PRIVATE SECTOR DISCUSSION No. 9

Private Companies in Vietnam:

A Survey of Public Perceptions

July 1999

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TABLE OF CONTENTS Executive Summary

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Part 1: Survey Objectives and Methodology

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A. Background: 6 B. Objectives: 6 C. Methodology: 7 Approach 7 Sample selection 8 Data processing 9 Part 2: Major Findings of the Survey

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1. Finding # 1: Negative image of the private sector is consistent across sample groups

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2. Finding # 2: The private sector is overwhelmingly the least preferred place of employment

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3. Finding # 3: The private sector faces discrimination from institutional lenders

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4. Finding # 4: The private sector faces discrimination from inputs suppliers and buyers of its products

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5. Finding # 5: The media plays a crucial role in formulating public perception

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6. What the Government thinks about the Private Sector - Finding # 6

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7. The North vs. The South, The Experienced vs. The Inexperienced - Finding # 7

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Part 3: Recommendations

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1. The media 17 2. The banking sector 17 3. Business associations 18 4. Domestic private sector support organizations 18 5. Specific recommendations for MPDF’s public relations strategy for the private sector in Vietnam

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ANNEXES

1. Questionnaires 2. Interview framework for government officials 3. Summary of focus group discussions 4. Analysis of survey data

EXECUTIVE SUMMARY Despite the small boom in private sector growth, the obstacles to success of private companies in Vietnam are manifold. Economic crisis in recent years has only served to highlight the crucial role of these private companies to the national economy. Considering their importance, one might expect private sector accomplishments to be accompanied by a significant measure of public respect among the Vietnamese. But, in fact, Vietnam’s private sector suffers from a serious image problem . The general public does not trust the entrepreneurs who open and operate the country’s new private companies and is consistently ready to think the worst of them. Two years of work linking financial institutions and private sector investment projects has provided the Mekong Project Development Facility (MPDF) with a great deal of anecdotal evidence of the widespread discrimination faced by Vietnam’s private firms. MPDF has, therefore, commissioned a survey to quantify and further clarify the Vietnamese public view of this vital and dynamic economic sector. The objective was to find out what the general public think about the private sector and why; and specifically, how people think about the private sector as an employer, as a credit applicant and as a counterpart. MPDF hopes to lay the groundwork for a vigorous public relations campaign to improve the image of the private sector as responsible citizens, good employers, reliable partners and creditworthy borrowers. This survey focuses on six stakeholder groups in private sector development in Vietnam: government officials, credit officers, suppliers and customers of private sector firms, graduating university students, their parents, and private sector managers. Geographically, the survey covers five major Vietnamese cities including: Hanoi, Hai Phong, Da Nang, Ho Chi Minh City and Can Tho. Two separate approaches have been employed. The first was face-to-face interviews with 60 Government officials. The second approach started with a focus group discussion with each of the other five stakeholder groups. Then a questionnaire was designed and produced based on the outcome of each focus group. Questionnaires were mailed out and achieved an 80% response rate, or 644 responses out of 800 questionnaires sent. The main findings are: 1. At a general level, survey data from all 6 groups revealed a negative image of the private

sector. The public has little confidence in the private sector and is not fully aware of the contributions that the private sector is making to the national economy. More often than not, the public thinks of the private sector as opportunistic people who are only after short term profits at all costs, including exploitation.

2. Private firms are the least preferred employers. Students and their parents think of a

private employer as failing to provide suitable jobs and to ensure job security for employees.

3. In the eyes of the bankers, private firms are the least preferred applicant for funds

because they are often perceived as dishonest, associated with higher risks, and having no back up from the Government.

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4. Suppliers and customers like to work with private firms although less so than with state firms that still have government backing.

5. Eighty-five percent of respondents said that the media are the main source of information

about the private sector. 6. The insights provided by numerous interviews with government officials highlighted that

the fundamental cause of the image problem of the private sector has an “ideology” root. 7. There is no difference between the Northerners and the Southerners in their attitudes

towards the private sector. A campaign to educate the public on the contributions of the private sector would clearly be no small task. The media would need to play a major role, as would private sector promotion organizations and educational institutions. With its resources and deep-seated belief in the potential of Vietnam’s private sector, MPDF is an ideal candidate to initiate such an effort.

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I. SURVEY OBJECTIVES AND METHODOLOGY

A. Background: Re-emergence of substantial private sector enterprise in Vietnam began only a decade ago. While local governments—particularly in the South—always allowed limited space for an informal private sector, this space was subject to rapid and unpredictable contraction when it did not conform with national policy. Private ownership of means of production was ideologically unacceptable under the prevailing centrally-planned Marxist-Leninist model of economic development. In general, the private sector was confined to very small-scale, household services enterprises—the typical example being a set of stools around a small table or two, forming a noodle soup (pho) shop. Since the passing of the Socialist Republic of Vietnam’s first-ever Company Law in 1990, the scope, image and importance of the private sector have all evolved significantly beyond those of the street-side pho shop. By end 1998, Vietnam’s total number of registered private companies surpassed 26,000—more than 5,000 of which are manufacturers. In 1998, a year characterized by general economic downturn and increasing levels of un- and under-employment, the total number of people working for private Vietnamese companies rose by 16.2 percent. Vietnam’s formal private sector has been the main force behind growth in garment and leather products exports. This report lays out the findings of an attitude survey conducted in June 1999 by a Vietnamese consulting company on behalf of the Mekong Project Development Facility (MPDF). 1 The goal is to move toward implementation of a public campaign to raise awareness of the private sector’s crucial role in reinvigorating national economic growth—a key component within the framework for action that came out of MPDF’s survey of private larger manufacturers during the first two months of 1999.2

B. Objectives This research has two main objectives. The first is to document the Vietnamese public’s general perceptions of the formal domestic private sector, i.e. registered private companies owned by Vietnamese na tionals. The second is to clarify three core issues regarding a possible future public relations campaign on behalf of Vietnam’s private companies:

(a) What might be the key messages? (b) What would be the most appropriate format and content? (c) What would be the most appropriate media channels?

Specific questions the report addresses include the following:

1 MPDF is a multi-donor program set up to support the establishment and growth of the private sectors in Vietnam, Lao PDR and Cambodia. This 5-year program is managed by International Finance Corporation (IFC), the private sector arm of the World Bank Group. Donors to MPDF include: Australia, the European Union, Finland, IFC, Japan, Norway, Sweden, Switzerland, and the United Kingdom. 2 Vietnam’s Undersized Engine: A Survey of 95 Larger Private Manufacturers. Private Sector Discussions # 8. MPDF, July 1999.

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(a) How do different segments of society feel about private firms? Why do they feel that

? Or why do they differ ? (b) How do people feel about employment with private firms vs. with other players in

the economy ? Why? (c) How do lenders feel about the credit-worthiness of private firms? Why? (d) What are people’s views of private firm managers/owners? Why? (e) How do people feel about doing business with private firms? Why? (f) How do managers/owners of private firms themselves feel about their public image?

C. Methodology : Approach. Six groups were identified as target populations for the survey:

(a) Government officials (b) Credit officers (c) Graduating vocational and university students (d) Private firm suppliers and customers (e) Private firm managers (f) Graduating students’ parents

For practical reasons, the consultant decided different approaches would be required for the first group, government officials, than for the other five groups. The reasoning was that trust would be a greater issue vis a vis government officials than the other groups. The approach taken with government officials (hereafter referred to as “Approach One”) was to do face-to- face interviews with each participating official. Interviews followed a basic outline set out in the Framework Questionnaire found in the Annex. This approach aimed to minimize the number of officials who refused to participate, as well as the number who simply quoted canned policy lines that provided no new insights. The consultant also felt that Approach One would better allow interviewers to distinguish the difference between genuine, heartfelt answers and automatic responses. Since trust was a lesser concern with the other five groups, the consultant was able to employ a different approach that allowed for greater coverage. The first step under “Approach Two” was to hold focus groups of 10-12 participants in Hanoi (for graduating students, their parents, and private firm suppliers and customers) and Ho Chi Minh City (private firm managers and credit officers). Focus groups allowed the consultant to gain an in-depth understanding of the major issues particular to each target group. These findings were subsequently used to design detailed questionnaires tailored specifically for each target group.3 Questionnaires were then delivered directly to selected participants. Sample populations were confined to five major Vietnamese cities: Hanoi, Ho Chi Minh City, Danang, Cantho and Haiphong. These five cities have been at the center of the Vietnamese private sector’s rebirth and represent all three main geographic regions of the country.

3 Summaries of each focus group are included in the Annex.

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Sample Selection. In order to explore regional differences, target group samples were divided evenly between respondents from the North and the South. The North included Hanoi and Haiphong, while the South was composed of Ho Chi Minh City, Cantho and Danang. 4 In order to ensure a comparable sample population size for the North, the respective sample size for each of the two northern cities was larger than for the three individual southern cities. Face-to-face interviews were conducted with a total of 60 government officials. In the North, there were 22 interviews in Hanoi and 8 in Haiphong; in the South, 18 in Ho Chi Minh City and six each in Cantho and Danang. At the central level of government, interviewees included high-ranking officials from various ministries and government agencies, including the Vietnam Chamber of Commerce and Industry (VCCI) and the Central Institute for Economic Management (CIEM), among others. Interviewees at the city and province level included heads and deputy directors of the local departments for taxes, economic police, customs, trade, planning and investment, and industry. Also included in this sample group were general directors and deputy directors of a number of private and state -owned commercial banks. Sample sets for the remaining five target groups were selected randomly, both for focus groups and the subsequent questionnaire-based surveys. To ensure that at least 120 questionnaires were collected for each target group, a minimum of 160 questionnaires was delivered by the consultants to potential participants in each city. In the end, a total of 644 people returned the questionnaire. 5 Final distribution of the sample was as follows:

Suppliers/ Customers

Students Parents Total City Private firms

Private SOE

Credit officers

Cantho 16 9 7 20 10 11 73 Danang 16 7 10 10 20 20 83 HCM city 30 23 17 33 29 31 163 Hanoi 45 20 20 40 50 50 225 Haiphong 20 14 13 21 21 11 100

TOTAL 127 73 67 124 130 123 644 Participants were chosen for each respective target group as follows:

(a) Credit Officers: Sample credit officers all had at least three years of field experience. A list of credit officers was first obtained by directly contacting banks and lending institutions in the five selected cities. All four state-owned commercial banks and all major joint-stock and private banks were contacted.

(b) Graduating vocational and university students: Two vocational schools and 10

universities were targeted in Hanoi and in Ho Chi Minh City. One vocational school and two-to- four universities were chosen in the remaining three cities, depending on the availability of universities in each city. Selected universities did not include the International Relations Institute, Law University; or Marine University because graduates from these universities rarely face the choice of whether to work for a

4 Danang is usually said to be in the central region. However, since the total population of private companies in Central Vietnam is very small, the consultant chose to include Danang with the South—with which it has more in common than with the North. 5 Distribution found in Annex.

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private firm, government agency or state enterprise. Students majoring in other fields that left them little choice of whether to enter the private or state sectors (such as Philosophy, Oriental Studies, and Journalism) were also not targeted. Sample students were randomly chosen from master lists obta ined from selected institutions.

(c) Private firm suppliers and customers: Target firms were split fairly evenly between

those from the private sector and those from the state sector. Participants in the focus group were all general directors of their respective firms. For the follow- up questionnaire survey, firms were chosen randomly from a master list drawn from the consultant’s own firm database, firm directories put out by VCCI, FTDC, and UAIC, and the Yellow Pages. A phone check was conducted to make sure that all selected firms were still in operation.

