Research on the Development of Vietnamese Enterprises in the Period 2016–2022

The research employs a descriptive statistical method to analyze the current state of business development in Vietnam. The results show that ROA fluctuated between 2.1% and 2.9% during the 2016–2022 period. ROA peaked in 2017 (at 2.9%) and declined to its lowest level in 2020 (at 2.1%). ROS ranged from 3.4% to 4.3%, showing a downward trend from 2017 to 2019, followed by a recovery from 2020 onward. REO exhibited a declining trend from 2017 to 2020, then slightly recovered from 2021. In 2017, REO reached its highest level (at 10%), then gradually decreased to 6.3% in 2020. From 2021, REO recovered to 7.9% and continued to rise to 8.3% in 2022. To foster business development, the following solutions should be implemented: Continue maintaining the growth momentum of ROA and REO by improving asset utilization efficiency and optimizing returns on capital. Control costs to sustain and enhance ROS, maximizing profitability per unit of revenue. Focus on sustainable development strategies to ensure long-term growth in the coming years.

Introduction

Enterprises play a crucial role in socio-economic development. In Vietnam, the government consistently prioritizes business development, as reflected in various policy enactments. Specifically, the government has issued several policies to support enterprise growth, including Decree 90/2001/NĐ-CP and the implementation of a legal support program for businesses under Decree 66/2008/NĐ-CP. Additionally, Resolution No. 10-NQ/TW, dated June 3, 2017, from the Fifth Plenum of the 12th Central Committee, aims to promote the private sector as a key driver of Vietnam’s socialist-oriented market economy (Central Executive Committee, 2017). Resolution 11/NQ-CP, issued on January 30, 2022, focuses on an economic recovery and development program for 2022–2023, emphasizing capital investment in infrastructure development, particularly key projects such as the North-South Expressway and regional connectivity routes (Government of Vietnam, 2022). Notably, public investment spending was increased by up to VND 176 trillion over two years (2022–2023), covering sectors such as healthcare, social security, labor, employment, business support, cooperatives, household enterprises, and infrastructure development. In April 2023, the government issued Resolution 58/NQ-CP, outlining key measures to help businesses proactively adapt, recover quickly, and develop sustainably by 2025 (Government of Vietnam, 2023). However, despite these support policies, their effectiveness remains limited. Access to credit continues to be a challenge. According to a 2022 business survey, approximately 55.6% of enterprises reported difficulties in obtaining credit, up from 34.8% in 2019, 40.7% in 2020, and 46.9% in 2021. A five-year review of the implementation of Government Resolution 35 on business development support until 2020 revealed that 50% of its objectives were not met. Furthermore, businesses continue to face challenges related to market access, administrative procedures, and legal frameworks (Ha, 2024). To gain a comprehensive overview of business development in Vietnam, this study utilizes secondary data from the Ministry of Planning & Investment (2024) for the 2016–2022 period. It assesses key profitability indicators based on business performance to evaluate the level of enterprise development

Literature Review

E-commerce

An enterprise is an organization with a distinct name, assets, and a registered business address, established or registered under legal regulations for business purposes, (Law No. 59/2020/QH14, dated June 17, 2020).

The Role of Enterprises

First, enterprises contribute to job creation, income improvement, and better living standards for workers. The rapid growth of businesses has provided more employment opportunities with higher wages. Rising incomes in the enterprise sector enhance the overall standard of living and facilitate labor restructuring from agriculture to non-agricultural sectors.

Second, business growth and development are crucial for sustained and stable economic growth. Increased enterprise activity leads to a higher volume of goods and services with improved quality, reducing reliance on imports. This expansion enhances domestic consumption, boosts exports, and contributes to economic stability and development.

Third, enterprise development influences economic restructuring both nationally and within individual industries. The business sector is diverse, encompassing various economic components, with state-owned enterprises and foreign-invested companies holding significant shares. Although private enterprises are still relatively small, they are expanding rapidly across sectors and regions. Additionally, the cooperative economy is being revitalized and experiencing new growth. The widespread growth of enterprises across industries and regions facilitates labor reallocation from low-productivity sectors—such as agriculture, forestry, fisheries, and small-scale household businesses—to higher-productivity sectors like industry and services, which offer better wages and employment conditions.

