Last updated: Monday, April 24, 2017
Recommendations, Complaints from Businesses AddressedPosted: Thursday, March 30, 2017
The Vietnam Chamber of Commerce and Industry (VCCI) is actively collecting opinions, suggestions and recommendations from the business community on the enforcement results of Resolution NQ35/CP, as well as upcoming directions of central and local authorities and the business community, to report to the Prime Minister.
Vietnam Business Forum would like to excerpt opinions from some business associations and some foreign organisations in Vietnam wishing to ask the Prime Minister for solutions to tackle emerging difficulties and facilitate business operations in the country.
Mr Nguyen Van Thu, President of the Vietnam Association of Mechanical Industry (VAMI)
The new edition of Resolution 35 had a good beginning, but is yet to produce positive impacts on enterprises because they lacked active response and approach to new changes. More fundamentally, authorities have not adapted to the new spirit of Resolution 35.
In order to bring Resolution 35 to life, businesses themselves have to actively grasp and address their problems, ask the Government and authorities for authoritative solution. Especially, civil servants must change their way of serving businesses and abandon the currently rampant bureaucracy.
The manufacturing industry has seen a lot of related decisions for the past 15 years, with firstly Decision 186 (2002) on strategy and eight key mechanical groups, then Decision 10 (2009) on support for key mechanical products and Decision 1791 (2012) on pilot localisation of three thermal power projects. These decisions, plus the drastic administration of the Government and authorities in charge, substantially supported the development of the mechanical industry. Nevertheless, all these decisions are invalidated and the future of the mechanical industry is left uncertain. What will we take for national industrialisation and modernisation, let alone national security and defence?
It has seemed that the mechanical engineering industry has been forgotten. VAMI itself sent three requests for a meeting with the Government to report, present, explain and recommend employment for the industry. Indeed, capable domestic companies should be allowed to act as general contractors to raise the localisation ratio. For example, privately run Xuan Thanh Group boldly acquired up to 75 per cent of equipment used in the world’s largest clinker furnace (with a daily output capacity of 12,500 tonnes) from some domestic manufacturers such as Lilama 69-3 to localise some domestically made industrial equipment. The facility was planned to start official operations in the third quarter of 2017. But, the association has yet to receive the answer from the Government and expected the Government to give opinion on this issue.
Mr Truong Van Cam, Vice Chairman and General Secretary of the Vietnam Textile and Apparel Association (Vitas)
There is certain progress in State management after nearly one year of carrying out Resolution 35. Most obviously, the Ministry of Industry and Trade removed Circular 37 on limit and examination of formaldehyde and aromatic amine content in azo dyes in textile products; the State Bank of Vietnam (SBV) issued Circular 24 on loan extension in foreign currency till the end of 2017; and the Ministry of Information and Communications accepted the association’s recommendation on printer import conditions.
However, some State management agencies and localities seemed to have not caught up with new developments and weakly responded to changes in business conditions. For example, after the repeal of Circular 37, the Ministry of Industry and Trade drafted a new set of standards for inspection of garment and textile products. This draft even raised more difficulty in implementation than earlier. Or, printer import conditions imposed by the Ministry of Information and Communications stated that owners of garment and textile facilities must hold a college degree of printing or a certificate of printing specifically issued by the Ministry of Information and Communications. We reported on this absurdity nearly a year ago, but no change has been made. We found that although our recommendations were very clear and amendments could have been made right away, authorities still wanted to hold tight on business management rather let it go.
Resolution 35/CP does not criminalise economic relations but they are already included in criminal laws, for example, evasion of social insurance and illegal dismissal of employees subjected to imprisonment. We proposed treating these as civil relations and economic relations only. VCCI should work closely with business associations to jointly put forth recommendations, as a way to increase their weight.
