VIETNAM NATIONAL UNIVERSITY HOCHIMINH CITY INTERNATIONAL UNIVERSITY

REPORT
Introduction to Macro Economics Enterprise growth and survival in Vietnam-Government role
Group 9

1. Ong Minh Quang 2. Phm Minh Mn 3. Hunh Hu Lc 4. Phan Thin Tm 5. Lm Th Tr My 6. Nguyn ng Phng Vy 7. Trn Kim Yn 8. Nguyn Hng Mai 9. Nguyn Vnh Phc 10. Nguyn Vng Yn Nhi

BABAIU11090 BABAIU11001 BABAIU11058 BABAIU11296 BABAIU11298 BABAUN11020 BABAIU12156 BABAIU12192 BAIU09224 BABAUH12032

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Content I. Introduction II. Growth & Survival: a. Growth i. Reasons: 1. Internal 2. External 3. Governments Policies ii. Solutions for new enterprise that develop b. Survival i. Internal Factors of Bankruptcy ii. External Factors of Bankruptcy iii. Effects of governments policies iv. Exist Strategies + Suggestive Strategies III. Summary

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Introduction

Vietnam is nowadays able to be considered as a huge range of enterprises and can attract more investments from other countries. In 2015, we welcome a big event that Vietnam will join ASEAN Economic Community (AEC), so we may have a big chance to develop further especially in our economy. To be shaped, our government play a very important role in setting a long-term strategy to get a higher economic position in ASEAN and also in the world. In our report, we make a small analysis about opportunities and difficulties we are having help us in the near future. To be clear, our group will state some real issues that hinder our economy from expanding and also indicate some governments policies attached with these problems. Moreover, we also provide some suggestive strategies that can be useful for our government.

Growth-Reasons
Internal
In the recent few decades, the domestic economic is gradually develop. Before 1986, Viet Nam has an economy as the economy of the socialist countries. In 1986, Viet Nam set up one new innovation policy in the market economy socialist orientation. Although the sector is expending, the core economic sector still be under the administration of the government. After 1986, Viet Nam's economy has experienced tremendous growth and achieved economic growth of an average of 9% annually from 93 to 97, especially after the United States removed the embargo on trade with the South of Viet Nam in 1994. Some of the best examples for this advanced leap is 85% GDP growth in 1997 was fallen to 4% in 1998 because of the impact of the event ASEAN Economic Crisis in 1997 and increased to 4.8% in 1999. GDP growth increased from 6% to 7% between 2000-2002 whereas the world economy is stagnant. To be achieved these accomplishment, we must to mention these following reasons:
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 Process and procedure established business has been shorted and made a lot of ventilation compared with the previous year. Thus, it could help business reduces time and feel more convenient to make conduct with the authorities. The presence of variety of investment funds in Viet Nam launched initially formed and developed a systematic way. The strong development of the commercial banking system in recent year has been the growth of Viet Nam's economy. Businesses are take advantage of the positive available factors such as the population, the geographic, and the natural resources Factors client is a key factor for the successful business The number of customer buying based on brand attributes and no small proportion is sometimes difficult for the marketing of product and distribution channels. To be successful, businesses must be not depend on that factor but depending on the ambition of leader, as well as thought leadership and direction of the business and human resources. Due to the leader's abilities, they have to take advantage of effort to liberalize the economy and implement reforms, build infrastructure to reform the economy.

External
a) Inflation
High or unpredictable inflation rates are regarded as harmful to an overall economy. They
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add inefficiencies in the market, and make it difficult for companies to budget or plan longterm. Uncertainty about the future purchasing power of money discourages investment and saving. The inflation rate in Vietnam was recorded at 5.92 percent in October of 2013. From 1996 until 2013, Vietnam Inflation Rate averaged 7.3 Percent reaching an all time high of 28.2 Percent in August of 2008 and a record low of -2.6 Percent in July of 2000. In Vietnam, the inflation rate measures a broad rise or fall in prices that consumers pay for a standard basket of goods.

b) Competiton
The biggest challenge of the WTO after 6 years is increasing competitive pressures, including the domestic market due to it gradually opening the market to foreign companies. Meanwhile, the competitiveness of enterprises (companies) Vietnam is not high; competitiveness of goods in all three national level commodity, DN poor, higher production costs, low grade compared with international standards, service quality is not professional. At the same time, due to inter-communion with the international market's fluctuations to impact the world in Vietnam faster, stronger.

