Government walking in step with businesses

New policies will soon be announced by the Vietnamese  government to provide more support for domestic and foreign businesses in Vietnam.

The Vietnamese government has extended the involvement of the private sphere in its policy reforms to unprecedented levels

Come mid-week, Prime Minister Nguyen Xuan Phuc will chair a meeting with the business community to help solve their prevailing problems, thus creating a more conducive business climate, said Le Manh Ha, Deputy Chairman of the Government Office at last week’s press briefing.

Themed “Walking in step with businesses”, the meeting will attract around 2,000 direct participants, quadrupling that of the 2016 event, including 1,500 private enterprises, 200 representatives from foreign investors, diplomatic organisations and influential financial institutions and 100 state-owned enterprises, he added.

Additionally, the event will be broadcast live to enable leaders of 63 cities and provinces nationwide, as well as businesses, to join in.

The meeting will focus on assessment of the performance of Resolution 35 issued in May 2016 after the first meeting between the government leader and the business community, and also address business concerns and proposals on possible solutions to business development. As planned, the prime minister will announce solutions to better support the business community at the end of the event. The 2017 meeting is the second event of this kind following the first in April 2016 after Prime Minister Phuc was elected as the new government leader. Resolution 35 was issued to support and develop enterprises by 2020.

Resolution 35, together with Resolution 19 on improving the national competitiveness have specific aims for much needed changes in management to make Vietnam comparable with other countries in the regions. Following this, numerous measures have been implemented by the government, such as proposals to the National Assembly regarding the amendment of various investment and business-related laws, such as the Law on Support for Small-to Medium-sized Enterprises.

“The most encouraging sign is that as never before, the government and ministries are spending so much time on and giving so much priority to institutional growth, the development and amendment of laws. And as never before, during the past few months, the government has been so actively listening to and interacting with businesses,” said Vu Tien Loc, chairman of the Vietnam Chamber of Commerce and Industry.

Foreign groups share thoughts

Chau Ta - President of AusCham

Vietnam-Australia relations are growing strongly and our members are both contributing to and benefitting from that growth.

Our members are largely optimistic about their existing activities here and many predict that they will expand their operations. This shows confidence in Vietnam’s strong macroeconomic performance and the broad efforts being made by the government to improve the business environment in the private sector. 

While the TPP has not moved forward as hoped, Australian and Vietnamese businesses benefit from the existing ASEAN-Australia-New Zealand Free Trade Agreement and Vietnam’s commitment to further improving trade and investment opportunities by participating in new international trade agreements. 

On the domestic front, AusCham recently signed an MOU with Vietnam’s Department of Foreign Affairs of the Provinces which gives our members greater access to all of Vietnam’s 63 provinces. 

We see tremendous potential for Australian investors in sectors such as agriculture, energy, financial services, education, tourism and health. 

Of course there are always challenges and AusCham aims to be a constructive partner in helping to address them.  Initiatives such as the prime minister’s dialogue are important as they enable the government and private sector to work together to identify and address barriers to growth.  The reality is that even when everyone is pushing in the same direction on the ‘big picture’, businesses often get stuck dealing with practical day-to-day problems, particularly regarding the implementation of laws, which can have a very significant impact on the bottom line. This needs to be addressed just as assiduously as macroeconomic policy and forums like the prime minister’s dialogue and the Vietnam Business Forum (VBF) are important for this reason. 

Furthermore, while we greatly appreciate the focus on expanding the private sector’s role in a healthy economy, we are also particularly interested to see reform of the state-owned enterprise sector, so it was pleasing to see that as a key focus of the recent Vietnam Party Central Committee’s fifth plenary meeting. Vietnam has a great opportunity to act decisively to achieve its vision of a well-balanced economy with strong institutions that can grow sustainably.

Jens Ruebbert - EuroCham’s Chairman

EuroCham has just published the results of its Business Climate Index, which continues to indicate that EuroCham members remain optimistic about their businesses in Vietnam and the future of their business in the country. Although the results indicate a slightly lower satisfaction index than in the fourth quarter of 2016, EuroCham believes that its members will continue to do business expecting the best of the country, while still holding high expectations for the upcoming EU-Vietnam Free Trade Agreement.

At EuroCham, we have been following your guidance and the implementation of Resolution 35 with great attention. Since 2016, we have seen positive efforts and changes as well as a very modern, open-minded and practical, business-oriented approach to lawmaking.

We believed that with EVFTA, a “new wave” of European companies is ready to invest and vice-versa – therefore, the EU and Vietnam shall jointly grab this fantastic opportunity and address the main challenges in order to prepare smoothly for the implementation phase in 2018.

In recent years, the government of Vietnam has conducted a rigorous legal reform process aimed to increase foreign and private investment in the country, and we strongly applaud the fact that improving socialist-oriented market economy institutions, reforming state-owned enterprises, and bolstering the private sector was addressed during the Vietnam Party Central Committee’s fifth plenary meeting of the 12th tenure. We expect the outcome will be soon visible.