Mr Nguyen Hai, Secretary General of Vietnam Sugarcane and Sugar Association
The Vietnam Sugarcane and Sugar Association and companies in the sector received direct supports from the Ministry of Agriculture and Rural Development, the Ministry of Industry and Trade, the Ministry of Finance and others, helping shape the sugar and cane development plan to 2020, with a vision to 2030, which replaced Decision 26/2007/QD-TTg dated February 15, 2007 ratifying the master plan for sugarcane and sugar development to 2010, with an eye to 2020.
Regarding the sugar import quota auction mechanism, the Ministry of Industry and Trade submitted and obtained approval of the Prime Minister on import sugar quota auction mechanism successfully applied in 2016. In 2017, the ministry proposed renewing this mechanism. In order to tackle scarcity impacts and stabilise domestic sugar prices, the Ministry of Industry and Trade and the Ministry of Agriculture and Rural Development asked the Government to import 100,000 tonnes of sugar for tariff quotas in 2016 (Circular 09/2016/TT-BCT dated July 1, 2016).
The Vietnam Sugarcane and Sugar Association suggested adjusting and supplementing the sugarcane and sugar development plan to 2020, with an eye to 2030. The association asked for laws or ordinances with respect to sugar and sugarcane production and for strict and thorough application of national technical standards on quality of sugarcane (QCVN 01-98:2012/BNNPTNT). The association also suggested perfecting incentives to encourage sugarcane bagasse-fuelled power production and raising the price of this electricity to the price rate applied to electricity generated by biomaas. The association sent Official Letter No. 83/CV-HHMD dated December 9, 2016 to the Prime Minister on rising the price of electricity produced by sugarcane bagasse. The Vietnam Sugarcane and Sugar Association hoped that the Prime Minister will consider calculating power prices generated by sugarcane bagasse.
Mr Nguyen Van De, Chairman of Thanh Hoa Business Association
Based on surveys into the Thanh Hoa business community and feedbacks from local companies, the association found that enterprises are facing the following main difficulties: hard land access, unmatched planning and inconsistent or unclear planning information. Land clearance and procedures for granting basic construction permits and granting land use right certificates are problematic issues for businesses. Besides, high rents are also a big problem for enterprise.
They also face hard access to capital. Outstanding debts trapped in many projects in 2-3 years and even 5-6 years are drying up companies’ capital base. Some even went bankrupt because of unrecoverable loans, particularly those active in construction industry.
In the past time, administrative procedures have been improved considerably, helping businesses save time and money. However, when they come to settle procedures related to site clearance, investment licence, land access and other procedures related to business operation still time-consuming and upsetting, thus affecting the progress of their projects. In addition, civil servants lack appropriate attitude and equity when working with businesses.
In order to create favourable business environment in 2017, the Thanh Hoa Business Association recommends the following contents to the Government: Direct Chairperson of Provincial/Municipal People's Committees to stand responsible for implementing Resolution 19-2016/NQ-CP and Resolution 35/NQ-CP; accelerate the reform of administrative procedures, especially those relating to production and business to shape a more conducive business environment; ensure equal business rights and equal access to resources and business opportunities; reduce business costs in tax, land, investment and construction; direct the State Bank of Vietnam to guide credit institutions to have measures to support enterprises, especially SMEs, to access credit sources; revise the land policies to allow industrial park infrastructure companies to use their assets to mortgage for bank loans; and timely address emerging issues against enterprises.
Mr Tran Khac Tam, Chairman of Soc Trang Business Association
Initial recommendations based on business cases and economic development are supported by the Government and ministries such as the State Bank of Vietnam, the Ministry of Finance, the Ministry of Agriculture and Rural Development, the General Department of Taxation, and the Office of Government. Specific recommendations include continuing to lend foreign currencies to exporters; continuing to pilot agricultural insurance and interest rate reductions by 1-2 per cent for weak and restructured businesses to get through hardships, supporting sustainable shrimp farming amidst notorious contamination in Bac Lieu and Ca Mau provinces.
