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Business Forum

Last updated: Wednesday, November 22, 2017

 

Confidence in Vietnam Business and Investment Climate

Posted: Monday, October 23, 2017

As Vietnam heads into a more challenging global environment, the economic imperative will be to transform the current growth model from a reliance on low labor costs and resources to enhanced productivity and competitiveness in manufactured goods and services. Given the government’s strong commitments to accelerating reforms, we see Vietnam’s economy on a continuing positive trend.

Mr Adam Sitkoff
Executive Director, AmCham
The American business community is proud of its contributions to the development of Vietnam’s economy. In 1995, bilateral trade was just US$451 million. Last year’s bilateral trade number surpassed US$52 billion and Vietnam exports more goods to the United States than to any other country. US exports to Vietnam rose 77 percent in the two-year period from 2015-2016. The future is bright in Vietnam and I am confident that the rapid expansion of trade and investment relations between the US and Vietnam will continue and become dynamically stronger.

We regret that the United States withdrew from participating in the Trans Pacific Partnership Agreement. However, AmCham believes there are other constructive paths forward to increase trade and investment between our two countries. To sustain and grow our bilateral trade and investment relationship, trade must be free and fair. Importing products into Vietnam remains more costly and complicated then it should be, and, given Vietnam’s US$34 billion trade surplus with the United States, it is particularly important for Vietnam to be seen as seriously addressing the numerous non-tariff technical barriers to trade mostly encountered at the border, and the so-called behind the border barriers which restrict the activities of companies and hamper the flow of US exports into Vietnam.

AmCham encourages Vietnam’s government to make further efforts to improve governance and transparency, change the behaviour of state-owned enterprises, strengthen intellectual property rights, and ensure that legislation enables and facilitates, rather than restricts, business opportunities for our members. We believe that the business climate can best be helped by actions that increase productivity and reduce the costs and risks of doing business in Vietnam. Continued growth can best be ensured by maintaining macroeconomic and political stability, building world-class infrastructure, intensifying the effort on upgrading workforce skills and improving the ease of doing business here -- including addressing areas where inconsistencies, inefficiencies, and unfair practices persist.

AmCham remains confident in Vietnam’s long-term prospects. We congratulate the government on the hosting of APEC 2017 and express our confidence that Vietnam is moving forward and its best days are ahead of it.

Mr Back Jong Kook
Chairman & General Director, Hanwha Life Vietnam
During our eight years of presence in the Vietnamese market, we have seen an increasingly improved and more transparent investment climate. The Government of Vietnam has adopted a number of aggressive reforms on investment incentives, an improved legal corridor and a one-stop-shop mechanism that reduces time spent on administrative procedures. In addition, Vietnam has a strong investment in improving the quality of its human resources to meet the stringent requirements of foreign invested enterprises. And finally the infrastructure has been significantly improved. With this endless reform effort, Vietnam is highlighting the interest of investors and many foreign companies are planning to expand the investment sector or increase capital in this market.

Prior to that trend, Hanwha is researching investment into other areas, including credit, real estate and office leasing. With a huge investment in expanding business performance, Hanwha Life Vietnam expects to increase its total premium income to VND10,000 billion by 2025 and profit before tax to VND1,340 billion, becoming a leading life insurance company in Vietnam. Apart from contributing to Vietnam’s economic development, Hanwha Life Vietnam also has strong commitments in making a positive contribution to the country’s sustainable development by implementing community activities to improve living conditions, healthcare and education of people in disadvantaged areas of Vietnam.

Mr Adam Schwarz
CEO and Founder, Asia Group Advisors

With strong fundamentals and stable policies, Vietnam has reached middle-income status at a pace enviable to most countries. Vietnam can expect a positive medium-term outlook, driven by strong FDI and participation in major trade agreements. Vietnam is committed to increasing labor productivity, improving infrastructure, upgrading technology in sectors such as agriculture, and accelerating institutional and market reforms. The leadership has recognized that structural reforms are essential if Vietnam wants to alleviate constraints on productivity growth and escape the middle-income trap. The commitment to reforms has been laid out in Vietnam’s 2011 – 2020 Socio-Economic Development Strategy (SEDS), which includes improving competitiveness and the ease of doing business, as well as creating an environment conducive to bringing about a balanced mix of state-owned, private, and foreign companies.

Vietnam has also made progress in its policy-making process, for which data-driven and inclusive approaches are becoming more mainstreamed. Collaborative dialogues between the private and public sector continue to develop. The 2017 APEC Summit in Vietnam provides an excellent opportunity for strengthening public-private sector collaboration. Within this dynamic space, Asia Group Advisors works with Fortune 500 companies in Vietnam and across Southeast Asia to enable them to effectively engage the government and work towards mutual goals of growth and development.

As Vietnam heads into a more challenging global environment, the economic imperative will be to transform the current growth model from a reliance on low labor costs and resources to enhanced productivity and competitiveness in manufactured goods and services. Given the government’s strong commitments to accelerating reforms, we see Vietnam’s economy on a continuing positive trend.

Ms Nguyen Thi Nga
Chairwoman, BRG Group

Over the past years, the Government of Vietnam has acted vigorously to show its determination to improve the business environment, with one of the major goals of boosting innovation, enhancing productivity, driving the economy to a higher level of development. With the great determination of the Government, efforts of ministries, branches and localities, thousands of administrative procedures, business conditions and sub-licenses stipulated in statutory circulars have been abolished, thus building up the confidence of the business sector.

In 2016, for the first time, the number of business start-ups in Vietnam set a record of more than 110,000 new companies established. Those strong actions have created great motivations for the business community in Vietnam. Therefore, the target of having more than one million effective enterprises by 2020 is within reach.

Ms Duong Thi Mai Hoa
General Director, Vingroup Joint Stock Company

As a multi-business conglomerate, Vingroup has the opportunity to comprehensively sense dynamic progress and integration milestones in Vietnam. The Government has continually reformed and perfected the investment environment, enabling all economic sectors to participate equally in the market, for instance, allowing foreigners to lawfully own, sell and transfer real estate; and calling private enterprises to invest in infrastructure among others.

With the APEC 2017 Economic Leaders’ Week to be held in November 2017, the business community believes Vietnam will continue to affirm its prestige, role and position on the regional and world economic maps, unlocking integration opportunities and paving the way for future breakthroughs.

Dr Pham Thai Lai
President & CEO, Siemens Vietnam
 
Vietnam is entering a promising development period following the formation of the ASEAN Economic Community (AEC) and the enforcement of important free trade agreements (FTAs) such as Vietnam-EU FTA (EVFTA). However, competitive pressures will certainly increase sharply while Vietnam's biggest challenge is the relatively weak capacity and potential of domestic firms. Small and medium enterprises (SMEs) are particularly vulnerable groups due to a number of reasons including inadequate technology, low productivity and competitiveness, small-scaled production, and especially lack of capital. Moreover, Vietnam's labour force is abundant but its quality is not high.

Last but not least, the 4th industrial revolution (Industry 4.0) is sweeping in. This new, digital industrial revolution is unstoppable and will bring about many opportunities, and at the same time, massive challenges.

Hence, in order to achieve sustainable growth and increase national competitiveness, as well as to be well prepared for Industry 4.0, in my opinion, Vietnam should focus on three underlying factors: Establishing a stable and supportive regulatory framework; Developing highly-skilled and high-quality labour resource, and Enhancing basic infrastructure, especially for power generation, transmission, health and transport. Vietnamese companies need to control and ensure high quality standards, increase labour productivity by training a skilled and qualified workforce, improving production processes, upgrading production facilities and investing in cutting-edge technologies.








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