In 2000, Vietnam passed the Enterprise Law to the development of the private sector to promote and facilitate the transition from a centrally planned to a market economy. The Enterprise Law changed the paradigm for private enterprises in Vietnam, by business registration is a legal right, but a privilege. Between 2000-2005, the number of private enterprises increased by more than 100%, adding over 2.5 million jobs to Vietnam labor market. Despite these achievements, Vietnam remained private sector underca … Read more »

In 2000, Vietnam passed the Enterprise Law to the development of the private sector to promote and facilitate the transition from a centrally planned to a market economy. The Enterprise Law changed the paradigm for private enterprises in Vietnam, by business registration is a legal right, but a privilege. Between 2000-2005, the number of private enterprises increased by more than 100%, adding over 2.5 million jobs to Vietnam labor market. Despite these achievements, Vietnam remained under-capitalized private sector, with only 12 companies with over $ 33 million total capital. This case study follows Mr. Nam, a successful Vietnamese furniture manufacturers try funding sources to identify his company expand established under the Enterprise Law. However, in the past, Mr. Nam expansion of business of financing and managed accumulating more informal credit expansion required Mr. Nam to identify “market” financing. In this search, Mr. Nam met two fundamental problems. First, the banking sector still under government influence, have not give strong incentives for the private sector. Second, require banks and other private sources of capital Mr. Nam to his business to an independent audit, which would certainly uncover many business practices that were technically illegal file – and significantly to competitiveness. This case study students to encourage the social costs of weak regulatory environment, poorly designed economic laws, and to consider the relationship between these conditions and the production of (unwanted) commercial standards. Instructors of development finance, small and medium enterprises finance, and legal and regulatory courses should this case study useful. HKS case number 1812.0
«Hide

from
Eli Mazur,
Nguyen Ngoc Bich,
Quynh Anh Lam
Bui Van
20 pages.
Publication Date: Sep 30, in 2005. Prod #: HKS348-PDF-ENG
Vietnam’s private sector development: Mr. Nam dilemma HBR case solution

[related_post themes="flat"]