(d) Graduating students’ parents: The sample was selected randomly from master lists

obtained from the same universities chosen for the graduating students target group. Participants in the focus group included parents from both North and South.

(e) Private firm managers: This sample was chosen randomly from the same sources

used for private firm suppliers and customers. Participants came from a full array of economic sectors (manufacturing, service, agro-processing, and construction) and their firms had been in operation for at least three years.

Data Processing. Quantitative survey data was processed by the consultant using Microsoft Access software. Open-ended and qualitative answers were processed using word processing software. Results of the subsequent data analysis is included in the Annex for reference.

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II. MAJOR FINDINGS OF THE SURVEY

A. General public perceptions regarding private firms and their managers/owners Finding # 1 Negative image of the private sector is consistent across sample groups. When asked to cite the top three most negative characteristics associated with private sector firms and entrepreneurs, all four relevant target groups (students, parents, suppliers and customers, and credit officers) responded in very similar fashion. The most common characteristics cited are listed below:

Private firms :

a. Instability—vulnerability to bankruptcy b. Exploitation of employees c. Dishonesty d. Opportunistic nature—small scale with no long-term investments e. Poor care of employees—for example, lack of retirement pay f. Unhealthy competition g. Lack of consultation and training of employees, unfriendly working environment h. Loose management i. Lack of contribution to national economic development j. Tax evasion

Private entrepreneurs:

a. Authoritarianism—family concerns supercede employee concerns b. Greed, exploitation c. Lack of professional education and experience d. Lack of vision e. Poor understanding of legal framework f. Not trustworthy, unreliable g. Lack of contribution to national economic development - tax evaders h. Corruption - responsibility for corrupting government officials

Other responses further revealed the negative image of the private sector held by target group members:

?? Only 12.4% of the total sample from the five surveyed groups chose to associate the private sector with “Honesty/Integrity”, while 20 percent labeled the state sector as such;

?? Only 10.2% credited the private sector with significant contribution to GDP growth, while 18.1% did so for the state sector. Similar figures emerged for contribution to export growth;

?? Few participants were aware of how many private firms have been recognized for producing high quality products. This issue was addressed by asking participants whether they knew how many private firms had been placed by Sai Gon Tiep Thi (or Saigon Marketing, a Vietnamese newspaper along the lines of Consumer Guide) on

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its list of top companies. Even private firm managers themselves tended to underestimate the private sector in this regard.

On a more positive note, 90 percent of participants believed that the private sector does play an important role in the national economy. In fact, the private sector was credited with making greater contributions to job creation and greater efficiency than the state sector:

?? 38.8% of participants said that efficiency better characterized the private sector against a low percentage of only 9% of the participants who chose the state sector;

?? Similarly, a higher percentage of participants chose job creation as better characterizing the private sector (21.2%) than the state sector (only 10.6%).

Implications. Confidence in the private sector is low. The public tends to view the entrepreneurs who establish and manage private companies as generally unskille d and highly opportunistic individuals—people willing to exploit others to seize short-term gains. There is only limited awareness of the contribution that the private sector could potentially make to national economic development. B. Private sector employ ment Finding # 2 The private sector is overwhelmingly the least preferred place of employment. Graduating students and their parents were clear in their desire for the former to find work outside of the formal private sector. Only 21 percent of sample students expressed a desire to work in the formal private sector - 13 percent of which wished to establish their own company. Similarly, only a quarter of parents hoped to see their children work for a private company. The top four criteria named by both students and their parents as key in deciding where to work were: suitability of the job, job security, potential and stability of the employing firm, opportunities for training, and potential for career development. The table below shows the aggregate ranking of these four criteria for each of the two groups:

Criteria Students Parents Suitable job 68% 47% Job security 54% 51% Potentials/stability of the company 35% 47% Training opportunity 34% 34% Have potential for career development 26% 44%

A majority of both students and parents felt that private companies generally fail to satisfy these four fundamental criteria and, therefore, prefer work outside of the private sector: Students and their parents were basically in agreement about the failings of private firms, right down the line:

?? Two thirds of both students and parents said the private sector offers no job security,

in large part because of the questionable viability of the firms themselves; ?? Half of each groups saw no potential for career development or job training with a

private company;

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?? Few believed that private companies even possessed the know- how to provide the type of training they desired.

The picture of the private sector that emerges from the responses of private firm employees themselves and the people who their firms do business with is much like the one above: no job security, firms with unpredictable and unstable futures, and limited opportunity for career development or job training. The table below summarizes the relevant results among these two groups:

Criteria Private firms Suppliers & customers

No job security 78% 77% Low potential/stability of the company 76% 62% No training opportunity 53% 36% No potential for career development 32% 20%

Those already working in the private sector felt that the low esteem in which private firm managers are generally held is a major factor in people’s preference not to work for private companies. C. Credit-worthiness of private firms: Finding #3 The private sector faces discrim ination from institutional lenders. Credit officers were asked the following question: if you received two loan applications—one from a SOE and one from a private applicant - that satisfied all the basic lending criteria but you were only able to approve one, which firm would you choose? Eighty percent of sample credit officers said they would approve the state sector applicant - 18% said they would lend to the private firm and 2% they could not decide. Credit officers cited the following reasons for favoring state sector applicants:

Justification Ranking Private applicants are not honest and often misuse loans 45% Bank policy is to be cautious when dealing with private firms 30% Private firms do not enjoy the support of government 28% The general public does not trust private firms 27% Bad past experiences with private sector borrowers 25%

At least two of the above-stated reasons for discriminating against private sector applicants for institutional loans are largely a result of decisions made by forces outside of the private sector. Credit officers’ sense that government does not support private sector success, as well as banks’ mandated caution with regard to private sector loan applicants, are more the bi-product of government policy than any action on the part of private companies themselves. Government policy on collateral, for example, has a defining impact on both of these stated reasons for discriminating against the private sector. A third stated reason - the general public’s distrust of the private sector - has also been influenced by a long history of anti-private sector propaganda.

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As for positive characteristics recommending state enterprises over their private sector counterparts, more than half of the credit officers who said they would favor the state sector applicant explained that they would do so because of the lower risk involved. The chief reason given for this lower risk was the backing that state enterprises receive from government. Two other state sector features were cited by a significant number of credit officers as reasons for giving them preference: (i) state projects are more important; and (ii) state firms are more likely to have the resources to carry out the project in question. Other possible explanations - not given by sample credit officers - for discrimination against private sector loan applicants include the following:

?? While many banks claim to treat private and state sector applicants the same, national lending regulations such as collateral and capital requirements often have the de facto effect of disqualifying deserving private sector applicants;

?? The procedural labyrinth of the loan application process often leads the most efficient private firms to opt for higher interest loans from informal sources;

?? Lack of training and expertise regarding invest project risk analysis provides incentive for credit officers to turn away from potentially high return projects to simpler, safer deals that have government support, i.e. state sector projects.

Generally speaking, sample private sector employees and sample suppliers and customers of the private sector were in agreement with credit officers on the main reasons why private firms find it harder to access institutional loans:

Private firms do not have the backing of government 67% The general policy of banks is to be cautious with private firms 67% Perceived higher risks for loans to private sector 57% More difficult for banks to supervise private sector loans 45% Private firms are not honest 40%

Finding # 4 The private sector faces discrimination from inputs suppliers and buyers of its products. Private firm suppliers and customers were more positive about the private sector than were credit officers, but they still favored the state sector. Of respondents who preferred to deal with the state sector, one third explained their position by saying that private firms lack the desired financial strength—meaning the ability to pay on time and to provide financial support when needed—and another third said that private firms are often not reliable. The third most cited reason among those who preferred the state sector (23%) was that private firms do not operate with government backing.

Respondents who were more comfortable buying or selling from the private sector were mostly likely to do so because of better service (53%). The number two reason given for private sector preference was that private companies display more flexibility in business dealings. Implications. Both Finding 3 and Finding 4 show the powerful influence that government policy has on the image projected by private firms. As long as institutional lenders, input suppliers, retail sellers, and others believe that the government will bail state enterprises out of any tight situation, dealings with the state sector will be seen as a lower business risk than

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those with the unconnected private sector. This belief still lingers today with the Vietnamese public, despite repeated government declarations that it will no longer come to the rescue of state enterprises, because the government has not yet shown itself to be inclined to tolerate liquidation within the state sector. C. The media’s role in formulating public opinion: Finding # 5 The media plays a crucial role in formulating public perceptions. As such, it should be relied on as a major player in any public relations effort undertaken on behalf of the private sector. The influence of the media: More than 85% of the combined samples in all target groups named the media as a key source of information about the private sector in Vietnam. Colleagues, friends, and family, as a group, formed the second most common source of information on the private sector (60%). Worthy of note is that official documents served as the least employed source of information (22%). Survey participants from all target groups, including government officials, were in agreement that the image put forth by the media has largely been negative. Frequent topics of articles have included the following:

a. news on private sector fraud, misconduct b. news on tax evasion by private firms c. “ghost” companies d. private sector involvement in smuggling e. private sector involvement in corruption f. private firms going bankrupt g. mistreatment of employees in private firms

What is the media’s agenda? As is generally the case everywhere in the world, stories of corruption and failure sell more newspapers than stories of goodwill and success. It is therefore not surprising that the Vietnamese media has been there to pick up on the inevitable stories of malpractice and abuse by entrepreneurs in the country’s fledgling market economy. Similar stories regarding the state sector, however, rarely find their way into print or onto the air waves. In some cases, this is because government censors specifically warn the media not to cover scandalous events that might adversely affect state interests. In others, it is simply the consequence of conservative self-censorship within the media. The contrast between media coverage of the private and state sectors is made even more marked by the fact that line ministries, the government ministries with responsibility for particular state enterprises, regularly supply journalists with positive information regarding enterprises under their charge. In fact, ministries and other government agencies that oversee state enterprises often put out their own newspapers—for example, the Cong Nghiep newspaper, published by the Ministry of Industry. Other key newspapers identified by survey participants as being responsible for frequent negative portrayals of the private sector include: An Ninh The Gioi, Lao Dong, An

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Ninh Thu Do, Cong An Thanh Pho Ho Chi Minh. Any future public relations activities on behalf of the private sector would do well to actively involve these influential newspapers. E. Government’s attitude toward the private sector Finding # 6 Though government officials are divided in their thinking about the private sector, the insights obtained from face to face interviews highlight one fundamental cause of trouble for the private sector: ideology. Government officials in Vietnam are usually well versed in official policy and therefore almost always will recognize the positive role the private sector has been designated since the advent of doi moi economic reforms, more than a decade ago. Accomplishments that are frequently credited to the private sector by the official line include: job creation, increases in productivity, creation of constructive competitive pressures on the state sector, and contribution to national GDP growth. Some support the official position they themselves espouse, while others do not. Sample government officials generally acknowledged that policy makers in Hanoi hold a bias in favor of the state sector, and, as such, against the private sector. However, explanations to such bias of the mind differ from one to another interview with officials falling into one of the two following categories:

(a) The first group is made up of those who justify the policy makers’ bias on the basis of what they label as the weaknesses of the private sector: small scale, opportunism, dishonesty, and exploitation. In this way, they very much reflect the negative image held by much of the public—as seen in this report. Some in this group say the private sector is responsible for the blight of corruption that hangs over Vietnam’s transitional economy, claiming that corruption did not exist before the unleashing of the private sector. In line with this thinking, this group advocates further controls on the private sector to ensure that it will develop along socialist guidelines.

