Business Environment Needs Improving

11:16:31 AM | 8/18/2014

Business environment is one of most important indexes in the eyes foreign investors. Improving business environment will help Vietnam reduce costs, time and risks for enterprises. This is the main issue discussed in the conference “Implementing Resolution 19 on improving business environment in Vietnam” jointly held by Central Institute for Economic Management (CIEM) and Project of “State management for a comprehensive development” of US Agency for International Development (USAID/GIG project) in Hanoi.
According to Resolution 19/CQ-CP of the Government dated 18th March 2014, the Government requires Ministries, organisations and local authorities to concentrate on implementing effectively 3 strategic breakthroughs related to restructuring the economy and transforming growth model. Besides, they should continue completing socialism – oriented market economic mechanism with core issues of constructing, amending, supplementing legal regulations and policies to create a favourable and fair business environment for every organisation, enterprise and people. Concentrate on mechanisms and policies on property ownership right, intellectual property right, investor protection, minor shareholder protection, regulations on bankruptcy, dissolution and competition.
Mr Nguyen Dinh Cung, Director of CIEM said that the Resolution 19/NQ-CP put detailed targets on improving business environment, upgrading national competitiveness and it was constructed based on actual conditions of enterprises and international practices. It aims to reduce costs, risks and improve transparency in businesses. As a consulting unit, CIEM is asking for the opinions of the Vietnam enterprise community to elaborate best solutions to upgrade competitiveness. Besides, with support of USAID through the project “State management for a comprehensive development” (GIG), CIEM has conducted activities to offer better conditions for investors those who start operating in Vietnam, as well as to develop small and medium sized enterprises to create more jobs and growth for the economy, Mr Nguyen Dinh Cung shared.
Mr Oline McGill, an international expert on business environment questioned why many countries can successfully implement this but Vietnam does not. The business environment index of Vietnam in 2014 stays at 99th place of 189 countries ranked by the World Bank. Compared to Georgia, Mr Olin McGill said that, Georgia is a small, underdeveloped country that gained independence only since April 1991, to 2005, half of its population lived under standard. However, after only 5 years (2005-2009) of active administrative reform, Georgia’s business environment index has stepped forward 100 places from 112th place in 2005 to 11th place in 2010. After 5 years, Georgia’s GDP 2009 increased 67.6 percent, state budget receipt increased by 121 percent; export – import volumes rose and job number was risen to 50 percent; people’s incomes were up 65 percent; real estate renting market increased 66 percent.
Mr Olin McGill assesses that in Vietnam, referring to taxes procedures only, Vietnam enterprises has reduced 178 hours (from 1,050 hours a year to 872 hours a year), with about 400,000 enterprises, the economy has saved VND9,800 billion compared to that of 2009. Moreover, Mr Olin McGill also encourages ministries, organisations and units to seriously implement Resolution 19/NQ-CP and within next 3-4 years, Vietnam will stay at top places among countries with attractive business environment. Specifically, if tax paying time is reduced from 879 hours a year to 171 hours a year, the enterprise community will save about VND66 trillion.
Another example, currently to export cargo, enterprise has to have 5 complete document sets and spend 21 days; similarly, to import cargo, an enterprise has to have 8 complete document sets and also spend 21 days. If the target of Resolution 19/NQ-CP is implemented, that is time of import – export procedures of Vietnam equivalent to that of of ASEAN-6 (13 days for import and 14 days for export), Mr Olin McGill estimated that GDP of Vietnam will increase by 28 percent, export – import volume increase by 50 percent and 3.5 million new jobs will be created.
Referring to inconvenient, harassing policies that both domestic and foreign enterprises are facing, in the conference, many opinions were discussed. According to Mr Do Hoang Anh Tuan, Deputy Minister of Finance, Vietnam should change philosophy of tax payers and tax collectors. To realise it, Ministry of Finance has come to an agreement with the World Bank and beneficiaries to support the Ministry and General Department of Taxation in a 3 year project (2014-2016), including 4 targets: completing tax policies and tax administrative procedures in compliance with international standards; constructing a comprehensive data system that focuses on taxation risk management; upgrading information technology in tax organisations; implementing mechanism of calculating time, costs and estimating satisfaction level of tax organisations.
Sharing about tax administrative procedures, Ms Nguyen Thi Cuc, Chairwoman of Vietnam Tax Consultants’ Association addressed that a VAT declaration paper has 9 forms, of which several forms require detailed description like number, series, type of car or motorbike. These forms are created to prevent commercial fraud, but they should be eliminated to create more favourable conditions for honest enterprises. Only then enterprise community will enjoy many benefits related to time, costs and opportunity costs, Ms Cuc suggested.
Anh Phuong