Business development services (BDS) have found it difficult to establish a niche in Vietnam, according to research conducted by MPDF and VCCI.
Business development services (BDS) refer to a wide range of non-financial services that help businesses with improving performance, access to markets, and ability to compete. The role of BDS in business development is widely recognised throughout the world.
Low awareness: Despite the fact that Vietnam has a growing business services sector, entrepreneurs are largely unaware of the potential benefits of using such services. They tend to be wary of disclosing confidential business information to outside consultants, and small entrepreneurs in particular lack the necessary resources to gather information about business service providers.
Limited demand and supply: As small- and medium-sized enterprises (SMEs) typically have modest incomes and savings, they have low a demand for and use of outside services, including BDS. Many are also either unaware of the benefits of such services or do not see their potential value, particularly of services such as strategic management advisory services that do not promise immediate and tangible benefits.
The supply-side of the BDS market is also limited. Service providers lack a clear understanding of the specific needs of local businesses, or do not have the expertise and ability to tailor their services according to those needs. Consulting firms in Vietnam are still very young for the most part, and Vietnamese consultants, in general, are still learning the trade.
Insufficient information: A reliable and systematic statistical database on the Vietnamese economy and on specific industries and markets does not exist, and information on foreign markets and the world economy is not readily available, nor are technical books, documents and information related to the skills needed by BDS providers. This is a major constraint, as all of these are crucial for providing strategic advice to companies in a timely and thorough manner.
Legal constraints: An enabling environment is the key to the effective development of the business service sector and a functioning BDS market in Vietnam. Recent legal reforms such as the Enterprise Law and the increasing liberalisation of the economy, particularly of the service sector, have boosted many BDS markets in Vietnam in both supply and demand. Increasing efforts have been made to improve the investment and business environment and to strengthen the confidence of the business community. However, there remain a number of legal constraints to the development of the BDS market. Most notable are the excessively high market entry conditions for some business services such as vocational training, auditing services and intellectual property services. In addition, there are still inconsistencies between the Enterprise Law and other legal documents concerning BDS and restrictions on the transaction of some services. For example, tax deductions for marketing, advertising and branding activities are capped at 10 per cent of total expenses, which discourages businesses from purchasing such services.