Governments Policies
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CORPORATE INCOME TAX

Since 01/01/2014, tax income will be reduced by about 22%, instead of the current 25%. And since 01/01/2016, the case subject to 22% tax rate specified in this paragraph apply to them the rate of 20% and enterprises with total revenue of 20 billion 20 % tax rate

PRIVILEGES ON LAND
Exemption or reduction of land use, exemption or reduction of land rent, water rent state, Support land and water surface rent of households and individuals, Exemption or reduction of land use purpose change the land use

TAX INCENTIVES FOR EXPORT, IMPORT TAXES

State policy requires a lot of tax incentives for businesses as applicable tax rate 0% preferential imports for some products such as line telephone sets with cordless handsets phone, depressing tax preferential import tax rates for many food items such as rainbow trout (trout), Atlantic salmon, herring declined from 12% to 10%; butter dropped from 14 to 13%, The beauty products such as: Preparations for permanent waving or straightening, hair spray also proposed import tax rate from 17% to 15%. Many cars of heading 8703 reduced import duty from 74% to 70%, a number of vehicles proposed reduction from 62% to 59%. Besides, the government should take measures to promote the development of such as: First, the time required to set strategic direction for business development which now proposes appropriate policy mechanisms to support business development. Second, build a system of financial institutions serving the capital needs of businesses, enabling companies to access funds at an interest rate low through policy, government decrees. The government should accelerate reducing interest rates. If only offer a lower interest rate, the solution is not optimal solutions, which have done all 3 things: Frozen reschedule and acquired NPLs. Third, focus on improving the quality of human resources. Resources used to specialization towards high quality. In addition to specialized training to improve disciplines, the team leader should be trained in management skills, financial management skills main skills of human resources management... Fourth, the need to take advantage of tax policy priorities are being supported by the State additional funding to action.
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Fifth, the immediate transition forms to the traditional sales channel selling modern, dynamic and flexible so that the state exists to solve prolonged storage, freeing funds are stagnant. Sixth, in the context of global integration as the current need to raise awareness business community about the role and importance of IT applications believe in the business activities. This step is necessary to meet the growing demand of information technology applications in economic development social and economic integration of the country internationally. Conclusion: The role and position of critical business systems in the economy, should implement synchronous measures and policies to encourage enterprises

Growth- Solutions for new enterprise that develop

First customer : You will not be able to say is "doing business" when you have not
taken a customer. If initially you do not have customers, you have to put a priority on this. You expand and "warm" the inherent relationships. Those of you surely know who wants you to succeed and who will help you in what is needed for your business or are ready to introduce you to potential customers.

Investment in sales skills : Sales are vital to the business. Often the newly
established enterprises often lack the sales experience. Take out a fixed schedule every week to study and apply the necessary sales skills fit your business model . You do not think that marketing will help you for sales Marketing is a different story than the sales story. Marketing helps create customer interest for your business. Once you have an interested client, you must use your sales skills to make them buy from you

Profitable : Revenue is the most important solution to solve fiancial problems but is
only superficial. The ultimate goal you need to achieve is profitable. Without profit, your business will fail. You have to understand the value of your business and ensure that you focus on making money. For some businesses, their profits from investing in research and innovation. Consider financial problems to determine your company's profits come from.

Pricing policy: In the first 90 days, you will have to face the fact that you get from
the market. You have to weigh very carefully about your pricing policies. Do not repeat the mistakes that companies often make the lowest offer in the hope that the price is unbeatable. Your opponent now has established long before you, and they can offer the price you can not compete.

Prepare quarterly goals: Establishing a business is very time-consuming and

sometimes make you feel stress. You need to learn at the same time a lot of skill and a

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lot of systems you have built. You will easily fall into work day after day without results. Successful people are often the target set at 90 days (one quarter) with clear timelines. This is the difference between success and will not succeed .

Type of business : "personality" of your business and will be consistent with the
needs and trends of the business. If you understand the nature of your business, you will know how to do what is best for it.

Survival
Internal Factors of Bankruptcy
The national reports point to internal problems as being major reasons for the demise of a significant proportion of companies. These problems are usually a result of mismanagement or taking excessive risks, and usually the companies concerned either had long-standing problems or were not prepared for changing market conditions. As a result, when the economic downturn and financial crisis hit, bankruptcy was difficult to avoid. The two main internal factors identified were excessive debts and a failure to develop an effective strategy for competing in the market.

