Steady governance foundation enables businesses to improve competitiveness and cope with instability

Ms. Ha Thu Thanh, Chairman of the Board of Directors of the Vietnam Institute of Directors (VIOD), Vice Chairman of the Business Council for Sustainable Development (VBCSD), Senior Corporate Governance Consultant - Deloitte Vietnam

What is the role of corporate governance in improving the competitiveness of Vietnamese enterprises, madam?

In Vietnam many years ago, when it came to improving the competitiveness of enterprises, the important factor was corporate governance was rarely mentioned.

However, things are different especially since the Covid-19 pandemic, businesses have realized very clearly that one of the three important values ​​to help businesses respond flexibly and recover quickly is having good governance besides financial and human resources

The competitiveness of enterprises includes the capacity of the market for products and services, people including leaders, staffs, corporate culture and corporate finance.

When linking corporate governance with competitiveness, this is one of the points to connect and increase resources. Moreover, good corporate governance also enables to improve the image and brand, thereby helping businesses attract new investments.

Nowadays, direct or indirect investors all attach great importance to corporate governance, in order to evaluate the transparency and publicity in business activities before deciding to invest. In particular, a well-governed enterprise will be a force to keep employees and increase new labor resources.

In addition, in the context of fierce competition, businesses need to move towards sustainable development following the ESG trend. ESG stands for E-Environmental (Environment); S-Social (Social) and G-Governance (Corporate Governance), which are a set of standards to measure factors related to sustainable development and the impact of businesses on the community. The higher the ESG score, the better the ability to practice ESG.

Handling the above issues well, businesses are strong enough to upgrade competitiveness and cope with the uncertainties of business now, not only due to the pandemic but also uncertainties from the supply chain. So more than ever, businesses and policymakers must understand the role of corporate governance to include in the assessment of competitiveness and in the business strategy.

Accompanying corporate governance is corporate culture, in your opinion, how should businesses improve this?

Despite grasping the new trend, culture is still something that needs to be built and nurtured. Because, culture is the only thing that is missing when the business grows, the only thing that remains when the business is in crisis, and the only thing that competitors can't get from the business.

Over the past two years, many businesses have responded, coped and "survived" from the storm of Covid-19. One of the important factors that help them do this is the corporate culture background. The corporate culture acts as a support and also a push so that when the business is in crisis, it will not fall down.

Therefore, corporate culture from senior leaders needs to be identified, positioned and oriented to become a "lighthouse" leading and building company culture, towards sustainable development.

For small and medium-sized enterprises alone, what actions are needed to improve the competitiveness of this sector, madam?

After the Covid-19 pandemic, all existing capabilities of the business were shown. Businesses today are operating under ever-increasing pressures and are larger than they have been in the past.

Small and medium-sized enterprises must take full consideration to improve their competitiveness by implementing corporate governance to the minimum level, in order not to incur extra costs due to non-compliance.

Along with that, the immediate solution is that businesses need to focus on developing human resources with appropriate policies to encourage, develop and retain employees. Enterprises must always consider employees as a resource for business development, not an object to hiring.

Thank you very much!