From the private side, we are willing to contribute to the improvement process, either by sharing international best practices or introducing international consultants with experience in other markets to develop and implement regulations. Modern, efficient, infrastructure is vital to continued economic growth and lowers the costs of doing business for all investors in Vietnam. Rapid economic growth and urbanisation is driving high demands for roads, electricity, ports, waste and wastewater treatment, hospitals, and other public infrastructure for goods and services.

Hong Sun - Vice Chairman of the Korea Chamber of Business in Vietnam (KorCham)

South Korean businesses view Vietnam as an ideal investment destination as the prospects for doing business here are optimistic in terms of revenue, profit, and business performance. Most of businesses agree that the business performance has come with positive signs and progressively attracted many Korean investors.

Vietnam has been constantly improving its business environment and Korean businesses highly appreciate such efforts made by state and local officials. For now, we all feel that the business environment here has grown better than it was previously.

Nevertheless, there are some issues which we at Korcham are concerned about. The issue concerning us the most deals with administrative procedures reform and policy implementation. Compared to the past, administrative procedures have been simplified to some extent, yet in reality, they have not met our expectations. In addition, we also expect the local legislations to be consistent, unified, and transparent for us to follow and implement.  

For Korcham businesses, we also have our eyes on another issue: the import of second hand machinery and equipment. We have encountered great difficulties with this particular issue. We thus hope the Vietnamese government to review the conditions of import and the lifetime of the machinery and equipment, in a bid to facilitate our business activities.

The Labour Code is also another setback on our table. For instance, the issues of basis wages, overtime caps, and work permits. Lifting the basic wages too much would add burden to businesses or the maximum overtime allowed and work permit are those problems that walk in the way of our business operation, of which we would hope the government could closely scrutinise and examine.   

The fifth plenary meeting has agreed upon completing the socialist-oriented market economy institution, continuing to re-organise, renovate, and improve the efficiency of state-owned enterprises (SOEs) and developing the private economy into an important driving force of the socialist-oriented market economy. Through these resolutions, we see a local government who has clearly identified the need to transform the state-owned enterprises into equitised ones, in a bid to foster effective competition. The role of the private sector in the economy is absolutely vital.

As a private enterprise, we hope that the Vietnamese government can spread out the opportunities for foreign investors here in Vietnam. At the same time, the policies will need to be consistent and transparent, which will enable the private sector to operate more effectively.

Jonathan Moreno - Chairman of AmCham Vietnam

First, we want to express our appreciation for the intentions, efforts and results of the government’s Resolution No.35/ NQ-CP on supporting and developing businesses. This effort, as recently noted by our partners at VCCI, “demonstrates the government’s commitment to action and integrity in service of business in order to make businesses a real driving force of the economy.”

Vietnam-US trade exceeded $52 billion last year, up 16 per cent over 2016. We believe that the upward growth trend of commercial relations between the US and Vietnam will continue, and strengthen.

We support a path towards a free trade agreement between our two countries. For an FTA to move forward, it will need to be viewed as fair by all parties. The American business community in Vietnam stands ready and committed to do our part to make this goal a reality.

We will highlight some opportunities for improvement which will be viewed as positive efforts toward “fair trade” and will advance US-Vietnam commercial relations.

First, we request the government to eliminate costly technical barriers to trade, which contribute to the current $32 billion annual trade deficit the US has with Vietnam. The broad scope and uneven enforcement of Vietnam Decree 38 in particular leads to restricted trade and uncertainty for both US exporters and Vietnamese importers. Also, we request the elimination of the Economic Needs Test (ENT) which is a very ill-defined test that every American retailer must comply with before it can sell goods to an end-user in Vietnam.

Second, in the spirit of reducing costs to businesses noted in Resolution 35, Chapter II, Section 4 we would like to point out Decree 181/2013/ND-CP guiding implementation of the Law on Advertisement. The decree requires a Vietnamese entity to engage a locally licensed advertisement agency, which restricts opportunities for small and medium enterprises (SMEs) to promote their products and services domestically and internationally when they advertise on cross border platforms like Google or Facebook. With limited budgets for advertising and marketing, Vietnamese SMEs find these platforms the easiest, most economical and effective way to promote their business.

 The Draft Decree on Automobile Transport Businesses requires that transport businesses report information of every trip. It would create costly administrative burdens, and is inconsistent with Resolution 35, Chapter II, Section 4, a) Ministy of Finance  “Review and adjust toll rates, BOT fees; … to help businesses reduce costs, especially transport business enterprises.”

 The WTO estimates that Vietnam’s trade costs will be reduced by 20 per cent when the Trade Facilitation Agreement is implemented. We recommend:

- Activate the National Committee on Trade Facilitation to coordinate and implement the Agreement;

- Conclude in 2017 a Customs Mutual Assistance Agreement between the US and Vietnam for information exchange, technical assistance, and to combat trade fraud; 

- Establish a Vietnam Customs Bond System which will separate the release of goods from determination of customs duties, taxes, fees, and charges, thereby expediting customs clearance, and reducing costs.

In conclusion, AmCham fully supports the government’s commitment to see the development of Vietnamese SMEs and their increased contribution to global supply chains.

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By Bich Thuy