Việt Nam's largest firms remain resilient despite COVID-19

Delegates at the release of the 2023 Report on Top 500 Vietnamese private enterprises (VPE500) on August 31. — Photo courtesy of KAS

HÀ NỘI — Even though there were few large-scale private enterprises in the Vietnamese economy, their roles are crucial in the development of private enterprises, especially during the COVID-19 pandemic, according to the 2023 Report on Top 500 Vietnamese private enterprises (VPE500).

The report was released on August 31 and conducted by the Vietnam Institute of Development Strategies (VIDS) in collaboration with the General Statistics Office of Vietnam (GSO)'s Industrial Statistics Department and funded by the Konrad-AdenaeurStiftung Vietnam (KAS).

The first VPE500 report was published in 2022.

This year’s report focuses on analysing the dynamics of VPE500 during 2021-2022 when COVID-19 hit the economy.

Florian Constantin Feyerabend, resident representative of KAS Việt Nam, emphasised the important role of private enterprises.

“The imprint of private enterprises in the Vietnamese economic picture is becoming more and more obvious. In the current volatile global economy, the private sector has been contributing to maintaining Việt Nam's economy,” he said.

The group generated 57.8 per cent of net revenue of businesses in the country by the end of 2021.

In the private sector, the largest domestic businesses could be seen as market leaders and influencers in the economy. Performance of those firms reflect the health of the whole economy, Feyerabend added.

According to the report, for domestic private enterprises, the COVID-19 pandemic has impacted smaller businesses more than larger ones.

The VPE500 experienced a slight decrease in workforce, but it was not significant, down 0.4 per cent. Notably, the businesses that remained on the list for three years managed to sustain a 0.2 per cent increase in staff.

This group of enterprises has a larger scale and experiences faster growth in scale than other private enterprise groups.

The VPE500 has the highest average labour productivity (around 9.3 per cent), as well as assets (18.0 per cent per year) and revenue (11.9 per cent). This suggests that the COVID-19 pandemic has had limited impact on the VPE500 group, as these businesses can still invest in expanding production and business assets.

As a result, VPE500 is more resilient than private enterprises in general, the report said.

The VPE500 also outperforms private businesses and other ownership types in terms of innovation and automation implementation ratio. In 2010, up to 43.0 per cent of the VPE500’s members engaged in research and development activities, nearly three times the ratio of state-owned enterprises, four times that of FDI businesses, and nearly 27 times that of private enterprises.

Moreover, 44 per cent of the VPE500 businesses own automation systems, 20 times higher than the ratio of domestic private enterprises, while surpassing that of state-owned enterprises and FDI businesses.

Banking group dominating the VPE500

The report showed that service enterprises dominate the VPE500, especially within the top ten largest businesses. Of these, the finance, banking, and insurance sectors hold an advantage, with 7 businesses in 2019, 9 in 2020, and 8 in 2021. The number of businesses in the commerce sector within the Top 10 decreased from 3 in 2019 to one in the next two years. Mobile World Investment Corporation was the sole representative of the commerce sector in the Top 50 for all three years, but its positions gradually declined (ranked 5th, 7th, and 8th in 2019-2021).

The VPE500 in the manufacturing and processing sector experienced significant swings over the years. These businesses primarily concentrate on food processing, metals and metal products, production materials, coal and oil extraction, and electrical and electronic sectors.

The real estate and construction group is relatively high in the list. However, due to the unfavourable market conditions during the COVID-19 pandemic, the number of construction businesses within the VPE500 has decreased from 67 to 50. Meanwhile, real estate enterprises increased, but their rankings fell.