Last update 10/22/2010 5:37:37 PM (GMT+7)

V1000 shows it’s the right time to restructure national economy
VietNamNet Bridge – Many conclusions can be drawn from the V1000 ranking – the list of 1000 Vietnamese big corporate tax payers released by Vietnam Report and VietNamNet. One of them is that Vietnam’s national economy not only needs to expand in breadth but also in depth.

Harvard Professor congratulates enterprises in V1000 rankings

Vietnam’s economic growth has been created on four main factors: natural resource exploitation, capital overuse, cheap labour force and the leading role of state-owned enterprises.

With this development model, Vietnam has achieved great results over the last two decades. However, economists have pointed out that the model cannot be expected to produce good results forever, and that it is now the right time to restructure the national economy to keep up with the pace of other economies in the world which have made considerable changes after the crisis.

And the enterprises in V1000 would be the “regular army” which pushes forward the process of restructuring the national economy.

Though only accounting for a small proportion of the existing 300,000 operational businesses, the V1000 businesses paid 90 percent of the total income from corporate taxes over the last three years.

Especially, in many localities, the taxes paid by the V1000 enterprises are considered the “lever” which helps develop local economy and improve local people’s lives. It is understood that the biggest tax payers are the businesses which can make biggest profits.

The path to industrialization is still thorny

In general, Vietnam’s economy is moving towards further industrialization and modernization. Industrial and construction sectors have become the driving force in Vietnam’s economic growth. The proportions of agriculture, forestry and fisheries production in GDP have decreased from 24.53 percent of GDP in 2000 to 22.1 percent in 2008, while the proportion of industries has increased from 36.73 percent GDP to 39.73 percent, and the proportion contributed by the service sector to GDP has decreased slightly from 38.74 percent to 38.17 percent.

However, as the V1000 ranking shows, the role of industrial and manufacturing sectors in the national economy is still small because of their limited capability to create profit. In the production sector, the vehicle assembling only ranks ninth out of 10 economic sectors which paid biggest taxes.

V1000 clearly shows that the businesses fields where highest profit can be earned are mostly the fields under the state monopoly: natural resource exploitation, real estate and finance and banking.

This shows that Vietnam still has to go a long way in its strive for furtherindustrialization, and that Vietnamese manufacturers still need to make more efforts to upgrade their technologies and improve their competitiveness.

Most of the biggest tax payers located in key economic zones

More than 2/3 of theindustrial output was generated by the enterprises in Hanoi-Hai Phong and in the east of the southern Vietnam.

Though the number of enterprises of HCM City listed in V1000 is 1.5 times higher than the number of enterprises from Hanoi , the sum of tax paid by Hanoi’s enterprises is higher than the tax sum paid by HCM City’s enterprises.

The 1000 enterprises paid 84 trillion in 2007-2009. Of this amount, Hanoi’s enterprises made up 42.8 percent, while enterprises in HCM City made up 34.15 percent.

Meanwhile, the sums of the tax paid by enterprises from other provinces and cities, except Dong Nai and Binh Duong, were inconsiderable. The number of enterprises the cities and provinces listed in V1000 is less than 20 and the amount of tax they paid accounted for less than 10 percent

Private businesses not strong enough

Though the number of private businesses has been increasing rapidly over the last few years, they are still not strong enough. Private businesses only paid 17 trillion dong worth of corporate income tax in 2007-2009, less than 50 percent of the tax sums paid by state-owned enterprises during the same period (46 trillion dong).

State owned enterprises, mostly economic conglomerates and general corporations, are still the biggest tax payers in Vietnam. The top 10 enterprises, mostly included state owned enterprises and paid 25 trillion dong in tax, which is higher than the total amoung of taxes paid by all private enterprises.

Minh An