Home / Business Development

Current Status of State Mechanisms and Policies for Business Development Services



10%

6% 4%

Maybe you are interested!

10% Advertising

Current Status of State Mechanisms and Policies for Business Development Services

Market Research Exhibition

Event organization

70%

Product design


Figure 2.2. Proportion of Marketing services in 2007

Source: Marketing Magazine No. 40, 2008

The structure of marketing service use in 2010 also did not change much compared to 2007. The proportion of market research services and exhibitions, which are important services for export enterprises, is still very modest (Figure 2.2). In general, market research and trade promotion services in Vietnam have not met the needs of export enterprises due to a number of reasons. The most basic and important reason is that resources for trade promotion activities are limited in quantity and quality, especially in local trade promotion agencies. According to statistics from the Department of Trade Promotion (Ministry of Industry and Trade), in 2007, only about 31.7% of local trade promotion agencies had more than 10 staff directly involved in trade promotion. Human resources in trade promotion have two basic limitations: expertise and foreign language. Attracting highly qualified human resources and good practical skills in trade promotion still faces many difficulties.

2.2.2.4. Market information services

With the explosion of information technology today, the volume of market information posted on the media is huge. Businesses

Enterprises can access, search and process information according to their needs. However, to synthesize and process this information in a timely and accurate manner requires enterprises to mobilize resources for this work. For many enterprises, due to limited resources and lack of professionalism in exploiting market information, enterprises exploiting market information themselves will lead to low efficiency. Therefore, it is inevitable that enterprises choose to use marketing and market information services.

For export enterprises, information services play an increasingly important role in supporting enterprises in building an information system, creating conditions for export enterprises to save operating costs, search for export markets and potential customers, thereby improving competitiveness. Organizations and private enterprises in this field have been established to effectively support enterprises. A typical example is the Government's Project 191 on Supporting Enterprises in Applying IT in the 2005-2010 period, a program organized by the Hanoi Department of Information and Communications in coordination with VCCI, aiming to provide free consultation on services and technology solutions such as accounting, searching for importers from the US, promoting e-commerce, English training... 11 enterprises and organizations have committed to participating in this project. Through the project, businesses will be able to purchase products at preferential prices (minimum 10% for hardware and from 30% to 100% for software/services) from IT units that have committed to "contributing" to the program. For their part, service businesses also see this as a good opportunity to promote their brand, image and increase revenue.

In 2007, VCCI provided information directly to 19,800 businesses. This number increased to 26,700 businesses in 2008 and above.

30,000 businesses in 2009 [27].

However, according to a survey on consulting and market information provision activities in Vietnam conducted by the Vietnam Center for Industry and Trade Information in 2008, the quality of this service has not been highly appreciated by businesses, only 6% of surveyed businesses highly appreciated the quality of this type of service, while up to 50% of businesses rated the service quality as only average [7].

The reasons for the limited quality of market information services are:

- Technical infrastructure and technology level in consulting and market information providing units, although improved, still do not meet requirements.

- Human resources in consulting and market information providing units are still inadequate due to lack of quantity and poor professional qualifications.

- The ability to invest in collecting, processing, and receiving market information between exporting enterprises and market information providers is not yet synchronized. The use of incompatible technology is a major obstacle for enterprises and consulting units to coordinate with each other in the process of providing and using services.

- Legal regulations related to practice are also one of the obstacles that limit information collection to meet business needs.

2.2.2.5. Logistics services

Logistics services have been growing with a relatively high growth rate in the recent period, from 20% to 25% per year. From only state-owned enterprises participating in providing services, since the reform, many private enterprises have participated. The number of these service enterprises has increased.

Although the industry has developed relatively rapidly, the competitiveness of businesses in this industry is still not high.

Vietnam currently has about 1,200 enterprises and 25 out of the world's top 30 freight forwarding corporations participating in business and investment in various forms, which is not a small number compared to other countries in the region. However, according to experts from the Nomura Institute of Japan, Vietnamese logistics enterprises only meet about a quarter of domestic market demand. Although 80% of Vietnam's export volume is transported by sea through domestic seaports, Vietnamese transport enterprises only handle less than 20% of the export volume. During the period 2006 - 2010, although the logistics market developed rapidly, over 70% of the value created belonged to foreign companies [35].

The main causes of the above weaknesses are:

- The infrastructure for the logistics service industry is still weak, especially the seaport system serving the needs of export enterprises. Although Vietnam has many seaports, only 10% are qualified to participate in international transportation with loading and unloading productivity only equal to 1/3 of the average productivity of countries in the region. In addition, the application of information technology in warehouse management is also a weakness that limits the competitiveness of the logistics industry in Vietnam.

- Technology applied in the logistics service industry in Vietnam, especially information technology, is still weak. A survey by SMC Consulting shows that the application of information technology in 45% of Vietnamese logistics enterprises has not met the requirements, the gap in level between domestic and foreign enterprises is quite large.

The WTO commitment to allow 100% foreign-owned companies to operate in Vietnam is creating huge competitive challenges for domestic enterprises.