Shrimp exporters and farmers in Soc Trang province are facing such difficulties and problems as insufficient baby shrimps for farming and insufficient supports to encourage sustainable shrimp farming. Some policies of the Government lack feasibility and practicality, for example, Decree 210, Decision 62, Decision 68/2013/QD dated November 14, 2013 and Decision 58 on credit guarantee need to be reviewed because of difficult application. Companies find it very hard to approach credit guarantee funds and they hardly borrow enough money for doing business given current contradicting regulations. Companies cannot use land to mortgage for loans because of current definitions in land ownership in industrial parks what banks cannot use as security for loans.
Mr Tran Dinh Nam, Deputy General Director of Vietnam Helicopter Corporation
To support business in general and Vietnam Helicopter Corporation (VNH) in particular to operate more effectively, VNH expects the Government will further reform administrative procedures and create best conditions for business to operate. Over the years, the Government has made a great effort to reform administrative procedures to transform into a “dedicated and professional” government. Specifically, for its business, VNH asked the Government, the Ministry of Transport and the Ministry of National Defence to promulgate regulations on low-level flying to enable aviation companies to facilities of each other for better development.
Mr Pham Viet Khoa, Chairman of the Board of Directors of FECON Joint Stock Company
In my opinion, it is necessary to consider amending the Law on Tender to allow domestic companies to take part in project carried out in Vietnam for the first time. At present, projects and technologies used in Vietnam usually require similar experience. This sends Vietnamese companies to an advantage because new technologies and project forms are the first to be present in the country. Or in other words, it is impossible to find similar projects or technologies here. Successful bidders are responsible for guaranteeing the performance of contracts and the warranty for completed projects. And, contractors will know how to mobilise resources (e.g. foreign experts) to make sure that the projects are successful.
Next, the Government should consider amending Decree 15/ND-CP/2015 to apply world practices to investment attraction to carry out implement infrastructure investment projects in Vietnam in the public-private partnership (PPP) form. It should introduce policies in support of foreign infrastructure investors in Vietnam such as government-guaranteed minimum revenue, exchange rate-adjusted selling prices, site clearance support.
Start-ups need preference policies such as corporate income tax (CIT) exemption and VAT exemption in 3-5 years, lad hire and half-cut land-use fees in 10 years, governance training, and scientific and technological development support.
Mr Duong Van Quang, General Director of Hong Long Infrastructure Development Investment Joint Stock Company
It is necessary to speed up administrative reform and increase administrative discipline and provide favourable conditions for enterprises carrying out high-performance projects to access State's preferential capital sources. Despite being the maiden, the Prime Minister’s Meeting with Business was quite open. I suggested summarising such meetings and making them public on the mass media, stating what has not been done to have better meeting outcomes in the future.
Mr Pham Van Dai, General Director of Minh Duong Group
The Prime Minister’s Meeting with Business is a new thinking and vision of the Government, showing the respect to the business community.
I think that the Government should focus on addressing the following issues
One, continuously reform administrative procedures from central to local levels
Two, necessarily developing a code to deal with separate issues.
Three, building regulations on conducts of civil servants and public servants in a bid to prevent bureaucracy and harassment. Resolution 35 aims to transform the administrative apparatus from administering to serving citizens and enterprises.
Four, further decentralising power to localities in business development because they are the nearest to businesses
Five, creating equitable business environment, capital environment, resource environment for all companies regardless of ownership type and scale; encouraging and supporting SME development because they are the seeds of development.
Six, Government is an intermediary that connects farmers, entrepreneurs and scientists.
Seven, supporting enterprises to invest in industrial park development and cottage industry development.
Mr Huynh Minh Chinh, President of 29/3 Textile and Garment Joint Stock Company
In my opinion, to gain the trust of enterprises, the Government, ministries and branches need to review legal documents relating to business to create the most enabling business environment for them.
I think that the biggest current difficulty to businesses is falling prices in the world in the midst of rising production costs because some companies adversely affect competitiveness and performance of enterprises. By understanding the health of Vietnamese companies on global markets, ministries and branches will advise the Government and National Assembly to make best policies in support of business.