Vietnam to Create Common Playground for Business Community

The meeting between the Prime Minister and businesses held in conjunction with Vietnam's first Entrepreneurs Day (October 13) successfully concluded at midday Oct 14, 2004. After nearly two working days, businesses cleared away a number of urgent matters via direct dialogue with the Prime Minister and leaders of ministries and relevant State bodies. Nineteen petitions were submitted by local authorities, associations and enterprises (including foreign-invested ones). The Prime Minister in cooperation with ministries and State management bodies responded to the petitions.

The first annual meeting between the Prime Minister and enterprises was held on January 9, 1998 with a goal to remove obstacles which separate State management bodies from businesses. At the 1999 meeting, a breakthrough in the development of enterprises and businesspeople was reached, being the government's plan to issue the Enterprise Law. From that time to the present, many conversations between associations, enterprises and relevant State organisations have been conducted with positive results. In addition, many activities aiming at honouring enterprises have been carried out.

The people of Vietnam have started to acknowledge and appreciate the important role of business in the development of the country's economy. Previously, the position and role of Vietnamese entrepreneurs was not adequately recognised. The Prime Minister's decision to declare October 13 as Vietnam Entrepreneurs Day will acknowledge and help to promote the achievements of Vietnamese entrepreneurs in the national process of industrialisation and modernisation. The day will not only pay respect to entrepreneurs but also serve the purpose of reminding Vietnamese entrepreneurs of their responsibilities for the economic development of Vietnam to keep pace with other developed countries. With the crucial work of entrepreneurs, Vietnam will become an industrialised country by 2020 from its current agrarian status, with an expected 500,000 enterprises by 2010.

At the meeting, the Chairman of the Vietnam Chamber of Commerce and Industry (VCCI), Vu Tien Loc handed the inaugural Entrepreneur Cup to the Prime Minister. From 2005, the most outstanding entrepreneur of the country each year will be awarded the cup.

During the conference, Mr. Loc communicated to the Prime Minister urgent concerns of businesses regarding prevailing policies which may negative affects on the competitiveness of enterprises ahead of integration into the global economy. Mr. Loc raised four groups of petitions including business environment improvement, administrative reform, building positive relations between employees and employers, and the development of a strong force of entrepreneurs. He stressed that entrepreneurs need strong support from the Government and authorities at all levels in order to foster a sustainable business community, especially in the development of their images and trademarks, so they can rival their business competitors in the region and around the world.

Apart from 120 petitions of associations, localities and enterprises (including foreign-invested enterprises) gathered by the VCCI for consideration by the Prime Minister or relevant State bodies, 19 other proposals were put forward at the meeting, mostly relating to tax, customs and production site issues. The Prime Minister required relevant management bodies to solve these problems. According to Deputy Finance Minister Truong Chi Trung, many issues were resolved immediately at the tax and customs session, and responses to the outstanding issues from the conference will be provided shortly to enterprises.

Answering the questions of entrepreneurs at the meeting on value-added tax (VAT) policies on imported materials, Mr. Trung said that the ministry applies the same VAT rates to both imported and domestic materials. There are no discriminatory policies on material importers. With regard to the process of business establishment, Mr. Trung promised that in the future the Ministry of Finance will consider reducing unnecessary procedures and the creation of more open mechanisms for enterprises.

Boosting economic growth is Vietnam's current urgent task, however, raising the competitiveness of local enterprises, which is presently very poor, is also a vital factor in the success of Vietnam's global integration. To improve their competitiveness, enterprises and localities nationwide must build their own trademarks. This was also a major point raised by the Prime Minister at the meeting.

Concluding the conference, the Prime Minister said that in the coming time the Government will create a common playing field for all kinds of businesses. Protectionism will be removed. The government will amend Investment Law and Enterprise Law to create an equitable legal framework for all businesses. The Prime Minister also asked ministries and relevant State agencies to review all impediments facing individual investors and enterprises. All problems must be solved publicly and transparently.