(b) The second group, while also quite critical of the private sector’s missteps, saw the policy bias against the private sector as a product of complex factors inside the government, among which some said is a real lack of confidence in the private sector. In the end, officials said, the fact is that the private sector is treated like the policy makers’ “step child” because policy makers are only experienced with rearing the state enterprises.

More specifically, according to officials from this second group, the key reasons for the low esteem in which policy makers hold the private sector are as follows:

?? Marxist-Leninist ideology. ?? According to a couple officials, the marriage o f a private sector and a “socialist

orientation” is one of convenience, not true love. Therefore, it is inevitable that the two economic partners must always be suspicious of one another. The idea is that private sector development in Vietnam has traditional occurred only as a compromise, needed to solve an immediate socio-economic crisis rather than as a part of a comprehensive, long-term plan.

?? A “naïve” attempt by policy- makers to have the niceties of socialist ideology and the benefits of a competitive market.

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?? There exists an inherent interests for the current government and state structure, especially at the mid -level, to protect the “status quo”. The longer economic transition can stall in ideological no -man’s- land, the better for those who are benefiting from it at the cost of the whole society.

?? The private sector in Vietnam is not yet strong enough to prove itself to policy-makers and to the public.

According to these same officials, a generational change will be required in order to free policy makers from the ideology that restricts them today. Ideological concerns force even the most pro-private sector advocates to move forward cautiously, but when put in a context where many have vested interests in the status quo, the consequence is an environment not conducive to rapid private sector growth. Though the second, more straight-talking group did include officials from all surveyed cities, the percentage of those coming from the North was significantly higher. This may be attributed to:

a. The fact that officials in the North are more “theory-oriented" while in the South, officials are more “action-oriented" and practical. Straight-talking on sensitive subjects may not be seen as particularly practical in the current policy environment

b. The fact that the business environment in the North is less advanced than in the South, making Northerners more sensitive and in touch with these issues.

It is also interesting to note that government officials have attached far greater importance to policy issues as obstacles to private sector development than have private sector actors themselves. While 10 percent of the private sector participants cited policy as a major obstacle, significantly more listed other issues such as management skills (34%), financing (26%), personnel (16%), and market demand (13.5%). These data do not mean that the policy factor is not important, but rather means that:

a. Policy issues might be more important to those trying to enter the market than those who have already done so.

b. Those who are already operating under current conditions have already learned to cope.

F. The North vs. the South and the Experienced vs. the Inexperienced Finding # 7: There is no difference between Southerners and Northerners in their attitudes toward the private sector. Analysis of survey data shows no significant difference between North and South. This was surprising considering the two regions’ very different histories and their differing socio-economic situations at present. Also surprising, but consistent with the regional finding, was the fact that there was no difference in attitude between people with experience working in the private sector and those without. All looked down on the private sector.

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III. Recommendations

1. The media Educating and incorporating the media into a comprehensive public relations campaign would require a two-pronged approach. The first step to dealing effectively with the top-down hierarchy of the various media organizations is to involve leadership. Editors- in-chief set the tone for their respective newspapers. The same is true with those in corresponding positions in the television hierarchy. An initial move could involve nominating the heads of several key organizations as honorary members of an advisory team for the public relations campaign. Parallel to efforts to involve the media’s tone-setting leadership must come initiatives to involve and train the reporters. It can accurately be said that, as of now, there is very little, if any, professional business reporting being done in Vietnam. The public has little faith in the competence of business reporters and all too much cynicism regarding reporters willingness to write in accordance with their own personal interests - i.e. to write positively if they are rewarded monetarily and negatively if they are not. Activities aimed at this level may include seminars on how to report businesses, briefings on MPDF’s successful deals in the private sector; and scholarships for media people to take part in MPDF-sponsored business training programs at MPDF’s local partner training institutions. Key newspapers and magazines include: a. Nhan Dan b. Ha Noi Moi c. Thoi Bao Kinh Te Vietnam d. Saigon Times Group e. Sai Gon Giai Phong f. Sai Gon Tiep thi g. Tien Phong h. Lao Dong Survey participants offered the following recommendations for the media to present a more balanced picture of the private sector: a. Be honest, objective; do not resort to ideology principles in portraying the private sector b. Proactively recognize and promote successful private firms and their managers c. Do not exaggerate private sector scandals; no more slandering of the private sector d. Make the public fully aware of the difficulties that the private sector is going through e. Disseminate information on the role of the private sector in the economy f. Preserve a separate column for private sector issues 2. The banking sector: Eliminating the “moral hazard” issue introduced by the implicit government guarantee that always sits behind all state enterprise business dealings is an enormous task, and one which MPDF is not equipped to directly take on. MPDF’s parent organizations, the IFC and the

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World Bank, on the other hand, potentially can have an impact through their direct channels to policy makers. Efforts directly undertaken by MPDF would ideally concentrate on the following: a. Training (either directly by MPDF or through its local partner training institutions) for

banks in risk assessment, project appraisal, and corporate lending analysis. MPDF investment projects could be used as case studies, so as to counter any arguments that such methods are not applicable under Vietnam’s current economic conditions.

b. There have been complaints that IFC loan approval procedures for SMEs’ projects have

many of the same bureaucratic traits found in Vietnamese lending institutions. MPDF would do a great service to introduce new, simplified ways of financing small to medium sized private sector projects. The Venture Capital model, which MPDF began investigating in 1999 might be one answer.

3. Business associations: Survey participants showed a great deal of interest in membership in a reputable business association as a means for enhancing a firm’s public image. Participants felt that membership in an exclusive association with rigid eligibility criteria would likely even enhance a firm’s credit-worthiness. At present, however, such associations are not legal unless they are created under the umbrella of Vietnam’s Fatherland Front. A report commissioned last year by MPDF on Vietnam’s service sector recommended that MPDF conduct a study on what it would take to establish a professional association that could serve as a self-governing mechanism for a particular industry. The report further recommended that a single case study be undertaken with government approval so that all might learn about the real benefits of such a venture. The Vietnam Chamber of Commerce and Industry (VCCI), the government’s current business association, is seen as the ideal partner for this case study. Considering MPDF’s current focus on the garments industry, it would make sense to combine these two areas of concentration to look into creation of an independent Garment and Textiles Association. 4. Domestic private sector support organizations: MPDF already has working relationships with most of the domestic private sector support organizations in Vietnam. It will, therefore, not be difficult to add new public relations elements on to current cooperative activities. It is important not to discount the valuable contributions that government-run private sector support organizations like VCCI, VICOOPSME, Foreign Trade Development Corporation can make towards private sector development. One area in particular where these organizations can play a crucial role is in information dissemination through such activities as organizing seminars about the private sector in cooperation with local universities. MPDF could help by convincing the successful private companies it works with to participate in such information dissemination activities.

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5. Specific recommendations for MPDF’s public relations strategy for the private sector: Vietnam’s private sector suffers from a negative image both with the general public and with specific crucial sectors of society, such as with government and lenders. The bias against the private sector held by government is a key element that contributes to its poor showing with all other sectors of society. To combat this bad image, the private sector will need to shed more light on itself to expose to both the general public and the government that it is a vital player in the economic development of the country. To help in this effort, a public relations campaign on behalf of the private sector would ideally include the following: Key messages: ?? The private sector is a major and necessary engine for national economic growth ?? Private sector employers treat their employees as well as any other sector’s employers ?? Private firms are profit-oriented and therefore efficient users of investment capital ?? Most private firms are honest and make valuable contributions to their communities Means for information dissemination: ?? TV ?? Newspapers ?? Private sector support organizations ?? Universities Potential partners: It is in MPDF’s interest, in terms of ensuring both effective implementation and lasting impact, that any public relations campaign undertaken on behalf of the private sector be done in cooperation with local institutions. This ensures not only official support but also helps create a local constituency for greater official support for the private sector. The cooperative activities themselves, as well as specific MPDF-sponsored training programs, would allow MPDF to increase local institutions’ understanding of the private sector’s current and potential roles. Potential partners include: ?? Private sector support organizations ?? Research institutes ?? Universities ?? Banks ?? Key journalists MPDF might wish to structure an advisory committee constituted of members drawn from these partner institutions. Possible activities: Below are eight recommendations for action made by survey participants, listed by order of importance:

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1. Awards for best quality products for private firms 2. Seminars on the private sector’s role in the economy 3. Stories about successful private firms and successful entrepreneurs on TV, newspapers 4. Awards for best entrepreneurs of the year 5. Information about private sector contributions 6. Visits by government officials to well- managed private firms 7. Awards from commercial banks to their best private sector clients 8. Awards for top job-creating private firms

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ANNEXES 1. Questionnaire 2. Interview Framework for Government Officials 3. Summary of Focus Group Discussions 4. Analysis of Survey Data

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SURVEY QUESTIONAIRE (for graduating students)

General Information: University Do you have a family member working for a private firm: ? Yes ? No Questionnaire 1. What type of company do you prefer to work for after graduation? Please choose 2 only

by checking the appropriate boxes. ? Private ? State-owned ? Foreign ? Set up own company 2. Please choose 4 criteria among the following which you think most important in accepting

a job (please put 1,2,3,4 next to the chosen criteria with 1 meaning the most important, 2 the second important, 3 the third important and 4 the fourth important)

Criteria Level of Importance

?? suitable job ( in line with the major at school) ?? have potential for career development ?? salary ?? potential/stability of the company ?? the manager/owner of the company ?? reputation of the company in general ?? training opportunities ?? working environment ?? job security ??other (please specify)

3. If you DID NOT choose “private firm“ in Question (1), please choose 5 among the

following reasons by marking the appropriate boxes.

?? no potential for career development ?? no training ?? no job security (can be fired anytime) ?? can not contribute to the country’s economy ?? the future of the company is not stable (can go bankrupt) ?? the working environment is not nice ?? society will look down on you ?? can not give you the kind of expertise that you need ?? no suitable jobs ?? managers in private firms are not reliable ?? government’s policy is biased in favour of state sector ?? other (please specify)

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4. If you DID choose “private firm” in Question 1, please choose 3 among the following reasons by marking the appropriate boxes.

?? suitable jobs ?? have potential for career development ?? good working environment ?? no seniority issue ?? no need for an “umbrella” ?? good salary ?? good training ?? managers are reliable ?? other (please specify)

5. When you think of the private sector, what are the first 3 negative things that come to

mind? Please use short sentences or adjectives to answer this question.

a........................ b....................... c.......................

6. When you think of a manager or owner of a private company, what are the first 3 negative things that come to mind? Please use short sentences or adjectives to answer this question.

a. ......................... b. .........................

c. .........................

7. What do you think of the role of the private sector in the national economy?

a. Important b. Not important

8. What do you know about the private sector? Please read the following statements and mark the appropriate boxes.

Right Wrong a. Private sector in Vietnam accounts for more than

50% of garments exports b. Employment in private manufacturing companies

has the highest growth rate among all sectors in 1998

c. 6 out of 10 top local brands chosen by Saigon Times Group readers are state -owned

9. Which of the followings better characterises the state-sector or the private sector? Please

mark the appropriate box in accordance with your opinion.

