrating widely and deeply into the world economy.

The country’s SMEs have a low comparative advantage coupled with limitations in business vision and strategy, and lack of financial resources they said, which puts them at a severe disadvantage competing for market share.

According to the speakers, the world economy is likely to become completely integrated over the next few years. Therefore, they said it is vitally important for Vietnamese SMEs to start preparing as soon as practical.

Speaking at the conference, Deputy Prime Minister Pham Binh Minh said Vietnam is dealing with newly-emerged issues in its integration process and the nation’s SMEs need to sharpen their competitiveness.

Minh advised local businesses to install the latest technologies and take a more proactive role in negotiating cooperation agreements with foreign partners to acquire the necessary funds to invest in advanced technologies.

The strategy for SMEs, with their limited finances, technologies, and market understanding, should be to work closely with multinational companies involved in the regional and global supply chain to learn international practices before thinking about directly trying to compete in foreign markets.

Boosting institutional reform and capacity building

For her part, Nguyen Nguyet Nga, Head of the Vietnam Ministry of Foreign Affairs’ Multilateral Economic Cooperation Department, said since early 2015, the country has been entering a new period of development.

Having a clear business strategy, developing strategic products, and understanding target markets are among the factors that enable businesses to access the global market, she said.

Nga also recommended Vietnamese SMEs to devise along-term development strategy in a creative and sustainable manner. In the reform process, Vietnam should renovate institutions, fine-tune the legal framework and increase capacity building.

Last but not least, Central Institute for Economic Management (CIEM) Deputy Director Dr. Vo Tri Thanh said to achieve successful integration, it is essential to have strong support from the government and effective cooperation mechanism between state agencies, businesses and the whole community.