Business Forum

Last updated: Friday, February 15, 2019


Remarks on Vietnam Economy from Foreign Institutions: Government Creating Motivations for Business Community Development

Posted: Friday, February 03, 2017

2016 was the first year in office for the new Government of Vietnam. So far, the business community has sensed the Government’s clear direction and commitment to the development of the economy and business environment. The new government perfects the executive methodology from administrative order to a facilitating and serving government. This move has blown a new spirit and a strong impetus for the business community to develop business.

Vietnam Business Forum excerpted reviews on reforms of the investment and business environment of Vietnam from some foreign organisations and business associations active in Vietnam.

Mr Kenneth M Atkinson - Chairman of British Business Group Vietnam (BBGV)
On behalf of the British Business Group Vietnam, I would like to congratulate the new Government on the strong pro-business stance that has been adopted and their statement that they are an enabling government. Having worked and lived in Vietnam for 26 years, I have seen the significant progress Vietnam has made, but still see the enormous untapped potential, which can only be unleashed through a more transparent and enabling environment.

However, many of our members have expressed their increasing concerns over the increase in air pollution, noise pollution, traffic and flooding. Air pollution is clearly and visibly increasing at an alarming pace and this will start to have an impact on people willing to move families to Vietnam, which in turn could well have a negative impact on foreign direct investment (FDI). We believe that a major part of the problem is the lack of monitoring and enforcement of the established environmental control regulations, particularly in the industrial zones and of course the increasing traffic emissions.

Noise pollution is also an issue, in particular open Karaoke bars in residential areas that often operate at hideous noise levels late into the night, because the local police have no incentive to close these places down at appropriate hours.

Another contributor are loudspeaker systems used in school play grounds early in the morning and construction which is being undertaken 24 hours per day in residential areas. Whilst we understand under current regulations the problem is that trucks are not allowed into the city during the day time and the only option for concrete pouring is at the night time.

Traffic congestion is a growing problem in the cities of Hanoi and Ho Chi Minh City, in particular. Without adequate public transport it is difficult to address the traffic issue, however the growth in the number of small cars as opposed to motor scooters is quite evident and maybe this is something that could be addressed. Flooding is another serious issue, which has become more prevalent, as a result of poor drainage in many areas, resulting in real danger to residents travelling at peak times and severe inconvenience to workers. Some of this is we believe being caused by lack of environmental compliance on construction sites.

We strongly recommend that pollution and in particular air and noise pollution is addressed both quickly and without compromise. We believe the basic rules and regulations if enforced properly would result in immediate improvements. We also recommend that the Government have plans in place to limit traffic in the major cities as soon as the new public transport systems are operational. There is also a wealth of experience in dealing with these issues and the UK and BBGV have an Urban Development Working Group who would be happy to meet with Government Departments in order to assist in developing appropriate solutions to many of these issues.

Ms Virginia B. Foote- Chair of the American Chamber of Commerce in Vietnam (AmCham)
We congratulate Vietnam that in 2016, companies and investors enjoyed a level of stability and growth that those of many other countries in the region envy. The leadership transition was smooth; economic growth has been steady, inflation manageable, and the currency remaining in a tight range. AmCham hopes for continued long-term stability, as it remains one of Vietnam’s strongest competitive assets.

We feel disappointed that the US has not been able to ratify the Trans-Pacific Partnership (TPP) and that the path forward is not yet clear. It is our sincere hope - and our pledge - that we in the business community will continue to work to support closer ties with the US and reform and modernisation efforts in Vietnam with the hope that some of the issues and areas laid out in TPP can serve as a road map for important steps towards further global integration.

We look forward to the important year of APEC 2017 to be hosted by Vietnam which will provide a year of opportunities to host economic officials and business people from the 21 member economies when Vietnam can highlight economic progress and growth here.

Mr Tomaso Andreatta - Vice Chairman of the European Chamber of Commerce in Vietnam (EuroCham)
The Europe - Vietnam Free Trade Agreement (EVFTA) is on track. The implementation is ongoing and go-life will be early 2018.

This means that Vietnam will be a nexus for 600 million Europeans and 600 million Southeast Asians. We expect this to boost trade by 50 per cent in both ways according to a recent Euro study, increasing GDP here by a few per cent, according to a recent survey by Europe.

The majority of European companies coming to Vietnam might be SME's. But they are coming. And they are sustainable. They offer knowledge transfer, upskilling and a fair partnership. They will enhance Vietnam’s regional and global competitiveness.

This will happen when EVFTA takes effect. We look forward to working with the Government of Vietnam with the aim to achieve continuous and sustainable growth in a more liveable environment.