SOE Private Both Neither ? efficiency

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? contribution to GDP growth ? honesty/integrity ? job creation ? contribution to export growth

10. What sources of information do you have about the private sector in Vietnam? Choose the

most important 2 sources below: ? Media ? Parents ? Friends ? University 11. What information from the media has made you think negatively about the private sector?

Please specify 3 kinds of information. a. ........................... b. ........................... c. ........................... 12. Which of the following activities do you think should be done to create a better image for

the private sector? Please choose 5 activities (by circling your preferences).

a. seminars about the role of private sector in the economy b. articles about the contributions of private sector to the economy c. stories about successful private firms on TV, newspapers d. stories about successful owners/managers of private firms on TV, newspapers e. awards for best private entrepreneurs of the year f. visits by government officials to well-managed private firms g. awards for best quality products of private firms h. awards for private firms that create most employment of the year i. awards from commercial banks for their best private firm client

13. Can you please cite names of some large private firms? ................................................................................................................................ 14. Who is your role model for a private businessman/entrepreneurs? ................................................................................................................................ THANK YOU!

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SURVEY QUESTIONAIRE (for parents of graduating students)

1. Do you help and/or advise your children in their search for a job after graduation? ? Yes ? No Have you ever worked for a private firm? ? Yes ? No

2. What type of company do you prefer your child to work for after graduation? Please

choose 2 only by checking the appropriate boxes. ? Private ? State-owned ? Foreign 3. Please choose 4 criteria among the following, which you consider most important in

accepting a job (please put 1,2,3,4 next to the chosen criteria with 1 meaning the most important, 2 the second important, 3 the third important and 4 the fourth important)

Criteria Importance Level

?? have potential for career development ?? salary/income ?? potential/stability of the company ?? reputation of the company in general ?? training opportunity ?? working environment ?? job security ?? suitable job (in line with the major at school) ?? opportunity to improve your children’s knowledge ??other (please specify)

4. If you DO NOT choose “private firm” in Question (2), please choose 5 among the

following reasons by marking the appropriate boxes.

?? no potential for career development ?? no training ?? no job security (can be fired anytime) ?? can not contribute to the country’s economy ?? the future of the company is not stable (can go bankrupt) ?? the working environment is not nice ?? society will look down on your children ?? can not provide the kind of expertise that is needed ?? your children will be exploited ?? managers in private firms are not reliable ?? government’s policy is biased in favour of state sector ?? other (please specify)

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5. If you DID choose “private firm” in Question (2), please choose 3 among the following reasons by marking the appropria te boxes.

?? suitable jobs ?? have potential for career development ?? good/dynamics working environment ?? no seniority issue ?? can learn so that can set up own business later ?? no need for an “umbrella”, can develop as per capability ?? good salary/income ?? good training ?? managers are reliable ?? other (please specify)

6. When you think of the private sector, what are the first 3 negative things that come to

mind? Please use short sentences or adjectives to answer this question.

a........................ b....................... c.......................

7. When you think of a manager or owner of a private company, what are the first 3 negative things that come to mind? Please use short sentences or adjectives to answer this question.

a. ......................... b. ......................... c. .........................

8. What do you think of the role of the private sector in the national economy? ? Important ? Not important

9. What do you know about the private sector? Please read the following statements and

mark the appropriate boxes.

Right Wrong a. Private sector in Vietnam accounts for more than

50% of garments exports b. Employment in private manufacturing companies

has the highest growth rate among all sectors in 1998

c. 6 out of 10 top local brands chosen by Saigon Times Group readers are state -owned

10. Which of the following do you think better characterises the state-sector or the private sector? Please mark the appropriate box in accordance with your opinion.

SOE Private Both Neither

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? efficiency ? contr ibution to GDP growth ? honesty/integrity ? job creation ? contribution to export growth

11. What sources of information do you have about the private sector in Vietnam? Choose the

most important 2 sources below: ? Media ? Colleagues ? Official documents ? Other (please specify) 12. What information from the media has made you think negatively about the private sector?

Please specify 3 kinds of information. a. ........................... b. ........................... c. ........................... 13. If you have money, are you willing to invest in a private company? ? Yes ? No If NO, please provide 2 brief reasons: a. .......................................................................................................................... b. .......................................................................................................................... 14. What of the following activities do you think should be done to create a better image for

the private sector? Please choose 5 activities (by circling your preferences). a. seminars about the role of private sector in the economy b. articles about the contributions of private sector to the economy c. stories about successful private firms on TV, newspapers d. stories about successful owners/managers of private firms on TV, newspapers e. awards for best private entrepreneurs of the year f. visits by government officials to well-managed private firms g. awards for best quality products of private firms h. awards for private firms that create most employment of the year i. awards from the commercial banks for best private firm client

THANK YOU!

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SURVEY QUESTIONAIRE (for suppliers/customers of private firms)

I. General Information about Your Company: Years in business ? < 5 years ? 5 - 10 years ? > 10 years Type of ownership: ? Private ? State-owned ? Foreign Number of employees ? < 40 ? 40-100 ? > 100 II. Questionnaire 1. What type of firms do you purchase from/supply to? ? State-owned ? Private ? Both

2. What are your criteria in selecting a supplier or a buyer? Please choose the most important

4 criteria and put 1,2,3,4 next to the chosen criteria with 1 meaning the most important; 2 = second important ; 3 = third important and 4 = fourth important

?? financial issues (ability to pay/ ability to provide financial support) ?? reputation ?? delivery terms ?? after sales services ?? support from government agencies ?? quality ?? pricing ?? flexibility ?? how I perceive the company is being run/managed ?? other (please specify):

3. If your firm had two purchasing or supplying offers (one from an SOE and one from a

private firm), both of which satisfied all important criteria, which would you do business with (assuming you could only choose one)?:

? State-owned ? Private 4. If you DID choose the private firm in Question (3), please choose 3 among the following

reasons by marking the appropriate boxes.

? financial issues ? reputation (reliable firm) ? flexibility ? better services ? I think the firm is better managed ? managers of private firms can keep promises ? other (please specify)

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5. If you DID NOT choose the private firm in Question (3), please choose 3 among the following reasons by marking the appropriate boxes.

? do not have financial capability ? the firm is not reliable ? lack of flexibility ? quality is not good ? do not have guarantee of government ? managers of private firms are not reliable ? ? the firm is not well managed, leading to problems ? ? other (please specify)

6. What do you think about the role of the private sector in the national economy?

? ? Important ? Not important

7. When you think of the private sector, what are the first 3 negative things you think about? Please use 3 short sentences or 3 adjectives to answer this question.

a. ......................... b. ......................... c. .........................

8. When you think of managers/owners in the private sector, what are the first 3 negative

things you think about? Please use 3 short sentences or 3 adjectives to answer this question.

a. ......................... b. ......................... c. ......................... 9. What do you know about the private sector? Please read the following statements and

mark the appropriate boxes.

Right Wrong a. Private sector in Vietnam accounts for more than 50%

of garments exports b. Employment in private manufacturing companies has

the highest growth rate among all sectors in 1998 c. 6 out of 10 top local brands chosen by Saigon Times

Group readers are state-owned

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10. Which of the following do you think better characterises the state-sec tor or the private sector? Please mark the appropriate box in accordance with your opinion.

SOE Private Both Neither

? efficiency ? contribution to GDP growth ? honesty/integrity ? job creation ? contribution to export growth

11. Why do you think it is harder for the private sector to obtain loans from banks? Please

choose 4 among the following:

? ? private firms do not have the strong backing of government ? ? higher risks to lend to private firms ? ? private projects are more likely to fail ? ? private firms often do not have the capacity to carry the project ? ? private applicants are not honest, will not use loans as stated ? ? it is more difficult to supervise loans to private firms ? ? the general policy of commercial bank is “be cautious with private applicants” ? ? other (please specify)

12. Why do you think it is more difficult for private firms to employ people? Please choose

among the following:

? ? no potential for career development ? ? no training ? ? no job security (can be fired anytime) ? ? can not contribute to the country’s economy ? ? the future of the company is not stable (can go bankrupt) ? ? the working environment is not nice ? ? society will look down on people working for private firms ? ? can not provide the kind of expertise that is needed ? ? exploitation in private firms ? ? managers in private firms are not reliable ? ? government’s policy is biased in favour of state sector ? ? other (please specify)

13. What sources of information do you have about the private sector in Vietnam? Choose the most important 2 sources among the following:

? ? Media ? ? Colleagues, friend ? ? Official documents ? ? Other (please specify)

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14. What information from the media has made you think negatively about the private sector?

Please specify 3 kinds of information. a. ........................... b. ........................... c. ........................... 15. Do you think there should be more strong and large private firms in the economy?

? ? Yes ? No

THANK YOU!

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SURVEY QUESTIONAIRE (for private firms)

I. General Information about Your Company: Years in business ? < 5 years ? 5 - 10 years ? > 10 years Type of ownership: ? Private ? State-owned ? Foreign Number of employees ? < 40 ? 40-100 ? > 100 II. Questionnaire 1. What were your reasons for starting your business (or for taking over as CEO of a private

firm)? Please choose 2 among the followings.

? make more money, make a living ? maximize personal potential ? ? pursue own ethical values ? more challenge/adventure/creativity ? family/personal circumstances ? better life style ? other (please specify)

2. What image problems do you think the private sector and its owners/managers suffer

from? Please choose as many as applicable from the following: ? private sector is not contributing to national economy ? private sector is “small”, “scattered” ? private means exploitation ? private is only after “short-term” profits ? private firms’ managers are not well educated ? private firms are not reliable ? private firms do not have the capability to do large/key projects ? other (please specify) ................................................. 3. What information from the media do you think has made the public think negatively about

the private sector? Please specify 3 kinds of information. a. .......................... b. ........................... c. ........................... 4. What positive images do you think the public often has in mind when they think of the

private sector? Please use 3 short sentences or 3 adjectives to answer this question. a. ......................... b. ......................... c. .........................

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5. What positive images do you think the public often has in mind when they think of the manager/owner of the private sector? Please use 3 short sentences or 3 adjectives to answer this question.

a. ......................... b. ......................... c. ......................... 6. What do you know about the private sector? Please read the following statements and

mark the appropriate boxes.

Right Wrong a. Private sector in Vietnam accounts for more than 50%

of garments exports b. Employment in private manufacturing companies has

the highest growth rate among all sectors in 1998 c. 6 out of 10 top local brands chosen by Saigon Times

Group readers are state-owned

7. Which of the followings do you think better characterises the state-sector or the private

sector? Please mark the appropriate box in accordance with your opinion.