- Financing
Financing is one of the primary challenges that small businesses face. Many business owners take out loans to help finance their operations. If a business struggles, his lender may not be willing to grant additional funding, which could lead to bankruptcy. Even if an owner can secure more financing to keep his company afloat in the short-term, high debt makes it more difficult for a company to be profitable because it has to pay interest on the debt. Excessive debts were a widespread cause of bankruptcies in nine countries, according to the national correspondents Austria, Belgium, the Czech Republic, Germany, Italy, Lithuania, Norway, Poland and Romania. Prior to the financial crisis, borrowing was cheap and companies could therefore take on significant amounts of debt at little cost; however, it became difficult for them to continue servicing the debt when the economic crisis hit and their sales revenue declined. Small and medium-sized enterprises (SMEs), which rely more on borrowing, seem to
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have been the most vulnerable in this regard. Liabilities that exceed their assets. The other definition of insolvency in bankruptcy court is having liabilities that exceed one's assets. Even if cash flow is acceptable, legal counsel may advise businesses to file bankruptcy if liabilities have risen too high. Companies that file bankruptcy for this reason often hope to reorganize in a Chapter 11 bankruptcy by restructuring their debt and discharging as much debt as possible. The success of such reorganizations depends partly on the debtor company's behavior, but also depends partly on the willingness of creditors to cooperate. Thus, reorganization in bankruptcy court is inherently risky. The crisis not only led to the collapse of economically and financially vulnerable companies; it also hit competitive, but financially weak, enterprises. In particular, companies that began to restructure before the downturn, and had borrowed large amounts of money to do so, suddenly found their sales income falling and a reluctance on the part of banks to extend more credit. For example, in Norway, Tandberg Data a global provider of data storage had been experiencing financial problems since 2007 and underwent restructuring in 2008. The company failed in its attempts to renegotiate its debt repayment schedule and went bankrupt in April 2009.

In addition, companies which had borrowed in foreign currencies, especially those in the new Member States that joined the EU in 2004 and 2007, experienced a large increase in their servicing costs as their domestic exchange rate declined markedly.

- Poor Decision Making

The pursuit of an uncompetitive market strategy although a major internal cause of bankruptcies in many countries is often difficult to distinguish from external factors, which frequently aggravate the problem. In markets that are highly competitive, slight mismanagement may cost a company its position in the market. Moreover, companies which have not adopted a competitive strategy to assure survival as the market contracts during the economic downturn may be forced out of business as their share of the market declines. For instance, there are a number of examples of mismanagement in the textiles industry in several countries Austria, Belgium, the Czech Republic, Latvia, Lithuania and Slovenia and a failure
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to anticipate the consequences of the international Agreement on Textiles and Clothing coming to an end in 2005. This World Trade Organization (WTO) agreement had allowed quotas to be imposed on imports of textile products from developing countries. The failure to foresee the effects of this development was compounded by a lack of action during the subsequent threeyear period when the EU imposed temporary quotas on imports from China.

Lack of planning and level-heading thinking can lead to hasty decisions and business failure. For example, a business owner might spend time and money developing a product that she believes in without surveying customers and studying production costs to gauge whether the product could be profitable. Even if the product is useful, it might not be financially viable from a business standpoint. Lack of education and experience in finance and management can increase the likelihood of poor decisions, but no company is immune to making mistakes. - Other Causes Bankruptcy can result from a host of other underlying problems that inhibit profitability. Some other factors that can contribute to bankruptcy include poor business location, loss of key employees, lawsuits raised by competitors and personal issues like illness or divorce. Unforeseen disasters and criminal activity like floods, storms, fires, theft and fraud can also cause hardships that lead to bankruptcy.

External Factors of Bankruptcy

Firstly, CRS: Corporate Social Responsibility.
CRS is one of other important traditional reasons such as spending, quality and delivery service in business. CRS are connected with the enterprise's strategies and become an imperative condition to the enterprise's survival and development. CBR mean: - sustainning and protecting the company's culture - protecting the interests of teh employees - contending the corruption
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- Environmental Protection: When a marketing transaction impacts a third party--others besides the marketer and purchaser--the effect is called an externality. The third party is often the environment. Thus, it is the government's role to regulate industry and thereby protect the public from environmental externalities. Whether the government is effective in this role is a matter of much discussion. The Gulf oil spill of 2010 has been cited as evidence of lax oversight. - making good conditions for the employees - the good relationships - one for all

Secondly, The government policies on domains

- possession - management - distribution - ensure the stable macro economics to develop and grow - ensure the increasing of the social welfare for the employees - social justice - Taxation: Governments at all levels tax businesses, and the resulting revenue is an important part of government budgets. Some revenue is taxed at the corporate level, then taxed as personal income when distributed as dividends. This is in no way inappropriate, since it balances the tax burden between the company and individual and allows the government to tax more equitably. - Investor Protection: Government mandates that companies make financial information public, thereby protecting the rights of investors and facilitating further investment. This is generally done through filings with the Securities and Exchange Commission. Whether federal regulation has been adequate is a matter of much debate.

