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VCCI News

Last updated: Thursday, November 16, 2017

 

Further Aggressive Reforms Needed

Posted: Friday, May 19, 2017


At the Conference on Enterprises Meeting with the Prime Minister on May 17, Prime Minister Nguyen Xuan Phuc affirmed that the Government not only facilitates the freedom of creative business, but also ensures safety and investment capital assets; not only has low costs, but also low risks to ensure fair examination; and encourages business support and protection in all aspects of life so as to assure all of long-term investment and constant growth.

Themed “Accompanying businesses”, this year's conference drew the fullest-ever presence of the cabinet apparatus, including four deputy prime ministers, ministers and some 2,000 enterprises.

Private sector still finds it hard to access resources
Dr Vu Tien Loc, President of the Vietnam Chamber of Commerce and Industry (VCCI), said, Resolution 35 is the first resolution to embrace three fundamental messages: Business is development engine, Government plays a facilitating role, and start-up is the cause of the people. The ground-breaking spirit of the resolution has inspired the business community, especially the private sector.

He added that, since the first Prime Minister - Enterprise Conference took place on April 29, 2016 until the end of January 2017, VCCI had collected 421 recommendations from enterprises and business associations nationwide, with 320 sent to relevant ministries and agencies to have answers before and after the conference. Optimistically, more than 90 per cent recommendations were answered by ministries, agencies and localities. In addition, VCCI added 188 new recommendations from February 2017 and hoped that these will be heard and settled on this occasion.

Despite many improvements seen in the message of the Government in action, over the past year, businesses still thought that the business investment environment needs to be improved faster. According to the report of the Ministry of Planning and Investment, after one year of executing Resolution 35 of the Government, administrative procedure is still slow-moving. Unsolved inconsistencies of laws such as Investment Law, Land Law and Construction Law has upset businesses. Many agencies still handle the same matter, thus adding compliance burdens on businesses. For example, food safety is covered by three ministries: Ministry of Industry and Trade, the Ministry of Health and the Ministry of Agriculture and Rural Development, which jointly administer according to three decrees. Quarantine certificates are granted by different units in the same ministry.

The private sector is contributing nearly 40 per cent of the country’s GDP but it finds it hard to access land, credit and information and is subjected to multiple inspections. Only 40 per cent of active business entities have access to bank loans. The highest business expenses are still borrowing costs (7-9 per cent on average, compared with 4.3 per cent in China, and 2-3 per cent in South Korea), transport costs (costs for a container from Haiphong Port to Hanoi is three times more expensive than shipping from South Korea or China to Vietnam), electricity access cost (49 times higher than that in the Philippines). In addition, unofficial charges remain rampant. A survey for the Provincial Competitiveness Index (PCI) 2016 found that 66 per cent of respondents said they had to pay unofficial charges.

Continued dialogues and stronger reform efforts from both sides
That was said by Deputy Prime Minister Vu Duc Dam at the conference. He noted that dialogue and exchange will make concerned parties figure out matters of concerns and make enterprises agree and support decisions and policies of the Government. They need things detailed, specified and practical in order to reduce official and unofficial costs to avoid missing business opportunities. We must be quicker because we are already slow. He cited that to be ranked fourth in ASEAN in tax facilitation, Vietnam will have to stand in the range of 60-70th position, but it is ranked 167th in the world after many reform efforts. Finally, all public services must be made online and transparent. Electronic payment and online public services will certainly make the Vietnamese business environment more open.

Vietnam is trying to enter the ASEAN leader group in investment and business environment and to have one million enterprises by 2020. Minister and Chairman of the Government Office, Mai Tien Dung, admitted the fact that businesses are being overburdened by authoritative inspections. Some businesses in Dong Nai province report that they are inspected or examined three times a month. Some in other localities received 12 inspection delegations a year. VCCI President Vu Tien Loc proposed issuing a directive to promote Resolution 35, stating the time limit and responsibility of each individual and organisation, and requesting a similar directive each year. It is necessary to create a more open legal framework for businesses to start their own businesses and perform innovation. Unfortunately, less than 30 per cent of Vietnamese enterprises apply science and technology. This weak point explains why they have low productivity and competitiveness. Manufacturing and processing companies account for only 16 per cent of total business entities active in Vietnam. This also limits their engagement in local, regional and global production chains.

Delivering a closing speech at 1:30 p.m., Prime Minister Nguyen Xuan Phuc underscored the spirit of turning words into action. “Today, we have talked a lot about overlapping inspections and I thus now orders to issue a directive on inspection that cannot exceeds one a year. Directive 20 signed today states that a company cannot have more than one inspection a year,” he said.

He pledged to change more and work harder to improve the transparent, safe and effective business environment. PM Phuc also called on enterprises with their patriotism to actively change for higher labour productivity and business efficiency and contribute more to the economy.

Madam Thai Huong, President of TH Group
As a kind housewife and a good mother who brings best products to the community, TH Group is now carrying out community-benefiting projects from organic vegetables to inclusive healthcare. I suggest the Ministry of Health issue a set of standards on dairy products.

Madam Nguyen Thi Nga, President of BRG Joint Stock Company
We want to grow equally with other economic sectors when the private sector accounts for nearly 40 per cent of GDP. We hope that the Prime Minister will soon have a legal corridor to concretise policies, not to criminalise civil economic relations to protect legitimate interests of enterprises, so as to help them do right after they do wrong. They will feel assured and willing to engage in business.

Mr Pham Viet Khoa, President of FECON Joint Stock Company
The biggest obstacle and concern to the business is currently high tax. According to statistics, Vietnam’s tax is twice as high as Singapore. Therefore, the Government will necessarily take measures to reduce taxes for the business. In particular, corruption and give-and-take acts also relate in tax. Hence, we need to adjust tax laws in order not to fertilise potential tax-related corruption and ease tax burdens on the business. As far as I am concerned, China now allows businesses to opt for tax on revenue, about 1 per cent of revenue. Or in other words, they will pay tax for their revenue and no tax authorities are needed to examine. That is very simple, not as complicated as in our country. We are presently calculating income tax and the business will strive to look for ways to reduce income tax to a possible minimum. This imperceptibly leads to unauthorized invoice sales. This is a very painful reality that not all businesses dare to speak out because it maybe relates to “group interests”.

Mr Nguyen Huu De, President of Hop Luc Company
I hope for a better equality between the private sector and the State sector, especially in hospital field. To quickly bring policies to life, the Government also needs to select talented people as directed by the Prime Minister.

Le Hien








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