In a transitional economy, to keep pace with other countries in the region and in the world, Vietnam must have outstanding leaders. To this end, the Prime Minister required State agencies and localities to open training courses for entrepreneurs. Ho Chi Minh City has already done this effectively, he said.

Closing the meeting, Mr. Loc affirmed that VCCI will cooperate with the Government Office to gather all the petitions at the meeting and forward them to all relevant State agencies and localities. Those petitions which can be immediately resolved, will be, while others will be solved or responded to at a fixed time by named State agencies.

Vietnam should be aware of its own strengths to take proper development steps - Mise Atshushi, a representative from Japanese Sumitomo Group in Vietnam.

In recent years, Japan has poured investment of US$100 million per annum into Vietnam. This figure will undoubtedly rise once Vietnam places an emphasis on analysing its strengths as well as accomplishing its investment promotion policies. I would like to stress that Vietnam should be fully aware of its strengths and outline its development strategies. To boost the development of the software industry, the Government of Vietnam needs to meet some conditions to accommodate Japanese enterprises. Notably, Vietnam should own an information transmission line with high capacity but cheap price, and employ highly qualified software engineers. In addition, it is necessary for the country to upgrade some routes within the East - West corridor, namely Lao Bao - Dong Ha route, to facilitate the transportation of goods and to simplify customs clearance procedures. I believe that following its improvement, Vietnam will become a more appealing destination for investors and investments by Japanese businesses will be on the rise.

In my opinion, the Vietnamese Government should also map out transparent industrialisation policies, the sectors where it wishes to give priority for expansion and the areas it wants to inject investment into, following which, it should inform local and foreign enterprises of its exact decisions.

Preferential policies for investment remain inadequate, General Director of Vietnam Rubber Corporation, Le Quang Thung.

We find the land retrieval and compensation agreement inadequate. The price for land compensation is unsatisfactory and we cannot afford to make re-investments. We propose a motion that in cases where rubber plantation land areas are retrieved to set up industrial zones and residential areas, our company should be given top priority to become an investor if we can undertake the investment project. We insist that we are capable of luring investment capital sources.

The Corporation also submitted an application for investment incentives as early as 1999 and received approval from the Ministry of Planning and Investment. However, it has not yet enjoyed any incentives for the reason that the Ministry of Finance grants incentives only for projects formed after the Investment Law takes effect. Consequently, the enterprises which were brave enough to invest in disadvantaged areas must suffer losses.

Is it suitable to offer opportunities to non-state enterprises to decide on forms of business - Truong Anh Tuan, the Chairman of Board of Directors, General Director of Hoang Quan Real Estate Joint Stock Company.

At present, State-owned enterprises are allowed to choose forms of business. Thanks to the conversion to parent-affiliate company form, State-run businesses are running efficiently. It is suggested that the Government should give permission to private enterprises to adopt the form of a parent-affiliate company, corporation or group. This would help enterprises to raise their efficiency and competitiveness in domestic investment and production. It is my belief that in so doing, local enterprises will be able to effectively compete in the context of global economic integration.

The investment environment should be further diffused, the Chairman of Association of Foreign-invested Enterprises, Mai Thanh Hai.

A large number of foreign investors said that even though Vietnam has established a better investment environment, it is not tempting enough because of the tardy progress in site clearance, and unclear tax and customs regulations as well as the inconsistencies in settling procedures for investors.

Investors first arriving in Vietnam always fail to receive adequate information regarding the investment environment and relevant policies. They are therefore unable to learn about the general investment plan, trade and areas which receive investment incentives from the Government. I think that the Government and other departments and agencies should take measures to launch the image of Vietnam and investment-related policies to foreign investors and enterprises. The investment atmosphere of Vietnam must be further promoted and greater efforts must be made to improve investment policies. In my opinion, the best method of diffusion is to stimulate and assist investors whose projects are underway in Vietnam to remove obstacles facing them, and urge the localities to create favourable conditions for the operation of the projects. The Government should take time to work with the ministries, departments and localities to make them realise the policies in a concrete and uniform way.