For the first time, the issue of start-ups has been raised as a topic of wide-ranging discussion at the Asia-Pacific Economic Forum (APEC).
With the initiative from Việt Nam, the APEC Start-ups Forum was held under the framework of the APEC 2017 Small and Medium Enterprises (SMEs) Ministerial Meeting, on September 11 and 12, in HCM City. This is also one of the main themes of APEC Vietnam 2017.
According to Phạm Thị Thu Hằng, General Secretary of the Vietnam Chamber of Commerce and Industry (VCCI), the forum’s organiser, amidst deep and wide international economic integration, countries that have a high level of innovation and creativeness will have stronger competitiveness in the "common playground."
As the world has entered the digital era, creative start-ups have become the demand of all nations and the most critical issue for economic development of the APEC region.
In the region, the start-up ecosystem between member economies in APEC varies greatly. In particular, the more developed the economy is, the more business conditions tend to be improved.
The Global Entrepreneurship Monitor (GEM) study showed that South Korea, Canada, Japan, and the United States, as well as Australia, Singapore, Hong Kong (China) and Chinese Taipei, which have entered Phase 3 of the start-up ecosystem development (innovation-based development), are leading the entrepreneurial ecosystem in the APEC region.
The group of seven member economies---Indonesia, Chile, Peru, and Mexico, as well as Thailand, China, and Malaysia, also entered the second phase (efficiency-based development).
Meanwhile, the start-up ecosystem of Việt Nam as well as Russia and the Philippines has just entered the first stage (input-based development).
In fact, in the same area, economies whose development is based strongly on innovation have always grasped opportunities to engage in major production areas through various initiatives and creative ideas.
General Secretary of the Vietnam Chamber of Commerce and Industry (VCCI) Phạm Thị Thu Hằng spoke at the APEC Start-ups Forum (Photo: Hoàng Hải – VNA).
Hằng stressed that from the experience of the Group 3 economies, a favourable start-up ecosystem will help people capture business opportunities, and this is key to the country's development.
Therefore, building a start-up ecosystem and improving business start-up conditions have increasingly become urgent issues for developing countries such as Indonesia, the Philippines, Thailand, and Việt Nam.
At the APEC Start-ups Forum, representatives of the member economies exchanged, discussed, and launched initiatives to jointly build a connecting, dynamic, and creative start-up ecosystem in the APEC region, to create a common ecosystem by 2020.
According to regional ministers, the current environment and institutional capacity to promote start-ups in the region (including the legal framework, public policy, and venture capital funds) are still a challenge, and APEC members need to make greater efforts in addressing them.
Thus, the joint statement of the APEC 2017 SMEs Ministerial Meeting called for economies to remove barriers for creative start-ups.
Thus, each economy needs to take specific action, support the establishment of new businesses, and adopt legal frameworks that promote a friendly business environment and ensure access to resources, as well as build start-up networks and partnerships.
The regional ministers appreciated the fact that Việt Nam had successfully organised the APEC Start-ups Forum. This forum provided an ideal opportunity for member economies to share experiences and ideas and to seek appropriate tools to support start-up businesses and create a start-up community for the whole region.
The digital economy has become a necessity in the region and across the world. In a general context, start-ups are developing on the basis of innovative technology, which changes the way we look at global economic and social development.
In Việt Nam, Vũ Tiến Lộc, chairman of VCCI, emphasised: "Economies and enterprises are facing the integration of two waves of institutional reform and digital technology. Taking advantage of this opportunity, businesses in particular and the economies in general will grow exponentially, not additively."
Lộc said that in the digital economy, the world is shrinking and small businesses are growing up because digital technology is creating a foundation for equality between large companies and SMEs in accessing knowledge and markets.
"In a knowledge-based economy, Việt Nam will have a new generation of businesses with important characteristics: small capital - great wisdom," he said.
