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Last updated: Saturday, March 24, 2018


Consistency and Severity Boost Business Environment

Posted: Friday, March 17, 2017

Remarking on the picture of Vietnamese businesses in the first two months of 2017, many experts still expressed concerns about the health of the business sector. Vietnamese enterprises, especially small and medium-sized enterprises (SMEs), still need State support.

Volatile business environment
According to a recent report by the Ministry of Planning and Investment on business registrations in February and in the first two months of 2017.

Vietnam had 14,451 business start-ups with a total registered capital of VND152.558 trillion, up 3.9 per cent in entities and 35 per cent in value.

Some industries saw a decline in business establishments from a year ago such as arts and entertainment, accommodation and catering services, wholesale and retail, motorbike and automobile repairing. Geographically, some areas also witnessed a slump in new business formations. For example, the Central Highlands had 363 new companies, down 11.2 per cent year on year. The North Central and Central Coast had 1,905 businesses, down 4.7 per cent.

The value of capital added by existing companies also shrank in some sectors, e.g. electricity, water and gas distribution; information and communication; and other service sectors. Two regions saw a tumble in registered capital from a year earlier. The Mekong Delta region drew VND7,837 billion of new corporate capital, down 3 per cent and the northern midland and mountainous region had VND8,766 billion, down 1.4 per cent.

In the first two months of this year, 8,673 enterprises registered for scheduled operational termination, up 20.1 per cent year on year. Most of them had paid-up capital of less than VND10 billion (accounting for 91.9 per cent of newly suspended businesses). In the meanwhile, the country witnessed 2,524 enterprises dissolved in the reporting period, up 14.9 per cent from a year ago.

The nation welcomed the resumption of 7,977 companies in the first two months of 2017, up 7.6 per cent from the same period of 2016. Meanwhile, the growth of operation-resumed companies was recorded 69.5 per cent in the same period of 2016.

Focus on improving business environment
Mr Phan Duc Hieu, Deputy Director of the Central Institute for Economic Management (CIEM), said, that the sharp growth in corporate dissolutions and timed operational suspensions was remarkable because it partly reflected the business environment as well as policies. To know the exact health of companies for the time being, it is necessary to carry out surveys. He thought that no policies are currently strongly affecting business operations.

He further analysed that poll results for a draft decree on State monopoly of some goods and services showed mixed opinions about this issue. Although this was just a draft and essentially caused no effects on business operations, it is worth of noting. Haiphong City’s decision on collecting charges on use of seaport infrastructure impacted business operations but not caused them to terminate operations or got dissolved.

Recently, the Ministry of Finance and the Ministry of Industry and Trade simultaneously announced action plans to improve the business environment and enhance national competitiveness in the coming time.

Noteworthy contents include shortening the time needed to complete procedures. Specifically, access to electricity will not take more than 35 days; cross-border customs clearance will be slashed to 70 hours on exports and 90 hours on imports; and contract dispute settlement will not last more than 300 days.

Other contents included training to set up business start-up support systems, creating a favourable and stable investment and business environment for start-ups, and realising the target of having 1 million enterprises by 2020, of which at least 0.5 per cent are innovative start-ups.

Meanwhile, the Ministry of Finance set the target of achieving the average level of ASEAN 4 countries in tax administrative reform, including all three criteria (tax finalisation, payment time and complaint settlement).

Comparing the business environment with other ASEAN countries, Deputy Prime Minister Vu Duc Dam emphasised that in order to achieve the average level of ASEAN 4 countries as expected, Vietnam will have to make great efforts to improve specific indicators. “Currently, we are ranked 82nd. To be on par with ASEAN 6, including Singapore, we must jump to the 56th position and to the 43rd position to reach the level of ASEAN 4,” he said.

While Vietnam is making a progress in business environment index, other countries are gaining a quicker progress. Deputy Prime Minister Dam pointed out that we need stronger engagement, particularly at local levels. The essence of improving the business environment is reforming administrative procedures, promoting service provision and providing online public services.

Si Son

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