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Businesses Surveyed on One-year Enforcement of Resolution 35 NQ/CP: Positive Changes but Weakness Still in Place

Posted: Monday, May 22, 2017

After nearly one year of implementing Resolution 35 NQ/CP, the Vietnam Chamber of Commerce and Industry (VCCI) has conducted a survey on business opinions regarding the enforcement of the resolution by ministries, branches, localities and enterprises. The survey received the participation of 1,087 businesses and business associations nationwide (32 business associations and 1,055 businesses). Among 1,055 companies surveyed, 794 respondents gave their feedback from November and December 2016 and 261others from February and March 2017.

Positive changes in administrative procedure reform
According to the survey, businesses saw positive changes in the working environment, especially administrative procedures at State agencies streamlined and computerised, even put online (social insurance, tax declaration and some business registration procedures) to help reduce time, effort and expense for enterprises.
Opining the performance of public administration reform and business facilitation at ministries and provincial/municipal People's Committees, about 60 per cent of respondents saw “very effective” and “effective” performances of ministries, provincial/municipal People's Committees. 74.9 per cent of surveyed enterprises (highest) assessed “very effective” and “effective” on activities related to “Speeding up the effective deployment of one-placed single-window mechanism” and nearly 60 per cent (lowest) rated “very effective” and “effective” for “Establishing and publicising hotlines” and “Communicating on ethics of civil servants.”

In fact, administrative procedure reform towards “single-window” and “one-stop single-window” mechanism achieved some very positive results, helping shorten the time, simplify and publicise procedures to better ensure legitimate rights and interests of the business. The tax and customs sectors have made efforts and improvements to better serve the business. In customs modernisation, administrative procedures streamlined and removed intermediary steps in customs clearance.

However, the deployment of “single-window” and “one-stop single-window” mechanism still has limitations. For example, in many places, results of administrative procedure settlement for citizens and businesses in some fields are still lower than expected. Many procedures are not timely addressed, especially in land and construction.

Notably, most of provincial/municipal People's Committees, departments and branches have yet to disclose transparent information on administrative procedure settlement on websites where businesses can access to know the status of their procedures.

SME Development Fund yet to work effectively
Remarking on the impact of Resolution 35 on shaping a conducive business climate, supporting start-ups and making innovative changes, according to the survey, about 35 - 40 per cent of respondents said that the impact of these solutions as “Relatively positive,” “Positive,” and “Very Positive.” In particular, “start-up support policies” had the highest rate (80 per cent) and “SME Development Fund” had the lowest rating (67 per cent).

Although Resolution 35/NQ-CP stated that it is vital to have “measures to promote the implementation or supplementation of functions and tasks of the SME Development Fund to increase capital for start-ups, the SME Development Fund was evaluated to have the least positive impact on enterprises in the past time.

Difficult access to credit is always a constant concern for SMEs. The SME Development Fund is expected to provide additional concessional loans to support businesses. However, accessing this source of fund is not easy. Companies with feasible production and business projects, plans and schemes are entitled to borrow concessional loans from the fund and they cannot borrow from other State-owned credit institutions. SMEs can borrow up to 70 per cent of total investment value (excluding working capital) but the loan value cannot exceed VND30 billion. With standard regulations and conditions on lending interest rates, the SME Development Fund does not actually provide as high preferences as commercial banks. Thus, businesses are not enthusiastic enough to access this fund.

One of solutions stated in the resolution is “Having mechanisms and policies to create favourable conditions for enterprises to access land”. However, these policies are not yet effective. According to the survey, about 28 per cent of respondents did not see positive impacts on businesses. Difficulties in site clearance, particularly land compensation, clearance and resettlement for land-giving residents are still popular.

According to the survey, 20 per cent of respondents said that impacts of solutions on capital access support adopted by credit institutions on businesses is unclear because the valuation of security property assets changes. In the past, banks based on the market to evaluate security property but the new regulation defines the value on annual basis, announced by the State. For that reason, enterprises can borrow less from the same security assets than earlier, thus causing them to face capital shortage. Another reason is that some under-capitalised companies accept to pay overdue interest rates - 150 per cent of the loan interest rates - to have finance for their business operations. Their credit ratings become worse in the eyes of lenders which interconnect borrower data. As a result, they can hardly access loans in other banks. Therefore, debt restructuring and rescheduling seems to mean nothing to them. Last but not least, lenders tend to tighten credit loans although the Resolution requires the State Bank of Vietnam (SBV) to direct credit institutions to carry out credit access support policies for enterprises.

Anh Mai


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