Delegates from APEC member economies at the sidelines of the APEC Start-ups Forum. (Photo: Hoàng Hải-VNA)
However, in order to have a digital economy, Việt Nam must first have a skilled workforce that is professionally trained in terms of start-ups, business, science, and technology.
Criteria such as education and training for start-ups and vocational skills development for young people are key indicators for assessing whether a start-up ecosystem in the APEC region is effective.
One of the necessary elements to help start-up entrepreneurs in Việt Nam integrate into a knowledge-based economy is foreign language proficiency.
Đào Huy Giám, secretary-general of the Việt Nam Private Business Forum, said, "Language is a prerequisite for engaging in the Fourth Industrial Revolution.
“Although English has been popularised in Việt Nam for years, only about 30 per cent of the population is able to use this language. Meanwhile, in information technology-driven economies, over 90 per cent of their population is proficient in English and half of the population can use one or two other languages."
Besides this, if start-ups want to develop sustainably and be able to participate in the global value chain, they are required to comply with the law and business ethics.
Viet Nam leads the world in terms of start-up spirit according to a survey on entrepreneurship conducted by the Amway Group, German’s Technische Universitat Munchen University, and the Market Research Company GFK. The survey showed 95 per cent of respondents said they have a positive attitude towards start-ups.
In fact, the quality of start-ups is a very important issue to consider. Many Vietnamese people fear failure when starting a business, and Việt Nam ranks eighth among the 60 countries participating in GEM 2015 in terms of concerns about failure.
According to experts, the ability to do business and the fear of failure are inversely proportional. The obsession with failure is a barrier for people to start up companies even though they see available business opportunities.
More worrying, start-up businesses are primarily catering to consumers, accounting for 74.5 per cent of total start-ups. Meanwhile, the proportion of start-ups in the processing sector and service enterprises is very low compared with the figure in developed countries in Phase 2 (14.4 per cent and 3.3 per cent compared with 24 per cent and 11.5 per cent, respectively). This also constrains the participation of Vietnamese enterprises in the value chain.
In addition, three common reasons for giving up on business among the Vietnamese people are financial hardship (29.2 per cent), unfavorable business conditions (22.2 per cent), and good job opportunities or other business opportunities (19.4 per cent).
the APEC Start-ups Forum was held under the framework of the APEC 2017 Small and Medium Enterprises (SMEs) Ministerial Meeting, on September 11 and 12, in HCM City. (Photo: Hoàng Hải-VNA)
This is in line with the results announced by the General Statistics Office over the past few years. Small enterprises (with capital less than VNĐ10 billion) that are dissolved often make up 90 per cent of total businesses closed.
Dr. Lương Minh Huân from VCCI’s Institute for Enterprise Development, said to help people overcome the barriers, in addition to improving the business environment, the Vietnamese government needs to present solutions to improve their capacity to do business.
The GEM report indicates the four favourable factors for start-ups in Việt Nam are the dynamics of the domestic market, culture and social norms, government policies, and infrastructure. These indicators are even judged to be better than the average of economies in Phase 3.
By contrast, the four factors that are less conducive to starting a business in Việt Nam are education on business at the tertiary level, education on business at the upper levels, financing for businesses, and government support programmes. These indicators are considered to be below the average figures for countries in Phase 1, the same stage of development as Việt Nam.
Previously, at the "Creative Start-ups – Correct Understanding, Correct Action" forum held by the Vietnam Young Entrepreneurs Association and Vietnam Private Sector Forum (VPSF), Politburo Member and Deputy Prime Minister Vương Đình Huệ affirmed that the government will promote the formation of a complete ecosystem for start-up businesses with the establishment of venture capital funds, start-up supporting funds, a science and technology development fund, and a centre to support start-up businesses, to create an environment that helps the start-up community to form and operate effectively and overcome obstacles such as finance, market knowledge, and management skills.
"The wave of start-ups must really bring about practical results, not just movement," the Deputy Prime Minister stressed.