Vietnam firms must tackle competition, green transition, digitalization challenges in tandem: experts

Businesses in Vietnam have no choice but to tackle multiple challenges including increasingly stiff competition, green transition, and digitalization at the same time, experts said on Friday.

While the country needs and is demanding adaption to green transition and digitalization, this process cannot be rushed, they said at a workshop titled "Opportunities and Challenges in the New Context: What Should Businesses Do?" hosted by The Investor and its Vietnamese sister publication nhadautu.vn.

Phan Dang Tuat, president of the Vietnam Association for Supporting Industries (VASI) and former chairman of top brewer Sabeco, said the recent entry of three Chinese retailers into Vietnam posed a big risk for Vietnamese firms.

Chinese firms can deliver their goods to Vietnam at more affordable prices with no shipping fees, he noted.

Another challenge posed by Chinese firms is the delivery of steel at “dumping prices,” hurting Vietnamese steelmakers.

Amidst these risks, Vietnamese firms also need to push green transition and digitalization. While these are indispensable needs, firms are more focused on the microeconomy and it will take time for them to make headway in this regard, Tuat said.

On the same page, Dr. Vo Tri Thanh, director of the Institute for Brand and Competitiveness Strategy, said it would take time for developing countries, including Vietnam, to implement green transition. Vietnam should negotiate to make the change gradually, he added

He also spoke of non-tax barriers, which he said are overused by some countries. The government and businesses should collaborate to solve relevant issues.

Nguyen Huu Duong, chairman of local beverage firm Hoa Binh Group, suggested businesses should focus more on selling points. He noted that he’d proposed a commercial center project with no charges for domestic businesses. Selling channels have become a more and more urgent issue for firms since the start of the Covid-19 pandemic, he added.

As long as Vietnam cannot sell its products cheaper than China, businesses will fail. His own group has backed out of manufacturing to focus on building social housing, he said.

A commercial center that domestic firms can use for free would help them and attract global buyers to Vietnam, turning the country into a trade hub. This can also attract many Vietnamese people who now prefer shopping outside Vietnam, Duong said.

Trade dispute weakness

Vietnamese firms are currently helpless in the face of online trade disputes, because business protection is underdeveloped. It is problematic for businesses to fulfill both domestic and foreign requirements to export their products, said Nguyen Anh Duong, an expert at the Central Institute for Economic Management (CIEM).

While the government is striving to aid businesses with digitalization, the mechanism is complicated and takes a long time to evaluate the support to be given. Besides, firms are unwilling to receive support that is too small to be of real help, Duong said.

Le Hong Viet, CEO of FPT Smart Cloud, a pioneer in digitalization, said Vietnam has massive opportunities to enter the digital era and develop "made-in-Vietnam" products. This offers a pathway for the country to avoid the middle-income trap and attain sustainable growth, he said.

While Vietnam has not been the first to join this field, it has many advantages, including the government's support and the willingness of top tech businesses to help, he added.

Generative artificial intelligence (GenAI) will play a key role in digitalization and the semiconductor sector, he stressed.

Do Tien Thinh, vice director of the National Innovation Center (NIC) under the Ministry of Planning and Investment (MPI), said investing in AI is the path to success.

Vietnam boasts many advantages for utilizing AI, such as a young population with strong understanding of technology and a rapidly-growing Internet-based economy, he said

He also acknowledged that AI can pose risks to some particular sectors, such as taking away the jobs of programers, teachers, actors-actresses, and marketers.

AI applications will not be the same for all sectors and firms should prepare initially by investing in cloud computing and data analysis, he added.

Dang Tran Tho, head of the Institute of Heat Engineering and Refrigeration under Hanoi University of Science and Technology, said Vietnam is not too far behind other countries regarding green transition and digitalization. He suggested that businesses and the authorities review and update relevant policies and remove impractical ones. They should also step up collaboration with scientists, he said.

He noted that small businesses will not replicate the digitization progress made by giants because the process is costly.

Meanwhile, economist Nguyen Thanh Hai said slow issuance of “the green taxonomy” is yet another challenge that faces Vietnam. The country has to build one in line with its status, but even its drafting phase has not been completed after three years, he said.