Effects of governments policies

Reference Source: Document as Solutions for monetary policy and fiscal policy in Vietnam 2013 (Associate Professor-Dr. Nguyen Thi Nhung and Master Phan Din V of University City Bank. HCM) Articles: Monetary policy still has to "load" heavy-Dr Tran Hoang Ngan - Member of the Economic Committee of Congress talk to reporters Banking Times.

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Overall, the current Vietnams economy has a lot better by adjusting the monetary policy. For example, the macroeconomic is stable , inflation is curbed- CPI forecast at 7.5% in 2012, the exchange rate remained stable, rising foreign exchange reserves, interest rates fell from 20 % -25%, the credit structure changes towards increasing credit to agriculture, exports of small and medium enterprises, social security and basic social welfare is guaranteed. This situation encourages enterprises to remain their preferences in the market to subsidize or earn profits after long-hard time

. However, the monetary policy still has limitations, which adversely affect the business. Firstly, the potential risk of inflation is still high because fiscal longer dominate currency. This means the country uses monetary policy to solve many of the problems of fiscal policy, such as: support for a series of five priority areas supposed fiscal policies but using the central bank money, or advance to the budget disbursement, 30.000 billion mortgage assistance, and solving bad debts through VAMC also 100,000 billion "... all through the State Bank of Viet Nam. Secondly, the imbalance reflected in the rapid credit growth in previous years, business loans are easy to use false investment objectives, managing cash flow is limited to led to a billion NPL's commercial banking system is at 10% of total loans about 250.000 billion. Next, management policy and banking supervision are not really effective. For example, many banks pay the higher frame interest rates prescribed by the State Bank a few percentages through conditions such as deposits above 100 million or 500 million VN will be "plus" on the interest. Additionally, State Bank does not apply the law of the market economy well with weak banks, liquidity, and loans over the rate specified in the itinerary ... during merger, consolidation and acquisition of banks. Therefore, the safety of the financial system in Vietnam
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is threatened. On the other hand, the delay of its monetary policy when applied to bank manager VN economy has created disadvantages such as lack of flexibility, asynchronous in coordination between ministries, agencies with local central offices for the application and enforcement of policies. Moreover, the situation of cross-ownership stake in the banks reduces competition in this market and the bank's capital investment can be used to incentive for investment in the subsidiary, or as company backyard. For example: Maritime Bank is owned by Agribank, while the Maritime Bank and owns MB Mekong Development Bank. More complex, Asia Commercial Bank (ACB) is owned Export-Import Bank of Vietnam (Eximbank), but also owns Eximbank Bank Saigon - (Sacombank). Cross-ownership in MB Bank : Even thought, restructuring is considered as a good solution but the fact that the situation becomes more complex cross-ownership after restructuring. Thats because the group of shareholders are actually non-financial corporate control of the bank before and it continues in control now. Thus, the cross-ownership issue remains unchanged. This condition causes unfair competition between companies. Generally, all of these disadvantages can cause companies become victims of inflation and changes in macroeconomic, as well as the weak banking system, and the belief of enterprises also will be suffered . One of the complex problems in Governments policy is the corporate income taxes are constantly changing. There are about 100 companies fall into arrears with taxes and penalties while the policy was implemented tax incentives according to official guidelines of the Ministry of Finance and the General Department of Taxation and Tax provinces. The reason why hundreds of companies have arrears, penalty amounts large tax above is due to the inconsistency of tax regulations. The policy made the tax reduction, then change to not reduce tax, when they require the companies count combined tax but also forced separation another time. Some enterprises have to be collected large tax arrears and penalties as SCD (6. 89 billion VN-tax and 3.7 billion VN-penalty), BMP (75 billion VN-tax and 45 billion VN-penalty). This made it difficult for businesses and affects the rights and legitimate interests of businesses. As the tax arrears and penalties make many losses for businesses and shareholders. Besides that, Bankruptcy Law in Viet Nam is also not specified. The ability to handle insolvent computing companies is very limited is one of the ranking factors held back the business environment of Vietnam in the World Bank report (WB) and International Finance Corporation (IFC) announced. World Bank and IFC's calculations show that the time to solve a business is unable to pay up to 5 years and cost approximately 15% of the property value. However, the recovery rate is only 16.2 cents / USD. They fall into the situation that cannot produce but cannot stay permanently. It makes the enterprises become loss more and more over the years and the fact that they cannot pay their debts or take back money.
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Exist Strategies + Suggestive Strategies

1. Equity: the first factor
Processes and procedures required in establishing business have been shortened and made lots of ventilation in comparison with the previous years, which helps businesses reduce the time and always feel more convenient to make contact with the government authorities.