- Human resources in the logistics industry in Vietnam are still weak, skilled labor is lacking in both quantity and quality, management and executive staff lack business knowledge and experience. Operational staff are mainly trained in non-logistics majors; the direct labor force is low-skilled, and their work is unprofessional.

The worrying issue is that the logistics human resource training facilities are too few compared to the demand. With a patchwork of human resources, lacking in both quantity and quality, this service industry has little chance to compete equally with foreign rivals. With the goal of developing the logistics service industry set out in the Overall Strategy for Developing Vietnam's Service Sector to 2020, developing logistics human resources is an urgent issue in the current period.

- There is no strong enough legal corridor to facilitate logistics activities.

To develop logistics services to meet increasing demand, effective solutions are needed to overcome the above causes.

2.2.3. Current status of state mechanisms and policies on business development services

2.2.3.1. State regulations on business development services

- Provisions in the Commercial Law No. 36/2005/QH11 : Chapter III of the Commercial Law clearly states the provisions on general service provision activities, rights and obligations of participating parties. The Commercial Law also specifically stipulates some types of business support services for export enterprises.

Export services such as: Advertising Services, Trade Promotion Services, Exhibition Services, Logistics Services.

These regulations have facilitated the provision and use of business services by enterprises.

- Decree No. 90/2001/ND-CP dated November 23, 2001 of the Government on supporting the development of small and medium enterprises. This Decree has affirmed the important role and position of small and medium enterprises in the national economy and provided important mechanisms and policies to develop domestic small and medium enterprises. According to the provisions of this Decree, small and medium enterprises will be supported in part with costs for training, consulting, finance, credit, land, etc. This allows small and medium enterprises to increase their ability to use services, especially business development services.

- Decree No. 87/2002/ND-CP dated December 5, 2002 on the provision and use of consulting services. This Decree applies to all types of consulting services for fees, except for legal services as prescribed by the Law on Lawyers and guiding documents.

Article 4 of the Decree provides regulations on preferential policies and development incentives for consulting services. The Decree clearly states that the State has preferential policies to develop professional consulting organizations of all economic sectors. However, there are no specific and clear regulations on such incentives.

The Decree also clearly stipulates that the main contents of the consulting service provision contract are only listed for guidance purposes and are not binding. The parties involved can agree on additional details of the contents and terms of the contract depending on the actual circumstances.

Guidance notes can help alleviate potential disputes that may arise due to the lack of necessary provisions in service contracts.

One of the new points is that the Decree has paid attention to ensuring the rights of service users through regulations requiring service providers to comply with professional principles in providing consulting services, ensuring reliability, objectivity and independence in providing services. The Decree also sets out binding obligations for consultants. The most prominent point is that all consultants must facilitate customers using consulting services in filing applications for intellectual property protection for consulting results. Consultants must also carry insurance for professional liability. However, the problem is how consultants can fulfill this obligation while there is currently a lack of liability insurance providers in Vietnam.

According to the content of the Decree, all consulting activities must be carried out through a certain consulting organization with two or more people, qualified to provide consulting services. This means that consulting activities of individual individuals, including experienced and qualified consultants, are not accepted. Thus, by this provision, the Decree does not recognize the practice of consulting by individuals, although in reality this activity still exists. This is one of the limitations of this Decree.

- Decree 140/2007/ND-CP on “conditions for logistics service business and liability limits for logistics service traders”. The content of the decree clearly states concepts related to logistics services and regulations related to logistics service business activities. Basically, the decree has played a guiding role for businesses participating in providing this type of service.

- Decree 87/2009/ND-CP on multimodal transport was issued to replace Decree 125/2003/ND-CP issued in 2003, which included a number of changes to the old decree such as changing the concept of multimodal transport in which multimodal transport is divided into two types: international multimodal transport and domestic multimodal transport, while this concept has never existed in the world. This concept has given rise to new regulations on domestic multimodal transport.

- Ordinance of the National Assembly Standing Committee No. 39/2001/PLUBTVQH dated November 16, 2010 on advertising. The Ordinance clearly demonstrates the State's policy in protecting the interests of parties participating in advertising services, including advertising enterprises, service-using enterprises and consumers. The Ordinance also clearly states the State's policy is to always create conditions for advertising services to develop, encourage all economic sectors to cooperate and invest in order to develop advertising services.

- Decree No. 53/2006/NDCP dated May 25, 2006 on policies to encourage the development of non-public service providers. Clause 3, Article 2 of the Decree clearly affirms that the State encourages and creates all conditions for economic sectors to participate in providing services in general and DVPTKD in particular. The content of this Decree also clearly states that non-public service providers are encouraged to form joint ventures with domestic and foreign organizations suitable to their fields of operation to attract capital, labor and technology to improve service quality.

- Decree No. 56/2009/CP dated June 30, 2009 on supporting small and medium enterprises. This Decree applies to small and medium enterprises, organizations supporting small and medium enterprises, including organizations providing business development services. Chapter III of the Decree clearly states specific support policies on finance, technology innovation, market expansion promotion, information, and consultancy.

Comment


Agree Privacy Policy *