Fourth, enterprise development plays a vital role in addressing social issues. In recent years, businesses have significantly diversified and enhanced the quality of goods and services, meeting the increasing consumption demands of society. This has improved living standards and accelerated export growth. Many products that were previously imported—such as automobiles, motorcycles, transport vehicles, electrical appliances, electronics, garments, food, beverages, cosmetics, household goods, and construction materials—are now manufactured domestically and widely accepted by local consumers, (Nghe An Provincial Statistics Office, 2023).

Enterprise Development

Enterprise development encompasses various objectives, including revenue growth, business expansion, strategic partnerships, and profit maximization. Successful business development impacts all company departments, such as sales, marketing, production, human resources, accounting, finance, product development, and supplier management, (Nghe An Provincial Statistics Office, 2023).

Method

This study utilizes secondary data from the Ministry of Planning and Investment for the 2016–2022 period. The evaluation system for business development includes key financial indicators such as corporate debt ratio, Return on Assets (ROA), Return on Equity (REO), and Return on Sales (ROS). A descriptive statistical method is applied to provide a comprehensive view of business development in Vietnam.

Results and Discussion

General Business Overview

Based on the data on active enterprises with recorded business performance during the 2016–2022 period, the number of businesses in Vietnam showed a continuous upward trend. In 2016, there were approximately 505,059 enterprises, which increased to 735,455 in 2022-representing a 45.7% growth over seven years. The annual growth rate remained relatively stable, fluctuating between 5% and 10%.

Fig. 1 illustrates the annual growth pattern: 2016–2017: The number of enterprises increased from 505,059 to 560,417, marking a 10.96% growth. 2017–2018: Businesses grew to 610,636, reflecting an 8.96% increase. 2018–2019: The number rose to 668,505, corresponding to a 9.48% growth. 2019–2020: Growth slowed to 2.35%, largely due to the impact of COVID-19. 2020–2021: A strong recovery occurred, with a 5.04% increase. 2021–2022: The upward trend continued, reaching 735,455 businesses, with a 2.3% growth rate.

Fig. 1. Number of active enterprises with business performance (2016–2022).

The fluctuations in business growth indicate a significant decline in 2020, with a growth rate of only 2.35%, compared to the average from 8% to 10% in previous years. This decline was likely due to the impact of the COVID-19 pandemic, which forced many businesses to suspend operations or face difficulties. However, from 2021 onward, the number of enterprises continued to increase, signaling economic recovery. Analysis results suggest that if the current post-pandemic growth rate (2%–5%) is maintained, the number of enterprises could reach 750,000–760,000 enterprises by 2023. However, factors such as government support policies, global economic conditions, and entrepreneurship trends could influence this growth rate.

The debt ratio reflects the extent to which a company uses debt in its total capital. Through the chart, we can observe the fluctuation trend of this ratio during the 2016–2022 period. The debt ratio ranged from 2.04 times to 2.5 times, indicating that businesses tended to rely heavily on debt to finance their production and business activities. During the 201672017 period, the debt ratio surged from 2.3 to 2.5 times, reflecting credit expansion and increased access to loans. From 2018 to 2020, the debt ratio gradually declined to its lowest point of 2.04 times in 2020, possibly due to the impact of the COVID-19 pandemic, which made businesses more cautious about borrowing. In the 2021–2022 period, the debt ratio slightly recovered to 2.15 times, indicating that businesses started borrowing more to reinvest after the pandemic.

Looking at different periods, from 2016 to 2017, the debt ratio increased from 2.3 to 2.5 times, likely due to business expansion and increased borrowing for investment. During 2018–2019, the debt ratio dropped to 2.11–2.13 times, possibly due to financial risk control policies or tighter credit conditions. From 2020 to 2021, the ratio fell to its lowest level (2.04 times), potentially due to the impact of COVID-19, which led to businesses limiting borrowing or facing difficulties in accessing credit. In 2021–2022, the debt ratio rebounded (2.14–2.15 times), reflecting economic recovery as businesses began borrowing more to restore production and expand investments (Fig. 2).