SOE Private Both Neither ? efficiency ? contribution to GDP growth ? honesty/integrity ? job creation ? contribution to export growth

8. Why do you think it is harder for private firms to employ people? Please choose among

the following:

? ? no potential for career developme nt ? ? no training ? ? no job security (can be fired anytime) ? ? can not contribute to the country’s economy ? ? the future of the company is not stable (can go bankrupt) ? ? the working environment is not nice ? ? society will look down on people working for private firms ? ? can not provide the kind of expertise that is needed ? ? exploitation in private firm ? ? managers in private firms are not reliable ? ? government’s policy is biased to state sector

? ? other (please specify 9. Why do you think it is harder for the private sector to obtain loans from banks? Please

choose 4 among the following:

? ? private firms do not have the strong backing of government ? ? higher risks to lend to private firms

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? ? private projects are more likely to fail ? ? private firms often do not have the capacity to carry the project ? ? private applicants are not honest, will not use loans as stated ? ? it is more difficult to supervise loans to private firms ? ? the general policy of commercial bank is “be cautious with private applicants” ? ? other (please specify)

10. What do you think the private sector should do to improve its image? a. b. c. 11. What do you wish the Government should do to help improve the image of the private

sector? a. b. c. 12. What do you wish the media would do to help improve the image of private sector? a. b. c. 13. Which of the following activities do you think should be done to create a better image for

the private sector? Please choose 5 activities (by circling your preferences). a. seminars about the role of private sector in the economy b. articles about the contributions of priva te sector to the economy c. stories about successful private firms on TV, newspapers d. stories about successful owners/managers of private firms on TV, newspapers e. awards for best private entrepreneurs of the year f. visits by government officials to well-managed private firms g. awards for best quality products of private firms h. awards for private firms that create most employment of the year i. awards from commercial banks for their best private firm client

14. Do you think there should be more strong and large private firms in the economy? ? Yes ? No THANK YOU!

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SURVEY QUESTIONAIRE (for credit officers of commercial banks)

I. General Information: Years with the bank ? < 5 years ? 5 - 10 years ? > 10 years Type of bank: ? Private ? State-owned ? Foreign II. Questionnaire 1. What are the stated criteria for accessing a loan from your bank? Please state the 4 most

important criteria.

?? ......................... ?? ......................... ?? ......................... ?? ........................

2. What type of company (SOE or Private) do you think can better satisfy each of the above criteria. Please mark the appropriate box.

Chosen criteria SOE Private

1 2 3 4

3. If you had to process two loan applications (one from SOE and one from Private Firm),

both of which satisfy all basic criteria, and you can only approve one, which one would you choose?

?? SOE ?? Private

4. If you would not choose the private application, what are your reasons? Please choose

among the following: ? private firms do not have the strong backing of the government ? higher risks to lend to private firms ? private projects are more likely to fail ? private firms often do not have the capacity to carry out the project ? private applicants are not honest, will not use loans as stated ? general policy of your bank is “ be cautious with private applicants” ? the general public attitude is “private firms are often not reliable “ ? you have had more bad experiences with private customers 5. If you would choose the state-owned applicant, what are your reasons? Please choose

among the following:

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? they have the backing of the government ? less risks to lend to private firms ? state projects are important ? state firms often do not have the capacity to carry out the project ? state firms always pay back in time ? you are safer in lending to state applicants

6. Can you cite 3 risks in dealing with the private sector? a. b. b. 7. What do you think about the role of the private sector in the national economy? ? Important ? Not important

8. What do you know about the private sector? Please read the following statements and

mark the appropriate boxes.

Right Wrong a. Private sector in Vietnam accounts for more than 50%

of garments exports b. Employment in private manufacturing companies has

the highest growth rate among all sectors in 1998 c. 6 out of 10 top local brands chosen by Saigon Times

Group readers are state-owned

9. Which of the following do you think better characterises the state-sector or the private

sector? Please mark the appropriate box in accordance with your opinion.

SOE Private Both Neither ? efficiency ? contribution to GDP growth ? honesty/integrity ? job creation ? contribution to export growth

10. When you think of the credibility of the private sector, what are the first 3 negative things

you think of? Please use 3 short sentences or 3 adjectives to answer this question. a. ......................... b. ......................... c. .........................

11. When you think of the manager/owner of a private company, what are the first 3 negative

things you think of? Please use 3 short sentences or 3 adjectives to answer this question. a. .........................

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b. ......................... c. .........................

12. What sources of information do you have about the private sector in Vietnam? Choose the

most important 2 sources below:

?? Media ?? Colleagues ?? Official documents ?? Other (please specify)

13. Which of the following activities do you think should be done to create a better image for

the private sector? Please choose 5 activities (by circling your preferences). a. seminars about the role of private sector in the economy b. articles about the contributions of private sector to the economy c. stories about successful private firms on TV, newspapers d. stories about successful owners/managers of private firms on TV, newspapers e. awards for best private entrepreneurs of the year f. visits by government officials to well-managed private firms g. awards for best quality products of private firms h. awards for private firms that create most employment of the year i. awards from commercial banks for their best private firm client

14. If you have money, are you willing to invest in a private firm yourself? ? Yes ? No THANK YOU!

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INTERVIEW FRAMEWORK FOR GOVERNMENT OFFICIALS

The followings provide guidance on issues that can be explored during the interview with government officials. 1. What is your general assessment on the private sector in Vietnam - Positives

- Shortcomings - General image of the private sector: good or bad ? What do you think about the role of the private sector in the economy 2. Many people are in the opinion that many government’s policies are biased against the

private sector. What do you think about this statement? 3. In your opinion, what difficulties is the private sector faced with? + Internal : + External: 4. What problems do you often have with the private sector in your work (as compared with

the state sector) 5. Do you think the public in general currently have correct perception towards the private

sector? If not, why so? + Government? + Media? + The private sector itself? 6. Do you think the media is fair in its portrayal of the private sector? + What is right? + What is wrong? 7. What do you think the media should do to do a better job? 8. What activities/initiatives do you think can help to improve the image of the private sector 9. Other suggestions on solutions:

+ from the Government + from the private sector itself

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SUMMARY OF FOCUS GROUP DISCUSSIONS

For owners/managers of private firms

A focus group of 11 entrepreneurs (managers, owners or co-owners of a private company) was held on May 13, 1999 in HCMC. This is the first among 5 sectors focus group aimed at in-depth understanding of what private sector has to deal with in the areas of public relations. The participants represented owners/managers of private in different sectors: manufacturing, service, trade, construction ... Since this is the first focus group and the participants were the principal players of the private sector we stared the discussion from a broad angles in order not to lose any important issues. I. REASON TO START BUSINESS AND SUCCESS CRITERIA:

1. Reason to start business :

The participants were asked to list the reasons why one started own business and following are the answers not ranking by importance:

?? Make money, make a living ?? Use full personal potential (state companies rarely use their full potentials) ?? Can follow their own moral code (they have to cheat and are exposed to

corruption when work in state companies) ?? Challenge / adventure / creativity. ?? Family, personal circumstances (inhe rit family business) ?? Better life style.

2. Success criteria:

The success criteria named by participants were identical to those of the developed

world entrepreneurs indicating the participant business maturity. The criteria were :

?? Sustainable profit growth ?? Financial health ?? Good business strategy ?? Job / moral satisfaction ?? Contribution to the society ?? Personal growth ?? Staff development both in terms of quantity and quality

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II. FACTORS INFLUENCE BUSINESS SUCCESS AND DISADVANTAGES VS. OTHER SECTORS:

1. Factors influencing success:

The participants were next asked what factors influenced their business success

and the answers were:

?? Management skills ?? Financing, availability of funds: immediately the participants cited difficulties in

obtaining financing due to weak local commercial banks. All of them ended up using their own money and borrowed from family and friends to start up their business.

?? Personnel / staff: some participant complained that it is very hard to find talented and honest staff. This reflects weak human resource management skill of the Vietnamese private sector.

?? Government policies and regulations: this factor was mentioned the first among all factors. One participant started by saying private sector was banned from important and lucrative sectors in the past such as distribution of steel, rice, coffee, fertilizers; printing etc… Government regulations also create disadvantages for private sector in obtaining loans. For example, private companies must have collateral in order to obtain loans from commercial banks while state companies are not always subjected to this rule.

?? Market size or market demand was cited as an important factor to business success.

To conclude this section the participants were asked to give percentage of importance to each of the above factor to make the total 100%. The results are as follows:

Toys Construction Garment

Management 25% 50% 35% Financing 50% 20% 20% Market demand 10% 5% 30% Personnel 10% 20% 10% Govt. polic ies 5% 5% 5% Although the participants assign different importance to the same factor according to specific industry we can see that in general management and financing are considered most important and the other three factors are second important factors. We actually expected government policies play a more important role than stated by the participant. The reason may be that these companies are mature businesses.

2. Disadvantages vs. other sectors:

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The participants then were asked to ranked private sector vs. state sector and FDI sector according to the success factors. Three was given to the sector with the most advantage, 2 to the one with middle advantage, 1 to the sector with the least advantage. The results are as follows : State Sector FDI Private Sector

Management 1 3 2 Financing 2 2 1 Domestic market demand 3 2/1 2/1 Personnel 3 2 1 Government policies 3 2 1

The private sector obviously think they have disadvantages across the board versus the state and FDI sectors. They were asked to elaborate reasons leading to their disadvantage for each factor:

?? Financing: same regulations but state companies have to go

through less scrutiny and bureaucracy than private sector. ?? Domestic market: private sector can not enter some businesses

under government regulations. ?? Personnel: for the same money and job a person would chose

to work for a state company, then a foreign company before a private company. People do not feel secure working for a private company.

?? Government policies: laws are the same for every body but implementation differ from sector to sector.

III. PUBLIC OPINION ON PRIVATE SECTOR :

All through the focus group the issue of unfair public image of the private sector was repeated many times. This unfair image and reputa tion contributed to the difficulties of the private companies in getting financing, dealing with government agencies and tax authorities, hiring talented managers. All participants agreed that although public groups know that the private sector contribute positively to the national economy and the society there is still a big gap between their contribution and their recognition. Few people can imagine that in 10-20 years the private sector may play a dominant role in the economy of Vietnam. The reasons leading to this unfair public image as cited by the participants were :

?? Lack of knowledge and recognition of the private sector by the journalists. ?? Scandal and corruption committed by a few private companies. ?? Lack of communication about the private sector’s contribution to the public. ?? The participants suggested private companies should work

with newspapers / journalists but some complain that they don’t have money to do this.

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For parents of graduating students

A focus group of 14 parents of graduating vocational and university students was held in Hanoi on 18th May 1999. These parents, chosen randomly, represented students from the following universities/colleges:

?? Foreign Trade College ?? National Economic University ?? Foreign Languages College ?? National University of Hanoi ?? Poly-technique University ?? Construction College

Following is a summary of the discussions at the focus group: 1. Role of parents in helping their children look for employment: The focus group started with the general question whether the pa rticipants help or advise their children in looking for a job, and all participants but one answered “YES” on the back of such reasons as: their children often lack experience, hence are in need of advice and guidance; the parents consider it as their responsibility toward their children. When further asked about how difficult the participants think it is for their children to find a job, almost all parents in the focus groups said that it was very difficult to find a job in Vietnam at the present time (10 out of 14 participants says very difficult) due to the followings:

? ?Lack of jobs ? ?Complicated procedures ? ?Lack of information about jobs ? ?University training does not meet the requirements of real life ? ?Negative phenomenon in recruitment

When asked which among SOEs, foreign firms (FCs) and local private firms (PCs), they find it most difficult for their children to find a job in, most participants chose SOEs (13 out of 14). One participant chose foreign firms while no one cited local private firms. The participants found it the most difficult to find job in an SOE mainly due to the following reasons:

? ? Imbalance between demand and supply -- many people want to have jobs in a SOE (or a state agency) while employment supply in this sector is limited because:

? ? Employment in this sector provides stability, though salary is low ? ? Can have training opportunities ? ? Be able to have “left hand ” jobs (for earning more income) ? ? Parents want their children to work for SOEs because of psychology issue

? ? Lack of information about jobs in SOEs ? ? Need to have special “relationship” so as to be able to find a job in an SOE

