Last updated: Thursday, March 23, 2017
Important Solution Is ActionPosted: Tuesday, December 20, 2016
“We have to acknowledge that the business environment in Vietnam, despite positive changes in recent years, still has not yet caught up with those of other ASEAN countries, let alone the expectations of enterprises.”
This was shared by Dr Vu Tien Loc, President of the Vietnam Chamber of Commerce and Industry (VCCI) and Co-chair of the Vietnam Business Forum 2016 (VBF 2016), themed “Strengthening the private sector - Fostering partnership between domestic and foreign enterprises for a harmonious development of the Vietnamese economy.”
Dr Loc said, 2016 is the first year in office for the new Government of Vietnam. While it has not yet been a whole year, the business community have noted the Government’s clear direction and commitments to the development of the economy and business environment.
He added that numerous measures have been implemented by the Government, such as proposing to the National Assembly the amendment of various investment and business-related laws such as Law on Support to Small and Medium Enterprise, Law on amendment of business investment-related laws, focusing on the conditional business sectors. The Government has especially ensured that the amended provisions of the Law on Investment of 2014 and the Law on Enterprises of 2014 are implemented seriously, that thousands of business conditions stated in current circulars are abolished, and that these conditions are thoroughly reviewed for replacement by 50 new decrees. An enormous amount of work had been done in a very limited amount of time to meet the July 1, 2016 deadline for the abolition of business conditions in the circulars without compromising their quality.
In March 2016, the Government issued Resolution 19 of 2016, the third Resolution 19 on improving national competitiveness. In May 2016, the Government continued to issue Resolution 35 on enterprise development with a goal and a vision for entire term of office. All of these resolutions have specific aims for much needed changes in management areas to make Vietnam comparable with other countries in the regions, as well as very detailed implementation roadmap.
Dr Loc said, positive effects have been brought about in a relatively short period of time. 2016 is likely to become the record year with a number of newly established enterprises passing over 100,000. The World Bank recently announced the Doing Business Index, where Vietnam jumped up 9 places into ASEAN Top 5. These are very clear evidences demonstrating initial results of economic growth and enterprise development.
Closing the gap between policy and practice
However, the business environment in Vietnam, despite positive changes in recent years, still has not yet caught up with those of other ASEAN countries, let alone the expectations of enterprises. Enterprises still face many hardships, from difficult access to finance, relatively high interest rate, shortage of skilled workers, poor infrastructure, to administrative and legal obstacles in land, tax and import-export. Unlike in other countries, Vietnamese enterprises have to bear the burden of unofficial expenditures, red tape, and have to deal with risk of unpredictable policy changes and inconsistent interpretation and implementation of law by government institutions.
While businesses in many countries enjoy in an enabling and transparent business environment with efficient and supportive governance, with administrative institutions aiming at finding new solutions for business development, in Vietnam major problem of many government agencies is just narrowed to problem solving and dealing with red tape.
“The message is strong; policies are enough; direction is clear, so we think that the call now is for action, for shortening the gap between policies and practice, for elimination of difference between what is on paper and what is being implemented in reality. From now on, we will need even more vigorous measures in the monitoring and evaluation of implementation results of these resolutions. We cannot accept the fact that issues which were clearly pin-pointed in Resolution 19’s final report as being obstructive are still there unchanged for years, even if they are just ministry-level circulars. Strong reform attitude of this Government shall be upheld and enforced in practice in most serious way,” Dr Loc said.
In addition, we also have to calculate and consider the costs and benefits of each administrative procedure enforced instead of generalising all of them as necessary measures to ensure good governance as we have often been doing before. Vietnam seems abusing the application of administrative solutions, which have created a lot of burdensome bureaucratic issues and unnecessarily procedures without giving due consideration of its burden on Vietnamese businesses, of negative impact on competitiveness of Vietnamese goods and economy in general. Procedures such as formaldehyde test on textile products in the past, energy labelling process, or other industry-specific procedures in import-export, are incurring huge expenses for the business, while administrative gains are either unclear or insignificant. We need to promote productive actions such as the decision to abolish Circular 37 on Formaldehyde by the Ministry of Industry and Trade.