Vietnams Private Sector Development: Mr. Nams Dilemma Harvard Case Solution & Analysis

In 2000, Vietnam adopted the Law Company for encouraging the private sector and facilitate its transition from a centrally planned to a market economy. The company changed the paradigm of the law for the private sector in Vietnam, making business registration legal right, not a privilege. Between 2000-2005, the number of private enterprises has increased by more than 100%, adding more than 2.5 million jobs in the labor market of Vietnam. Despite this success, the private sector in Vietnam remains low, with only 12 companies with more than $ 33 million in total capital. This study should Mr. Nam, Vietnam successfully furniture manufacturer trying to identify sources of funding to expand the firm, which was established in accordance with the law of the enterprise. In the past Mr. We were able to finance business expansion from retained earning and informal credit, but further expansion requires Mr. Nam to determine the "arm's length" funding. In this search, Mr. We faced two fundamental problems. First, the banking sector is still under the influence of the state, did not have strong incentives to lend to the private sector. Second, private banks and other sources of capital requires Mr. We provide an independent audit of its business, which is, of course, reveal many business practices that are technically illegal - and the need for competitiveness. This study encourages students to consider the social costs of a weak regulatory environment, economic laws are poorly designed, and the relationship between these conditions and the production of (undesirable) commercial standards. Instructors financing of small and medium enterprises to finance, as well as legal and regulatory courses should find this study useful. HKS Case Number 1812.0 "Hide
by Eli Mazur, Nguyen Ngoc Bich, Lam Quynh Anh, Bui Van 20 pages. Publication Date: September 30, 2005. Prod. #: HKS348-PDF-ENG

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