Mr Fujita Yasuo - Chief Representative of JICA Vietnam Office
Vietnam tops the list of JICA's projects in supporting Japanese small and medium enterprises (SMEs) to expand business in overseas. The country also attracts Japanese SMEs with advanced products and technologies. Opinions of these companies and more than 1,500 Japanese companies operating in Vietnam will be used as practical inputs of JICA's support activities.

In 2017, JICA will continue to support Vietnam with three pillars, namely promoting economic growth and strengthening international competitiveness, good governance, and response to fragility.

First, supporting a diverse institutional reform on the basis of the new Government’s policies and the five-year socioeconomic development plan. I have had opportunities to meet with policymakers of Vietnam's Government, local authorities and experts. The main impression for me from these meetings is the acknowledgement of an urge for institutional reform, including speed of handling administrative procedures and efficiency of public investments, as well as a firm determination towards action.

However, Japan's experience shows this is not a simple task. In addition to applying Japan's lessons in supporting institutional reform such as legislature, judiciary, state-owned enterprise reform and financial system reform, which are being implemented via technical assistance, we will keep considering further support activities in response to emerging needs through dialogue with Vietnam's new policymakers.

Second, accelerating the progress of high impact projects and fostering their sustainable outcomes. The underway urban railway construction projects in Hanoi and Ho Chi Minh City are expected to resolve traffic congestion in these two major cities. In addition, projects led by the local authorities to leverage local competitive advantages, such as the high value-added agriculture business promotion activities in Lam Dong province, have also been initiated. To replicate and roll over technical cooperation projects, a loan to support small-scale infrastructure aligned with work already completed by local authorities is under consideration. JICA will take a new approach to accelerate procedures and execution of projects combining all schemes such as loans, grant and technical assistance.

Third, promoting the application of knowledge and technology delivered by both Japan's private and public sectors. The policy of “Infrastructure Systems Export” and “Partnership for Quality Infrastructure” employed by the Japanese Government aims at transferring Japan's advanced technologies and know-how in these fields. In addition, Japan's knowledge was also highly valued as evidenced through dispatch of Japanese experts and volunteers, provision of training in Japan as well as support activities from local authorities and non-governmental organisations of Japan.

Fourth, enhancing transparency and accountability in JICA's ODA for Vietnam. To that end, communication must, first and foremost, be improved for the Japanese and Vietnamese people to better understand JICA's projects.

In the first half of 2017, we will take a step towards improved transparency by making bidding and disbursement information of ODA projects publicly available. From previous lessons, I will endeavour to fight against fraud and corruption related to ODA projects and apply safety measures during construction processes.

Mr Atsusuke Kawada, Chief Representative of JETRO in Hanoi
After the success of impressive trade and investment activities, with Vietnam’s opening and integration trends in the context of increasingly deepened globalisation, Japanese traders, investors and companies have actually realised growing potential of Vietnam market, especially the retail market. Therefore, Japanese businesses invested up to US$43 billion in 3,242 projects in Vietnam. Japan ranked second among 100 countries investing in Vietnam.

In addition to developing a series of big shopping centres in Hanoi such as AEON Mall Long Bien invested by AEON Group of Japan, we find that the opportunity to introduce Japan’s superior products with premium quality, functionality and design to Vietnamese investors is increasing. Since 2012, JETRO has led Japanese business delegations to ASEAN countries to introduce their products, including Vietnam. The programme was initially called ASEAN CARAVAN. Within the framework of the programme, we will host business matches for Japanese and Vietnamese companies seeking to purchase products from Japanese firms and exploring markets.

However, some Japanese companies in Vietnam are confronting difficulties. According Jetro's surveys, nearly 80 per cent of Japanese companies criticised that costs in Vietnam are gradually increasing. 65.2 per cent of Japanese companies find it hard to purchase inputs and parts in Vietnam. Nearly 60 per cent complained that administrative procedures and tariffs are complicated.

For Vietnamese companies, creating competitive products is very important. Solutions are reducing production costs, improving product quality, enhancing productivity, and training human resources to meet production requirements. I think that support from the Government of Vietnam for the above activities is essential, but efforts from businesses are more important.

Further, collecting information from export markets is also important. I think that, by attending business exchanges, trade talks and international exhibitions held in Vietnam, businesses will have more opportunities to expand their exports.

In 2017, Vietnam will host the APEC Summit. I think that the Government of Vietnam will try to raise its voice to free trade areas and want to fulfil the leading role of applying flexible trade with the adoption of the Trans-Pacific Partnership (TPP).

Anh Mai - Huong Ly

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