The presence of international investment funds in Vietnam and variety of Vietnamese investment funds launched initially formed and developed a systematic way, but they are not really heavily involved in the process of supporting Vietnamese enterprises.

The strong development of the commercial banking system in recent years has shown the growth of Vietnam's economy as well as the heat of the capital market.

Although we all know that the early stages of development of businesses is the process demanding capital, but accessing to capital from the commercial banking system is still difficult for them, especially small business enterprises. Therefore, governments need to take more effective measures to help enterprises access the equity in the loanable market because this is a critical element for them to survive and contribute to Vietnams economy.

2. Survival is the only way to growth

There are a lot of business leaders who do have the competition courage and lack of confidence because they fear that it is cannot be done or they will face many difficulties in order to overcome competitors.

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This makes a negative impact on the practice of directing the business plan strategy as well as the expected contributions of employees who are enthusiasm in work. Leaders lacking confidence will result in a low in development aspirations of staffs which does as well amount to the fact that they may decide to move to company of their competitor although their current benefits are very high. In conclusion, corporate governance has always played a key role in the business management. Government should pay attention to these Vietnamese enterprise and create more protection in order to help them in competition with others, especially at the beginning period.

3. Customer factor:
Customer plays a key role in the success of a business. The number of customer buying products which bases on brand name occupies a significant part. This is a difficulty for small businesses in marketing their products and using distribution channels due to the fact that these new enterprises are often weak in this field. Large businesses have many advantages in controlling the marketing expenses as well as good distribution channels. At the current time, there needs to have a large support from customer to help Vietnamese enterprises develop because there are numerous products and services offered by variety companies and customer have a good many choices for their demand. However, this is also a challenge for companies those want to occupy the market. To put it briefly, company needs to make as much revenue as possible for their development and attracting customer is an essential step which will help them reach their goal. In addition, government needs to promote programs which encourage Vietnamese buy and use products and services produced by Vietnamese companies.

4. Human resources: the strength to develop

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Enterprises depend not only completely on equity capital but also the ambitious as well as the thinking and direction of managers to the company and human resources in order to reach to success. However, there are many managers who truly desire to develop the company have to face difficulties in managing human resources. A lot of young people joining small companies only have the aim of gaining experience. These people are willing to move to other bigger companies to receive higher benefits although the current company also has good benefit and development opportunities. Besides, working for a company with famous brand name is always a desire of any people which is a disadvantage of small companies. This has made a negative impacts on the stable development of human resources in Vietnamese companies owing to the fact that these companies often employs a small number of employees. Companies have to suffer considerable lost when employees playing key role quit suddenly.

Summary
Enterprise growth and survival in developing countries, especially Vietnam has seen a significant expansion in recent years. In this report, we have to find precisely reasons and determine what government policies influence on them as well as offer some resolutions for both enterprises growth and governments support. First of all, in fact, new enterprise still have a lot of obstacles which limit their ability to develop in this country. Over the few decades, the domestic economy in Vietnam has a noticeable step when the world economy reached the deadlock thanks to such reasons we mentioned above. Secondly, there are some suggestions for new enterprise or some which in trouble to make themselves become better. In addition, the first thing they have to do is concentrate on their first customers who will be introduce them to potential client. Sale skills, profit, understand nature and consist with the needs and trends of business, prepare for the quarterly goals, or notice about pricing policy are some main factors that put a huge impact to help them achieve the ultimate goal.
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Bankruptcy is also a big problem which make threats against any enterprise. It is defined that the excessive debts and poor decision making as well as poor business location, lawsuits, Overall, adjusting the monetary policy is also a good resolution to current Vietnams economy. Yet, it still has its own limitations which influence to enterprises like high inflation, the imbalance reflected in the rapid credit growth, management policy and banking supervision are not really effective, Beside, Bankruptcy law in Vietnam is not specified, therefore, enterprise can not control, can not pay debts and take money back. The authorities has planned to promulgate to support the enterprise by offering them many policies like corporate income tax by reducing from 25% to 22%, privileges on land by exempting land use, tax incentives for export and import by setting a lower tax rate for some specific products. Besides, the law makers also should take measures to support the enterprises development like proposes an appropriate mechanism, build a financial institutions system, concentrating on human resources quality, focusing on tax policy priorities, enhance IT skills and knowledge in this current global integration. Such resolutions should implement synchronous to encourage and support the enterprise due to they also give a hand to the development of the country.
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