It's been 4 weeks since Vietnam entered a strict social distancing period to fight the fourth wave of Covid-19. With cases rising to hundreds, the government has decided to extend it indefinitely. Amidst strict measures to contain the pandemic, SMEs in Vietnam have entered a mass destruction era having been weakened by the lack of a solid management foundation, now coupled with the incapability to digitalize their businesses.
Like SMEs across the ASEAN, most Vietnamese SMEs started off as family businesses, with very little knowledge of professional business set-up and management system. Most business transactions are cash based, with zero or limited accounting and financial management. Business is done through personal or leveraged relationships, using unfair advantages often seen in emerging markets. For over 20 years now since the Law on Private Enterprises and Companies Law were passed, the private sector has grown significantly and reaped the fruit of the grey market.
As Vietnam market opens up, facing competition from regional and international players, the table has turned and since then created enormous pressure on Vietnamese SMEs to professionalize, to transform, and most importantly to digitalize in order to stay relevant to the future of business and technology. While SMEs flock to SME-support government agencies, NGOs, consulting individuals and companies in hope of a quick fix, the world was hit by the pandemic, and the rest is history. Over 51 thousand SMEs have officially closed during the first 4 months of 2021, with the majority legal registered capital of less than US$500,000.
During lock-down, I have done a series of free consultancy and online mentoring programs for local SMEs in order to help them make better decisions fighting the pandemic and transforming for the future. Each live-streaming session attracts 600 to 1,000 entrepreneurs, with post views totaling up to 15,000 per session. This little exercise unveils the urge to create practical SME-support programs from the government and related NGOs during such a difficult time for the economy as a whole and the private sector in particular. And even though I have relentlessly stressed such urgent needs to save local SMEs for the past 5 years, it is now more than ever that action needs to be taken if we are to contain this apocalypse.
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