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From the above, it can be said that to most parents, jobs in an SOE are considered as the preferred choice. 2. Criteria that parents of graduating student often consider in advising/helping their

children in the job hunt: When asked to cite the most important criteria that they often consider when helping or advising their children to look for a job, the participating parents cited: job stability; good working conditions; have potentials for career development; opportunity for training (including training abroad) and salary as the most important ones. When asked to rank which among SOEs, foreign firms (FCs) and local private firms (PCs) the participants think can most satisfy the selected criteria, they gave the following results (with A being the most satisfactory one; and C the least satisfactory):

Criteria SOEs FCs PCs Job stability A B C Working environment C A B Have potential for career development A B C Training (including broad training) B A C Salary C A B

It is obvious from the above that overall, private employers are not highly appreciated by the participating parents. When asked to pick the kind of firms that the participants most prefer their children to have a job with (among SOEs, FCs and PCs), 13 participants voted for SOEs. The cited reasons were given below:

? ?Psychology ? ?No exploitation ? ?Higher prestige

However, some of the participants said that they have recently somewhat changed their thinking about the image of private sector and that they now think of the private sector in more positive way than in the past. 4. Image of the private sector: When asked what the participants think about private sector in general, they gave the following negative descriptions:

? ?The private sector is small and scattered ? ?Private firms are being treated unfairly by the Government policies ? ?Private firms are not reliable ? ?Some private firms are not honest ? ?The private sector is not reputable

On the positive side, they praised private firms for:

44

? ?Efficient management ? ?Being active / creative ? ?Creating jobs

5. Image of the owners/managers of private firms: The participating parents gave more positive description about the owners/managers of private firms when asked to do so. The common descriptions include:

? ?Active ? ?Highly responsible ? ?Brave ? ?Competitive ? ?Hard-working ? ?Adventurous ? ?Some are not well-educated

6. The media: When we asked the participating parents to cite the sources of information about the private sector in Vietnam, the media appeared to be the most common source to all of them. Over half of the participants (11 persons) said that the media was being unfair to the private sector (including one parent who is a journalist herself). The participants also cited the following reasons why the media was not fair to the private sector:

? ?Policies of the government are generally biased against the private sector, not encouraging to its development

? ?The media is not quite objective in giving out information about the private sector. Too much bad news about the private sector

? ?The media is controlled by the State

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For graduating students

A focus group of 12 graduating students was held in Hanoi on the same day as the focus group for the parents. Hanoi. The students participating in the focus group came from the following universities and colleges:

??National Economics University ??Foreign Languages College ??Construction College ??National University of Hanoi ??Water Resources Management College ??Thang Long University (private university)

The results of the focus group are summarized below: 1. Concerns of graduating students about employment: Almost all participating students said that they were worried looking for a job after graduation. Only one student said that he was not worried (because his parents already took care of that). When being asked to cite their concerns when looking for a job after graduation, the participating students gave the following replies:

??Have no relationships ??Feel that they do not meet the real requirements of the job ??Geography issue (jobs in rural areas vs. in cities) ??No suitable jobs for them ??Limited labor supply

2. Criteria for a suitable job When asked to cite the criteria that the students have in mind for a suitable job and rank the importance of the criteria, the participants gave the following results (In order of the attached importance – the figure in blanket indicate the number of students who chose the cited criteria as the most important one).

Order Criteria 1 Suitable job (in line with their major at school): 4 students chose

this to be the most important criteria 2 Have potentials for career development: (3) 3 Salary: (3) 4 Working environment: (1) 5 Location: (1)

Next on the list of criteria are: stability of the firm, and opportunity for training, though no student chose these two criteria as the most important ones.

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When asked to rank which among SOEs, foreign firms (FCs) and local private firms (PCs) the participants think can most satisfy the selected criteria, they gave the following replies (with A being the most satisfactory one ; and C the least satisfactory):

Criteria SOEs FCs PCs 1. Suitable jobs A B C 2. Have potential for career development A C B 3. Salary C A B 4. Working environment B A C 5. Location A C B 6. Stability of the firm A B C 7. Training opportunities A B C

It can be said that the perception of graduating students about employment in a private firm does not differ much from that of their parents, with employment in a private firm being the least liked. We explored further with the participating students on the questions of why they ranked SOEs, FCs and PCs as above, we obtained the following cited reasons: a. SOEs are considered as the best source of suitable jobs because: ??There are lots of state owned companies in the economy, therefore, larger supply of

suitable jobs. ??Only SOEs can provide good jobs ??SOEs are large sized ??The state owned sector is the leading sector in the economy

??SOEs are responsible corporate citizens, therefore, creating more jobs for the society b. SOEs are considered as being most able to provide students with potentials for the career development because: ??SOEs have more expertise than private companies ??SOEs have more experience than private companies ??Vietnam is a socialist country, therefore, not many opportunities for the private

sector to develop ??Only SOEs can give the students the opportunity to acquire a management position

The only reason that the students thought highly of private firms in this regard is: there is no issue of seniority in private firms. c. SOEs are thought to be of great potentials and stability because:

??Stability due to planned economy ??Financial stability (back up of the Government) ??Stability thanks to the dominating position and the leading role in the economy ??Budget subsidies from the Government

Private firms and foreign firms did not rank high as they were thought of as could easily go bankrupt, which would rarely happen to SOEs.

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To conclude this section, the students were asked to choose their preferred place of employment given they had 3 equal job opportunities respectively in a SOE, a foreign firm and a private firm, which could meet all chosen criteria. Their choices are as follows:

Firms Number of students SOEs 8 Private firms 3 Foreign firms -

(Note : on student had no comment)

The most commonly cited reasons for choosing SOEs included: stability, better retirement allowances, SOEs being more responsible to employees; can enjoy better social status working for SOEs. ( When the students were further asked which sector, the state sector or the private sector, do they think contribute more to the economy, 11 students mentioned the state sector. The remaining one student had no comment). 4. General th inking of the participating students about the private sector When asked about their general thinking about private firms (both positive and negative), the students gave the following description: ??Be active, creative ??Have no “bureaucracy” ??Create jobs ??Only care for profits ??Maphia

When they were further asked to name some of the difficulties that they thought the private sector was faced with, the students gave out the followings: ??Private companies are often small sized ??Private firms do not have high reputation ??The government’s policies give priority to SOEs ??People do not trust private companies ??Private firms have limited capital and technology

5. The Media Like their parents, students obtained most information about the private sector from the media (newspapers, magazines, TV). Eight students (66%) said that the media did not do a good job

48

in portraying the private sector in Vietnam ( one student said the media did a good job while the other 3 students either had no idea or said they did not care). The cited reasons for the students saying the media did not do a good job are:

??The media has to depend on the Government’s overall policy ??The media tends to neglect the private sector ??The media often provides incorrect information about the private sector s. Too

much bad news about private firms

??The media itself does not have much news

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For suppliers and customers of private firms

A focus group of 11 directors and deputy directors of companies which are either customers or suppliers of private co mpanies, or both, was held in Hanoi on 19th May 1999. Five of the participating firms were state -owned, and the rest were private ones. The purpose of the focus group is to learn how customers and suppliers of private companies perceive private partners when dealing with them, and other related issues. Below is a summary of the key findings of this focus group: 1. Criteria that firms consider when choosing a business partner: Participants cited 7 major criteria for deciding to sell to and to buy from a business partner. The cited criteria were:

?? Ability to pay ?? Product quality ?? Pricing ?? Financial position ?? Reputation/Status ?? Delivery time and capacity ?? After sales services

The most important criteria to consider when companies sell products was ability to pay. 11 participants unanimously chose ability to pay as the first criteria while 4 chose reputation and status as second priority. The most important criteria that companies consider when buying products/services was product quality (9 votes). The second criterion was delivery time and capacity (4 votes), pricing (4 votes) and reputation (1 votes). When asked how they ranked private, state-owned and foreign companies by such criteria as: financial position, product quality, pricing, reputation, delivery capacity, director’s capabilities and management skills, the participants gave the following answers:

Criteria Private State-owned Foreign # of Votes Financial position C B A 8 equal equal equal 3 Product quality C A B 1 C B A 8 Pricing A C B 8 A B C 2 Reputation C B A 3 A C B 1 B C A 2 C A B 3 Delivery time B C A 7

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A C B 1 Director’s capabilities B C A 1 C B A 8 Note : total number of votes for each criterion sometimes did not make to 11 as some did not have answers. As can be seen, the participants were most divided in opinion about reputation for different type of firms. This is understandable as the group had representatives from both state and private sectors, and who often had experiences in both purchasing and selling to private firms. 2. Image of the owners/managers of private firms: The commonly cited description of the image of the owners/managers of private firms were:

?? More active and decisive ?? Hard working ?? Put more efforts to work ?? More cautious on spending ?? His/her interests coincide with those of the firm ?? Better management ability in different aspects such as financial, human resources and

public affairs. ?? Not systematically trained in business management

3. The third issue that the focus group touched upon covered the difficulties that businesses were being faced with. As a result, the participants mentioned 7 difficulties that they often encountered, the most important of which included:

a. Human resources management (6 voted for this) b. Capital (2 votes) c. Lack of needed labour skills d. Market competition

When further asked to compare state-owned firms with private firms in term of each of the cited difficulties, i.e. is the difficulty more severe to the private sector or to the state sector, or both, the participants gave out the following replies:

Difficulties Private State-owned # of Votes 1. Human resources management Less More 6 More Less 5 2. Capital Less More 8 More Less 3 3. Labour’s skills Less More 11 4. Harassment from authorities Less More 7 More Less 4 5. Competition Less More 11 6. Macro economic environment Less More 11 7. Special raw material Equal Equal 11

4. The media:

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Findings from this section do not differ from those in the other focus groups. 100% of the participants considered media as an important mean to the improvement of the private sector’s image. However, 9 participants thought that the media had not fulfilled its job in doing so. One participant even said that the media were doing a very bad job. The major reasons for these statements were:

?? The media only focuses on the negative side of the private sector ?? The media carried a one-sided source of information ?? The media has not been quite objective in its judgement of the private sector

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For credit officers

A focus group of 11 bank credit officers was hold in HCMC on May 18, 1999. Following is the list of the participating banks:.

Ngan hang Xuat Nhap Khau – Eximbank, District 5 branch Ngan hang Ky thuong – Technology & Commerce Bank Tan Viet Bank Ngan hang Xuat Nhap Khau - Eximbank – H.O Ngan hang Dau Tu Phat trien – Bank for Investment & Development Ngan hang Sai gon Thuong tin – Saigon Commercial Bank (SACOMBANK) Ngan hang Ngoai thuong Dong Nai - Vietcombank Dong nai Ngan hang Thuong mai Co phan Ky Thuong VN – Vietnam Technology & Commerce Joint Stocks Bank Ngan hang Co phan Thuong mai Mekong – Mekong Joint Stock Commercial Bank Ngan hang Ngoai thuong - Vietcombank Ngan hang Cong thuong – Industrial and Commercial Bank (INCOMBANK)

It is worth to mention that in the wake of the Minh Phung Epco trial involving many high banking managers, it was very difficult to recruit participants for this focus group. During the focus group the participants were very defensive, unwilling to discuss in depth questions in fear that they may discredit themselves. I. DIFFICULTIES IN OBTAINING LOANS :

The participants were provoked by a question why the private sector complained that it is much more difficult for them to obtain loan than the State sector. Two, three participants from private commercial banks immediately protested the complain and stated that they absolutely treated the state sector and the private sector equally, others cited the following reasons : 1. Psychological advantage : the state sector has the government as an unofficial

guarantor who banks feel can always come to rescue while the private sector has no guarantor in case the loan goes bad as one Vietnamese saying “hold the guy with hair not the bald one – thang co toc nam thang troc dau”.