Fig. 2. Corporate debt ratio (2016–2022).

The results indicate that a debt ratio above 2 times suggests that businesses rely heavily on debt financing, posing financial risks if interest rates rise or cash flows are affected. The slight debt reduction during the 2018–2020 period may have been a positive signal, helping businesses avoid financial pressure when facing the COVID-19 crisis. Since 2021, debt levels have risen slightly but have not yet returned to the peak of 2017, suggesting that businesses are being more cautious in using financial leverage.

Thus, the forecast trend is that if the economy continues to recover steadily, businesses may increase borrowing to expand operations, pushing the debt ratio to around 2.2–2.3 times. If interest rates rise or the economy slows down, businesses may reduce debt usage to avoid financial pressure, keeping the debt ratio around 2.1–2.2 times.

Profitability Performance of the Enterprise

ROA (Return on Assets) is an indicator that evaluates a company’s profitability relative to its total assets. A high ROA suggests that the company is effectively utilizing its assets to generate profits. Table I shows business profitability performance scores through the period of 2016–2022.

Table I. Business Profitability Performance

Year	ROA	ROS	REO
2016	2.7	4.1	9
2017	2.9	4.3	10
2018	2.4	3.8	7.6
2019	2.2	3.4	6.8
2020	2.1	3.5	6.3
2021	2.5	4.2	7.9
2022	2.6	4.1	8.3

Fig. 3 illustrates that ROA fluctuated between 2.0% and 3.0% from 2016 to 2022. The general trend shows a decline from 2017 to 2020, followed by a slight recovery in 2021–2022. The trend line (dashed line) indicates a slight downward tendency in ROA over the long term.

Fig. 3. Return on Assets (ROA) performance for the period 2016–2022.

2016–2017: ROA increased from 2.6% to a peak of approximately 3.0%, reflecting a period of high profitability and efficient business operations. 2018–2020: ROA declined sharply from 2.5% to around 2.0%. This drop may be due to business expansion without optimized profit generation, intensified competition, and economic conditions. In 2020, ROA reached its lowest point (2.0%), likely due to the negative impact of the COVID-19 pandemic. 2021–2022: ROA recovered from 2.0% to 2.6%, indicating that businesses began operating more efficiently after a challenging period.

The average ROA of 2.0%–2.5% is not particularly high, suggesting that asset utilization efficiency has not been fully optimized. The decline in ROA during 2018–2020 could be attributed to rising financial costs, low investment efficiency, or economic stagnation. The recovery from 2021 reflects businesses adapting to market conditions and optimizing production and business activities.

If the economy continues to recover, ROA may remain at 2.5%–2.7% or increase slightly. However, if businesses do not improve asset utilization efficiency, ROA may stagnate or decline. Key influencing factors include financial policies, global economic fluctuations, interest rates, and corporate management capabilities.

The Return on Sales (ROS) measures the profit margin relative to revenue, reflecting a company’s ability to convert sales into net profit. A higher ROS indicates effective cost management and strong profitability.

Fig. 4 shows that ROS fluctuated between 3.4% and 4.3% from 2016 to 2022. The index declined during 2017–2019, reaching its lowest point in 2019 (3.4%), before rebounding from 2020 onward. The trend line (dashed line) suggests that ROS remains stable around 4.0% in the long term.

Fig. 4. Return on Sales (ROS) performance (2016–2022).

2016–2017: ROS increased from 4.1% to 4.3%, reflecting efficient operations and good cost control. 2018–2019: ROS declined from 3.8% to 3.4% due to rising production and operating costs, intense competition leading to lower profit margins, and pricing or discount policies affecting profitability. 2020–2022: ROS recovered from 3.5% to 4.2% in 2021, then stabilized at 4.1% in 2022. This recovery was driven by cost optimization post-COVID-19, increased revenue growth, and improved profitability.

A ROS above 4.0% is relatively strong, indicating stable profitability. The dip to 3.4% in 2019 signaled operational difficulties, likely due to rising costs or declining revenue. The post-2020 recovery suggests businesses have adapted well and improved efficiency.

