The purpose of this report was to document the status and problems of relatively established private manufacturers in Vietnam so they could be better assisted by the government and development agencies. The companies surveyed were an average of eight years old, and 90% were engaged in one of five industries (garments, leather, food and beverage, ceramics, and wood products). Many had access to short-term bank loans but few had long-term credit (over four years), and 80 to 90% were heavily reliant on export revenues. Those firms that were successful seemed to be producing higher-value products, accessing markets directly (as opposed to relying on trading agents), and securing long-term credit.
Major problems noted by managers were: 1) inability to access investment capital mainly due to collateral regulations; 2) lack of access to business information, especially on foreign markets; 3) insufficient working capital; 4) reduced regional demand following the East Asian economic crisis; and 5) unclear and frequently changing government regulations.
The report suggested that the risky investment environment, lack of business support institutions and technical expertise, and limited access to capital were to blame for the small number of registered private businesses in Vietnam. Further impediments to the growth of household businesses into larger manufacturers included crowding-out by state enterprises, insufficient investment capital, increased risks of growth and higher visibility, and inadequate skills to grow businesses. To encourage private sector development the study suggested: 1) policy changes to level the playing field between state-owned enterprises and private companies; 2) a public campaign to improve the image of private companies; and 3) greater consistency in government policies and regulations at both national and local levels.
June 1999
Full report English 
(361kb) | Full report Vietnamese 
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