This is interesting both from government policies and PR angles because it means that in order to create level playing field for both sectors not only the government has to stop saving troubled state companies but it has to communicate clearly through mass media that banks should stop relying on the government to rescue bad debts.

2. Legal advantage : the collateral condition is much tric more difficult for the private sector than the state sector. Recently government allowed bank to write off bad debts of state companies but not of the private companies.

3. The Company Law in Vietnam define a fixed legal capital (equivalent to equity) making it difficult to obtain substantial loan because the theoretical leverage of the company increases with every loan and soon reaches a risky level for banks to provide further financing.

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4. The private companies usually do not have proper book keeping making the due diligence for loan difficult and incomplete. One of the reasons private companies do so because the turnover and profit tax rate was very high in the past, from 4 - 10% turnover tax and 45% profit tax.

Some participants from private commercial banks had opposite opinion stating that they find it easier to give loans to the private sector than the state sectors for the following reasons:

a. Private owners try harder to pay back the loans b. It is easier to liquidate collateral or assets of private companies in case

they can not pay back the loan. II. MEDIA AND PUBLIC OPINION :

This group of bank credit officers didn’t think that the private sector has an unfair image problem. When asked why there certain newspapers slanders private sector unfairly one participant replied that it was certain journalist’s opinion not the official line of the newspapers. This is interesting to note and it may be worth to consider a special PR efforts geared just toward the journalists. Another participant noted that most private companies owner do not want to appear on media in fear of being too visibly successful and the tax authority may come! One participant added that private companies keep secret of their problems better than state companies i.e. there are seem less scandals within private companies than the state companies.

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55

ANALYSIS OF SURVEY DATA ______________________________________________________________________

56

Graduating Students

Sample Size 123

General Information:

Do you have a family member working for a private firm:

Yes 37% No 61%

Questionnaire

1. Do you prefer to work for which of the companies below after graduation? Please choose 2 only by ticking in the appropriate boxes.

Private 8% State owned 34% Set up own's company 13%

Foreign 41%

2. Please choose 4 criteria among the followings, which you think most important in accepting a job (Please put 1,2,3,4 next to the chosen criteria with 1 meaning the most important, 2 the second important, 3 the third important and 4 the fourth important)

No_1 No_2 No_3 No_4

suitable job ( in line with the major at school) 49% 11% 5% 5%

have potential for career development 15% 0% 0% 11%

salary 13% 24% 20% 21%

potentials/stability of the company 4% 11% 11% 10%

the manager/owner of the company 1% 1% 5% 2%

reputation of the company in general 4% 5% 7% 7%

training opportunity (including broad training) 4% 7% 15% 11%

working environment 4% 6% 8% 11%

job security 6% 11% 16% 23%

3. If you DO NOT choose the private firm in Question (1), please choose 5 among the following reasons by marking in the appropriate boxes.

no potentials for career development 51%

no training 57%

no job security (can be fired anytime) 67%

cannot contribute to the country's economy 17%

the future of the company is not stable (can go bankrupt) 64%

the working environment is not nice 18%

society will look down on you 5%

cannot give you the kind of expertise that you need 31%

no suitable jobs 12%

managers in private firms are not reliable 26%

government's policy is biased to state sector 28%

4. If you CHOOSE the private firm in Question 1, please choose 3 among the following reasons by marking in the appropriate boxes.

suitable jobs 17%

have potentials for career development 11%

good working environment 15%

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no seniority issue 9%

no need for an umbrella 15%

good salary 19%

good training 0%

managers are reliable 6%

other (Please specify) 0%

5. When you think of the private sector, what will be the first 03 negative things that you often have in mind? Please use short sentences or adjecti ves to answer this question?

Open-Ended Question

Open-Ended Question

Open-Ended Question

6. When you think of a manager or owner of a private company, what will be the first 03 negative things that you often have in mind? Please use short sentences or adjectives to answer this question?

Open-Ended Question

Open-Ended Question

Open-Ended Question

7. What do you think about the role of the private sector in the national economy?

Important 88% Not Important 10%

8. What do you know about the private sector? Please read the following statements and mark in the appropriate boxes.

Right Wrong

Private sector in Vietnam accounts for more than 50% of garments exports 47% 37%

Employment in private manufacturing companies has the highest growth rate among all sectors in 1998 57% 28%

6 out of 10 top local brands chosen by Saigon Times Group readers are state-owned 43% 33%

9. Which of the followings better characterises the state-sector or the private sector. Please mark the appropriate box in accordance with your opinion.

State owned Private Both Neither

efficiency 17% 43% 21% 11%

contribution to GDP growth 28% 14% 43% 1%

honesty/integrity 29% 11% 11% 33%

job creation 14% 22% 54% 2%

contribution to export growth 28% 8% 54% 1%

10. What are the sources of information do you have about the private sector in Vietnam? Choose the most important 2 sources from the followings:

Media 86%

Parents 18%

Friends 46%

University 28%

11. What information from the media that has made you think negatively about the private sector? Please specify 03 kinds of information.

Open-Ended Question

58

Open-Ended Question

Open-Ended Question

12. What of the following activities do you think should be done to create a better image for the private sector? Please choose 05 activities (by circling the chosen ones).

a. seminars about the role of private sector in the economy 75%

b. articles about the contributions of private sector to the economy 51%

c. stories about successful private firms on TV, newspapers 63%

d. stories about successful owners/managers of private firms on TV, newspapers 54%

e. awards for best private entrepreneurs of the year 0%

f. visits by government officials to well-managed private firms 45%

g. awards for best quality products of private firms 0%

h. awards for private firms that create most employment of the year 0%

i. awards of the commercial banks for a best private firm client 36%

13. Can you please cite names of some large private firms?

54%

14. Who is your role model for a private businessman/entrepreneurs?

34%

59

Parents of Graduating Students

Sample Size 130

1. Do you help and/or advise your children in looking for a job after graduation?

Yes 83% No 14%

Do you help and/or advise your children in looking for a job aft er graduation?

Yes 29% No 58%

2. Do you prefer your children to work for which of the companies below after graduation? Please choose 2 only by ticking in the appropriate boxes.

Private 25% State owned 74% Foreign 52%

3. Please choose 4 criteria among the followings, which you think most important in accepting a job (please put 1,2,3,4 next to the chosen criteria with 1 meaning the most important, 2 the second important, 3 the third important and 4 the fourth important)

No_1 No_2 No_3 No_4

have potential for career development 35% 0% 0% 8%

salary 15% 22% 17% 10%

potentials/stability of the company 11% 21% 5% 8%

reputation of the company in general 2% 4% 3% 7%

training opportunity (including broad training) 2% 8% 14% 10%

working environment 8% 6% 17% 5%

job security 15% 12% 9% 14%

suitable job ( in line with the major at school) 6% 9% 14% 16%

an opportunity to improve your children's knowledge 3% 3% 7% 15%

others (Please specify) 0% 0% 0% 0%

4. If you DO NOT choose the private firm in Question (1), please choose 5 among the following reasons by marking in the appropriate boxes.

no potentials for career development 45%

no training 57%

no job security (can be fired anytime) 66%

cannot contribute to the country’s economy 20%

the future of the company is not stable (can go bankrupt) 64%

the working environment is not nice 25%

society will look down on you 8%

cannot give you the kind of expertise that you need 20%

your children will be exploited 17%

managers in private firms are not reliable 16%

government’s policy is biased to state sector 5%

others (please specify) 1%

5. If you CHOOSE the private firm in Question 1, please choose 3 among the following reasons by marking in the appropriate boxes.

suitable jobs 14%

have potentials for career development 11%

60

good working environment 17%

no seniority issue 5%

no need for an umbrella 13%

good salary 15%

good training 6%

managers are reliable 5%

other (please specify) 1%

6. When you think of the private sector, what will be the first 03 negative things that you often have in mind? Please use short sentences or adjectives to answer this question?

Open-Ended Question

Open-Ended Question

Open-Ended Question

7. When you think of a manager or owner of a private company, what will be the first 03 negative?

Open-Ended Question

Open-Ended Question

Open-Ended Question

8. What do you think about the role of the private sector in the national economy?

Important 0% Not Important 0%

9. What do you know about the private sector? Please read the following statements and mark in the appropriate boxes.

Right Wrong

Private sector in Vietnam accounts for more than 50% of garments exports 49% 26%

Employment in private manufacturing companies has the highest growth rate among all sectors in 1998 44% 29%

6 out of 10 top local brands chosen by Saigon Times Group readers are state-owned 48% 25%

10. Which of the followings better characterises the state-sector or the private sector. Please mark the appropriate box in accordance with your opinion.

State owned Private Both Neither

efficiency 8% 28% 38% 9%

contribution to GDP growth 24% 9% 45% 0%

honesty/integrity 26% 5% 18% 28%

job creation 9% 13% 61% 2%

contribution to export growth 21% 6% 51% 1%

11. What are the sources of information do you have about the private sector in Vietnam? Choose the most important 2 sources from the followings:

Media 82%

Colleagues, friends 58%

Official Document 15%

Other (Please specify) 8%

12. What information from the media that has made you think negatively about the private sector? Please specify 03 kinds of information.

Open-Ended Question

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Open-Ended Question

Open-Ended Question

13. If you have money, are you willing to invest in a private company?

Yes 39% No 48%

If NO, please provide 02 brief reasons:

Open-Ended Question

Open-Ended Question

14. What of the following activities do you think should be done to create a better image for the private sector? Please choose 05 activities (by circling the chosen ones).

a. seminars about the role of private sector in the economy 60%

b. articles about the contributions of private sector to the economy 42%

c. stories about successful private firms on TV, newspapers 62%

d. stories about successful owners/managers of private firms on TV, newspapers 47%

e. awards for best private entrepreneurs of the year 45%

f. visits by government officials to well-managed private firms 40%

g. awards for best quality products of private firms 68%

h. awards for private firms that create most employment of the year 34%

i. awards of the commercial banks for a best private firm client 35%

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Suppliers/Customers of Private Firms

Sample Size 140

Years in business under 5 years 26% 5-10 years 16% >10 years 0%

Type of ownership: Private 39% State owned 23% Foreign 1%

Number of Employees <40 0% 40-100 14% >100 0%

1. Do you purchase from or supply to which of the firms below?

Private 9% State owned 1% Both 57%

2. What are your criteria in selecting a supplier or a buyer? Please ch oose the most important 4 criteria and put 1,2,3,4 next to the chosen criteria with 1 meaning the most important; 2 = second important; 3 = third important and 4 = fourth important

No.1_ No.2_ No.3_ No.4_

financial issues (ability to pay/ ability to pro vide financial support) 24% 6% 6% 8%

reputation 14% 11% 9% 8%

delivery terms 2% 6% 13% 9%

after sales services 0% 1% 4% 10%

support from government agencies 1% 2% 2% 4%

quality 24% 19% 9% 7%

pricing 6% 21% 16% 7%

more flexibility in dealing with 1% 4% 4% 6%

how I perceive the company is being run/managed 0% 1% 2% 5%

other (Please specify): 0% 0% 0% 0%

3. If your firm had two purchasing or supplying offers (one from SOE and one from Private Firm), which can both satisfy all important criteria that you have chosen, will you likely to accept the offer from:

Private 38% State owned 28%

4. If you CHOOSE the private firm in Question (3), please choose 3 among the following reasons by marking in the appropriate boxes.

financial issue 16%

reputation (reliable firm) 15%

more flexible in dealing with 30%

better services 35%

as I think the firm is better managed 16%

managers of private firms can keep promises 6%

others (Please specify) 0%

5. If you DO NOT CHOOSE the private firm in Question (3), please choose 3 among the following reasons by marking in the appropriate boxes.

do not have financial capability 21%

the firm is not reliable 21%

not flexible in dealing with 2%

quality is not good 7%

do not have guarantee of government 15%

managers of private firms are not reliable 4%

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the firm is not well managed, leading to problems 9%

others (Please specify) 0%

6. What do you think about the role of the private sector in the national economy?

Important 61% Not important 4%

7. When you think of the private sector, what will be the first 03 negative things you think about? Please use 03 short sentences or 03 adjectives to answer this question?

