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Last updated: Monday, September 25, 2017

 

Businesses Face Big Obstacles Working with Administrative System

Posted: Tuesday, March 14, 2017

The European Chamber of Commerce in Vietnam (EuroCham) and the Vietnam Chamber of Commerce and Industry (VCCI) recently announced the Whitebook 2017 on trade and investment in Hanoi.

The Whitebook 2017 is a collective expression of the views of EuroCham member companies, which operate in a wide range of industries. The publication echoes the European business community’s desire to support the Vietnamese Government in the development of the current legal framework; and a positive business environment in Vietnam, for the benefit of companies, investors and society. Against the backdrop of the recently concluded EU-Vietnam Free Trade Agreement (EVFTA), expected to come into force in early 2018, the Whitebook 2017 will provide useful information for the Government and businesses of Vietnam.

According to Whitebook 2017, Vietnam is an attractive destination for foreign direct investment. In addition to a series of legal changes, the Government of Vietnam welcomed FDI to invest in production activities.

In 2015, the European Union (EU) was the third largest investor in Vietnam with a total committed direct investment of US$1.3 billion. Among foreign investors in Vietnam, the EU has become an increasingly important source of FDI in Vietnam. By the end of December 2015, the EU pledged to invest US$23.2 billion in 1,730 projects.

Vietnam and the EU reached a bilateral trade value of more than US$28.3 billion in 2014. The former’s key exports included garment and textile, leather and footwear, coffee, seafood and electronic devices. Meanwhile, the latter’s exports were mainly pharmaceuticals, machinery and vehicles.

The EU’s strong commitments to support Vietnam for modernisation and integration into the world economy were also clearly expressed by its aid programmes. Under the Vietnam Socioeconomic Development Plan to 2020, EU assistance through the Multi-annual Indicative Programme for Vietnam in 2014-2020 increased by 30 per cent to reach EUR400 million, with a primary focus on developing clean energy in Vietnam.

Notably, the Whitebook 2017 has a chapter on EVFTA, its enforcement and impacts on business in Vietnam.

Michael Behrens, EuroCham Chairman said, against the backdrop of uncertain future of the Trans-Pacific Partnership (TPP), EVFTA is likely to become a benchmark treaty for Vietnam’s global trade integration in 2017 and beyond. The agreement also makes Vietnam the most promising business destination in Southeast Asia for European businesses.

Vietnam's rapid transformation has created an opportunity for expanding and strengthening trade with the rest of the world.

European businesses pointed out that positive impacts on Vietnam’s continuous growth included legal changes and other fundamental factors. Demographically, Vietnam currently is at the golden age period with 25 per cent of 90-million population aged from 10 to 24. Its per capita gross domestic product (GDP) is growing fastest among middle-income countries in Southeast Asia (12.9 per cent a year in the 2012-2020 phase).

In addition, the Whitebook 2017 outlined shortcomings needed to be address for better competitiveness, particularly when neighbours are challenging its competitive advantages in the region.

Accordingly, guidelines for various new laws have yet to be issued and procedural settlements for investors are still delayed. Foreign-invested project licensing process remains vague.

Remarkably, many foreign investors are facing great obstacles in working with the administrative system of Vietnam. Tax declaration, customs clearance, business registration and other administrative procedures are often delayed, resulting in unpredictable processing outcomes. This causes businesses to spend a lot of resources on administrative procedures which could have been used for core business development.

This year's Whitebook serves as a reference for policy supports aimed at improving the business environment in Vietnam. EuroCham sees this as an effective tool to help Vietnam become Europe's most important trading partner in Asia, and to help Vietnam become the economic hub of the ASEAN Economic Community (AEC).

Quynh Anh








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