Future trends suggest: If businesses continue optimizing costs and improving profit margins, ROS may remain around 4.0%–4.2%. If input costs rise or competitive pressures increase, ROS could decline slightly to 3.8%–3.9%. Key influencing factors include raw material price fluctuations, pricing strategies, operating costs, and consumer trends.

The Return on Equity (ROE) measures profitability relative to shareholders’ equity, reflecting a company’s ability to generate profit from its invested capital. A higher ROE indicates more efficient capital utilization.

Fig. 5 shows that ROE fluctuated between 6.3% and 10.0% during 2016–2022. The overall trend declined from 2017 to 2020, followed by a recovery from 2021. The trend line (dashed line) indicates a slight long-term decline in ROE.

Fig. 5. Return on Equity (ROE) performance (2016–2022).

2016–2017: ROE increased from 9.0% to 10.0%, reaching its peak during this period, indicating effective capital utilization and strong profit growth. 2018–2020: ROE declined steadily from 7.6% to 6.3%, primarily due to an increase in equity capital without a proportional rise in profits. Business performance weakened, profitability declined, and economic conditions or industry competition may have played a role. 2021–2022: ROE rebounded to 7.9% in 2021 and 8.3% in 2022, reflecting the company’s efforts to optimize operations after a period of decline. The improvement indicates successful measures to enhance returns on shareholders’ equity.

The analysis of capital efficiency in Vietnamese businesses from 2016–2022 suggests that an ROE above 8% is relatively good. However, the decline from 2017–2020 indicates a period of lower performance. While the 2021–2022 recovery is positive, ROE has yet to reach its 2017 peak. The decline in ROE may be attributed to high financial costs, high debt levels, or a lack of proportional profit growth relative to equity.

Future projections suggest: If companies continue to improve capital efficiency, ROE could reach 8.5%–9.0% in the coming years. If financial costs increase or profitability declines, ROE may stabilize around 7.5%–8.0%. Key influencing factors include loan interest rates, investment strategies, financial management, and market trends.

Summary of Profitability Metrics (2016–2022): ROA (Return on Assets): Fluctuated between 2.1% and 2.9%. It peaked in 2017 (2.9%), declined to its lowest point in 2020 (2.1%), and then slightly recovered to 2.5% in 2021 and 2.6% in 2022. The decline from 2018-2020 suggests reduced asset utilization efficiency, potentially due to economic conditions or operational challenges. The recovery from 2021 indicates improvements in asset efficiency. ROS (Return on Sales): Ranged from 3.4% to 4.3%, following a downward trend from 201772019, before recovering in 2020. It peaked in 2017 (4.3%), declined to 3.4% in 2019, then rebounded to 4.2% in 2021, before slightly decreasing to 4.1% in 2022. The decline in 2018–2019 may be due to rising costs or declining revenues. The post-2020 improvement reflects better cost control and higher profit margins. ROE (Return on Equity): Declined from 2017 to 2020 before recovering slightly from 2021. It peaked in 2017 (10%), gradually fell to 6.3% in 2020, then rebounded to 7.9% in 2021 and 8.3% in 2022. The 2018–2020 decline may be due to decreasing net profit or increasing equity capital without sufficient profit growth. The 2021–2022 recovery indicates improved capital efficiency.

Conclusion

The analysis of business performance from 2016–2022 suggests that financial indicators, particularly ROA, ROS, and ROE, generally declined, highlighting potential challenges in profitability and operational efficiency. However, starting in 2021, financial metrics showed signs of recovery, particularly ROA and ROE, indicating improved asset and capital utilization. The 2018–2020 downturn may have resulted from macroeconomic factors, rising costs, or declining operational efficiency. The post-2021 recovery was likely due to operational optimization, cost reductions, and revenue growth. Recommended Strategies: Sustain ROA and ROE growth by enhancing asset utilization efficiency and optimizing returns on equity. Control costs to maintain and improve ROS, maximizing profitability per unit of revenue. Focus on sustainable growth strategies to ensure long-term stability and expansion beyond 2022.