New era for entrepreneurs
The first three quarters of 2020 are history, and it is painfully clear that the Covid-19 pandemic has had pervasive and devastating effects on health, lifestyles, relationships and livelihoods of people all around the world. The most tangible economic effect of lockdowns has been the hard knock-on impact on key business sectors such as transport, tourism and hospitality, as well as entertainment. Consequently, unemployment is projected to reach nearly 10% in OECD countries by the end of 2020, nearly double from 5.3% in 2019; it could hit 12% should a second pandemic wave hit. Economists don’t foresee a significant jobs recovery until after 2021.
Young people face a tougher-than-ever job market and deficiencies in education systems that could compromise their futures. Women and low-paid workers will likely face greater unemployment than others. In hard-hit sectors such as hospitality, the part-time, temporary and self-employed workers that make up 40–50% of the workforce will continue to bear the brunt of the pandemic.
To cope with pandemic effects, many governments have prioritised policies that protected large corporations, which they deem to be the job creators, to spur growth acceleration.
While these companies deserve consideration, policymakers cannot forget the importance of small companies in contributing to healthy local economies. In the post-Covid-19 world, businesses of all sizes will need to increase their capacity to adapt, improving their flexibility, resiliency and responsiveness.
This is exactly where the strengths of small and medium business owners tend to lie, as large corporate entities find it much harder to adapt quickly.
Entrepreneurship is proven to be an essential driver of societal health and wealth. A formidable growth engine, it promotes the essential innovation required to exploit new opportunities, driving productivity and and creating employment.
Policymakers thus need to create cohesive, holistic frameworks in order for entrepreneurs to flourish. The Vietnamese government seems to on the right track in this regard, with a programme to accelerate the founding of startup businesses.
Incentives to take effect from Oct 5 will encourage innovative startups engaged in telecommunications, information technology, automation and related businesses. Also promoted will be those engaged in “new and clean energy” and in the production of intermediate goods participating in value chains and industry clusters.
Startups will be entitled to borrow public investment credit capital, enjoy preferential loans from the state-owned Vietnam Development Bank, and to apply for tax incentives.
Incentives will also be available to selected startups in industrial parks including Hoa Lac Hi-Tech Park, a new flagship facility in Hanoi. The perks include a 50-year exemption from the entire cost of land leases. Besides tax privileges, the state will cover the cost of the use of infrastructure in Hoa Lac and also fund land clearance and basic preparations for setting up facilities.
The launch comes as Vietnam’s economy suffers a slowdown due to the pandemic. Gross domestic product growth is now expected to be between 2% and 2.5%, down from over 5% forecast in May before the coronavirus returned in July. But Vietnam will still be one of the few countries in the world to record any growth at all.
The government of Prime Minister Nguyen Xuan Phuc is also calling for the reduction of red tape creating difficulties for entrepreneurs to set up companies and attract investment.
“Vietnam’s startup ecosystem still faces difficulties and barriers and remains less competitive compared to that of other countries in the region,” he said earlier this year.
A major priority to support entrepreneurs, according to experts, is ensuring liquidity so that they can pay ongoing operational costs such as rents and wages, albeit at reduced rates. But policymakers need to think further ahead at this stage, ensuring consistently good conditions for all forms of entrepreneurship beyond just early-stage startups.
Clearly, the focus for entrepreneurs after the crisis will be on further digitisation, managing liquidity to avoid bankruptcy, increasing sales and marketing efforts and reducing costs.
Perhaps in the post-Covid-19 era, we will see entrepreneurs come into their own across the business landscape as never before. The promotion of entrepreneurship will become central to governments, especially considering the significant negative impacts on economies due to the pandemic.
Governments and other stakeholders will increasingly need hard, robust and credible data to make key decisions that stimulate sustainable forms of entrepreneurship and promote healthy entrepreneurial ecosystems worldwide.