Ren Varma, head of Mainland Southeast Asia at the ACCA

The Central Institute for Economic Management projects two scenarios: the first anticipates a 6.13 per cent GDP growth, while the second foresees a more robust 6.48 per cent.

Amidst these economic projections, small and medium-sized enterprises (SMEs) play a pivotal role in shaping Vietnam’s economic growth scenarios, serving as dynamic engines of innovation, job creation, and overall economic resilience. Currently, over 97 per cent of Vietnamese enterprises are SMEs. Due to the challenging economic situation, numerous businesses have had to close their doors. However, many organisations have achieved sustained growth because of complementary and supporting policies, including lower lending rates, market diversification, and improved digital transformation.

The Association of Chartered Certified Accountants (ACCA) sheds light on SME challenges and strategic innovation opportunities. In its latest report, the ACCA identifies three key hurdles: escalating costs, talent challenges, and the evolving environmental, social, and governance (ESG) reporting agenda.

The report emphasises the critical role of innovation and strategic planning, with a focus on collaboration between industry players. In addition, the ACCA has partnered with local organisations such as VINASME in recent workshops in Vinh city of the central province of Nghe An, where the groups focused on empowering local businesses through digital transformation in finance and compliance with international financial reporting standards.

“In these testing times, SMEs must pivot towards innovative strategies to navigate the complexities of cost pressures, talent retention, and sustainable practices. Our research identifies the critical hurdles and offers a roadmap for SMEs to emerge stronger and more agile,” said Aleksandra Zaronina-Kirillova, head of SME Professional Insights at the ACCA.

ACCA is partnering with VINASME to develop financial accounting

The ACCA report delves into the global economic pressures facing SMEs, with a specific focus on escalating costs. Utility prices and material supplies have seen substantial increases, with 20 per cent of businesses grappling with a surge of over 20 per cent in utility prices and 19 per cent in material supplies. Inflation remains a key concern for 58 per cent of SMEs in 2023, underscoring the challenges faced by businesses on a global scale over the past 18 months.

Meanwhile, sustainability has become a cornerstone for small businesses, with nearly half of SMEs expressing a demand for ESG information. However, there exists a gap in the ability to generate this information. The ACCA report identifies sustainable transformation as a significant opportunity for small- and medium-sized accountancy practices (SMPs) to bridge this gap and support SMEs in aligning with ESG principles.

Thus, innovation emerges as a crucial factor in overcoming challenges. The ACCA report reveals that 63 per cent of SMEs are focusing on improving existing processes, with only 31 per cent planning to fully automate or digitalise operations. This presents an opportunity for further automation and digitalisation to unlock new avenues for growth. Skills development, especially in management and digital skills, is identified as a crucial element for fostering innovation.

SMPs are urged to play a pivotal role in the acceleration of digital technologies for small businesses and startups. Technology adoption is not just important for recovery, but is also a key enabler of innovation.

Additionally, the report recommends that SMPs invest in talent, flexible work arrangements, and leverage technology. Exploring new organisational structures is deemed crucial to meeting client needs and adapting to the evolving business landscape. These recommendations also align with Vietnam’s determination to stimulate growth and address the challenges faced by SMEs.

SMPs are encouraged to blend financial expertise with strategic insights to meet evolving client expectations. The demand for holistic approaches, integrating technology and ethical practices, underscores the need for SMPs to provide high-value-adding services. Moreover, overcoming capacity constraints is a shared goal for SMEs and SMPs. Strategic partnerships can pool resources, enhance services, and provide access to networks. Understanding clients’ needs and ambitions is crucial for SMPs to offer tailored solutions and navigate challenges effectively.

Ren Varma, head of Mainland Southeast Asia at the ACCA, said, “SMEs are increasingly expected to embrace sustainability, not only for ethical reasons but also for financial stability and client retention. SMPs play a critical role in supporting small businesses in embracing sustainability, integrating sustainable practices, and serving as trusted advisors.”

The ACCA report outlines challenges and opportunities for SMEs in Vietnam amid global economic trends. The interconnected issues of escalating costs, talent shortages, and evolving ESG reporting form a complex business landscape. Yet, these challenges also offer innovative strategies, technological advancements, and sustainable practices that empower SMEs in adapting to changing economic dynamics.

Encouraging SMEs to act on the ACCA’s insights, the focus is on translating knowledge into action. Beyond survival, SMEs are prompted to flourish in 2024, using these insights to formulate effective business strategies aligned with Vietnam’s growth commitment and comprehensive solution groups.