Open-Ended Question

Open-Ended Question

Open-Ended Question

8. When you think of the manager/owner of the private sector, what will be the first 03 negative things you think about? Please use 03 short sentences or 03 adjectives to answer this question?

Open-Ended Question

Open-Ended Question

Open-Ended Question

9. What do you know about the private sector? Please read the following statements and mark in the appropriate boxes.

Right Wrong

Private sector in Vietnam accounts for more than 50% of garments exports 22% 36%

Employment in private manufacturing companies has the highest growth rate 36% 21%

among all sectors in 1998

6 out of 10 top local brands chosen by Saigon Times Group readers are state-owned 37% 22%

10. Which of the followings do you think better characterises the state-sector or the private sector. Please mark the a ppropriate box in accordance with your opinion.

State owned Private Both Neither

- efficiency 2% 29% 24% 6%

- contribution to GDP growth 7% 11% 41% 0%

- honesty/integrity 11% 12% 9% 29%

- job creation 4% 16% 41% 0%

- contribution to export growth 8% 3% 50% 0%

11. Why do you think it is harder for the private sector to obtain loans from banks? Please choose 04 among the followings.

private firms do not have the strong back up of the government 44%

higher risks to lend to private firms 44%

private projects are more likely to fail 21%

private firms often do not have the capacity to carry the project 23%

private applicants are not honest, will not use loans as stated 33%

it is more difficult to supervise the use of the loans lent to private firms 44%

the general policy of commercial bank is be cautious with private applicants 41%

others (Please specify) 0%

12. Why do you think it is more difficult for private firms to employ people? Please choose

among the followings.

no potentials for career d evelopment 21%

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no training 35%

no job security (can be fired anytime) 52%

can not contribute to the country’s economy 2%

the future of the company is not stable (can go bankrupt) 51%

the working environment is not nice 16%

society will look down on people working for private firms 11%

can not provide the kind of expertise that is needed 8%

exploitation in private firm 0%

managers in private firms are not reliable 0%

government’s policy is biased to state sector 0%

others (Please specify 0%

13. What are the sources of information do you have about the private sector in Vietnam? Choose the most important 2 sources among the followings:

Media 54%

Colleagues, Friends 52%

Official Document 12%

Others (Please specify) 6%

14. What information from the media that has made you think negatively about the private sector? Please specify 03 kinds of information.

Open-Ended Question

Open-Ended Question

Open-Ended Question

15. Do you think there should be more strong and large private firms in the economy?

Yes 61% No 2%

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Private Firms

Sample Size 127

I. General Information about Your Company:

Years in business Under 5 years 54% 5-10 years 39% Over 10 years 7%

Type of ownership: Private 100% State-owned 0% Foreign 0%

Number of employees Under 40 69% 40-100 21% Over 100 9%

II. Questionnaire

1. What are your reasons to start your business (or to decide to work as CEO of a private firm)? Please choose 2 among the followings. make more money, make a living 50%

maximize personal potentials 76%

so that can pursue own’s ethical values 13%

more challenge/adventure/creativity 41%

family/personal circumstances 13%

better life style 10%

other (please specify) 0%

2. What image problems do you think the private sector (and its owners/managers) is suffering from? Please choose as many as applicable from the followings.

private sector is not contributing to national economy 7%

private sector is small, scattered 50%

private means exploitation 13%

private is only after short-term profits 39%

private firms ’ managers are not well educated 39%

private firms are not reliable 38%

private firms do not have the capability to do large/key projects 48%

others (Please specify) 0%

3. What information from the media do you think has made the public think negativel y about the private sector? Please specify 03 kinds of information.

Open-Ended Question

Open-Ended Question

Open-Ended Question

4. What positive images do you think the public often has in mind when they think of the private sector? Please use 03 short sentences or 03 adjectives to answer this question?

Open-Ended Question

Open-Ended Question

Open-Ended Question

5. What positive images do you think the public often has in mind when they think of the manager/owner of the private sector? Please use 03 short sentences or 03 adjectives to answer this

Open-Ended Question

Open-Ended Question

Open-Ended Question

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6. What do you know about the private sector? Please read the following statements and mark in the appropriate boxes.

Right Wrong

a. Private sector in Vietnam accounts for more than 50% of garments exports 39% 46%

b. Employment in private manufacturing companies has the highest growth rate among all sectors in 1998 62% 20%

c. 6 out of 10 top local brands chosen by Saigon Times Group readers are state-owned 51% 31%

7. Which of the followings do you think better characterises the state-sector or the private sector. Please mark the appropriate box in accordance with your opinion. State owned Private Both Neither

- efficiency 2% 56% 34% 5%

- contribution to GDP growth 8% 7% 76% 1%

- honesty/integrity 4% 28% 13% 42%

- job creation 13% 17% 70% 1%

- contribution to export growth 0% 7% 75% 1%

8. Why do you think it is harder for private firms to employ people? Please choose among the fol lowings.

no potentials for career development 20%

no training 37%

no job security (can be fired anytime) 80%

can not contribute to the country’s economy 0%

the future of the company is not stable (can go bankrupt) 65%

the working environment is not n ice 12%

society will look down on people working for private firms 0%

can not provide the kind of expertise that is needed 6%

exploited in private firm 0%

managers in private firms are not reliable 59%

government’s policy is biased to state sector 0%

others (Please specify 7%

9. Why do you think it is harder for the private sector to obtain loans from banks? Please choose 04 among the followings.

private firms do not have the strong back up of the government 70%

higher risks to lend to private firms 59%

private projects are more likely to fail 21%

private firms often do not have the capacity to carry the project 23%

private applicants are not honest, will not use loans as stated 28%

it is more difficult to supervise the use of the loans lent to private firms 46%

the general policy of commercial bank is be cautious with private applicants 69%

others (Please specify) 17%

10. What do you think the private sector should do to improve its image?

Open-Ended Question

Open-Ended Question

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Open-Ended Question

11. What do you wish the Government should do to help improve the image of the private sector?

Open-Ended Question

Open-Ended Question

Open-Ended Question

12. What do you wish the media did to help improve the image of private sector?

82%

54%

35%

13. What of the following activities do you think should be done to create a better image for the private sector? Please choose 05 activities (by circling the chosen ones).

a. seminars about the role of private sector in the economy 71%

b. articles about the contributions of private sector to the economy 54%

c. stories about successful private firms on TV, newspapers 62%

d. stories about successful owners/managers of private firms on TV, newspapers 41%

e. awards for best private entrepreneurs of the year 62%

f. visits by government officials to well-managed private firms 42%

g. awards for best quality products of private firms 69%

h. awards for private firms that create most employment of the year 45%

i. awards of the commercial banks for a best private firm client 30%

14. Do you think there should be more strong and large private firms in the economy?

Yes 100% No 0%

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Credit Officer Sample Size 124

I. General Information

Year with the bank < 5 year 58% 5-10 years 28% >10 years 13%

Type of bank Private 49% State owned 49% Foreign 0%

II. Questionnaire

1. What are the stated criteria in providing loans to customers? Please state the 4 most important criteria.

1. Open-Ended Question 3. Open-Ended Question

2. Open-Ended Question 4. Open-Ended Question

2. Regarding the 4 most important criteria that you have chosen, which company (SOE or Private) do you think can better satisfy each of the chosen criteria? Please mark in appropriate box.

State owned Private

Criteria No1 95% 0%

Criteria No2 95% 0%

Criteria No3 95% 0%

Criteria No4 0% 94%

3. If you had to process two loan applications (one from SOE and one from Private Firm), which can both satisfy all criteria and that your fund is limited (sufficient for one application only), which one will you more likely to recommend:

State owned 80% Private 18%

4. If you do not choose the private application, what are the reasons? Please choose among the followings.

- private firms do not have the strong back up of the government 28%

- higher risks to lend to private firms 0%

- private projects are more likely to fail 0%

- private firms often do not have the capacity to carry out the project 19%

- private applicants are not honest, will not use loans as stated 45%

- general policy of your bank is be cautious with private applicants 30%

- the general public attitude is "private firms are often not reliable" 27%

- you have had more bad experiences with private customers 23%

5. If you choose the state-owned applicant, what are the reasons? Please choose among the followings.

- they have the back up of the government 42%

- less risks to lend to private firms 53%

- state projects are important 40%

- state firms often do not have the capacity to carry out the project 47%

- state firms always pay back in time 11%

- you are safer in lending to state applicants 51%

6. Can you cite 03 risks in dealing with the private sector?

Open-Ended Question

Open-Ended Question

Open-Ended Question

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7. What do you think about the role of the private sector in the national economy?

Important 93% Not important 6%

8. What do you know about the private sector? Please read the following statements and mark in the appropriate boxes.

Right Wrong

a. Private sector in Vietnam accounts for more than 50% of garments exports 30% 52%

b. Employment in private manufacturing companies has the highest growth rate among all sectors in 1998 84% 0%

c. 6 out of 10 top local brands chosen by Saigon Times Group readers are state-owned 68% 0%

9. Which of the followings do you think better characterises the state -sector or the private sector. Please mark the appropriate box in accordance with your opinion.

State owned Private Both Neither

- efficiency 15% 26% 32% 14%

- contribution to GDP growth 23% 9% 56% 0%

- honesty/integrity 48% 2% 10% 25%

- job creation 10% 30% 55% 0%

- contribution to export growth 18% 18% 59% 0%

10. When you think of the credibility of the private sector, what will be the first 03 negative things you think about? Please use 03 short sentences or 03 adjectives to answer this question?

Open-Ended Question

Open-Ended Question

Open-Ended Question

11. When you think of a manager/owner in a private company, what will be the first 3 negative things you think about? Please use 03 short sentences or 03 adjectives to answer this question?

Open-Ended Question

Open-Ended Question

Open-Ended Question

12. What are the sources of information do you have about the private sector in Vietnam? Choose the most important 2 sources among the followings:

- Media 90%

- Colleagues 48%

- Official documents 33%

- Other (Please specify) 31%

13. What of the following activities do you think should be done to create a better image for the private sector? Please choose 05 activities (by circling the chosen ones).

a. seminars about the role of private sector in the economy 76%

b. articles about the contributions of private sector to the economy 46%

c. stories about successful private firms on TV, newspapers 69%

d. stories about successful owners/managers of private firms on TV, newspapers 50%

e. awards for best private entrepreneurs of the year 57%

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f. visits by government officials to well-managed private firms 48%

g. awards for best quality products of private firms 77%

h. awards for private firms that create most employment of the year 29%

i. awards of the commercial banks for a best private firm client 49%

14. If you have money, are you willing to invest in a private firm yourself?

Invest 57% Not to invest 39%