Enterprises Support Removal of Restriction on Advertisement Expenses

Enterprises Support Removal of Restriction on Advertisement Expenses

Right after the Ministry of Finance's promulgation of Decree No.199 on removing the restrictions on advertisement and reception expense, VIB Forum had an interview with accountants in several State-owned enterprises and notes that they fully support this new policy of the Government.

Mrs. Trang, the accountant of the Vietnam Data Communications Company (VDC) holds that the ceiling expense on advertising and reception of 10 per cent out of the aggregate eligible expenditures has tied enterprises to an unreasonable restriction though these expenditures are legitimate and profitable. The restriction was necessary in the old economic mechanism as it prevented enterprises from over-spending on advertisement for the purpose of unfair competition and market-cornering. In many cases, however, this restriction has impeded business operations of enterprises. Also according to Mrs. Trang, the new policy does not impose the maximum expense on advertisement but requires that expense be based on business efficiency with regular vouchers as provided by the State.

Mrs. Nguyen Thi Cam Chau, the accountant of Ho Chi Minh City Food Company, said: “The restriction removal greatly facilitates our company’s business undertaking because we have a great need for advertisement." The limit of 10 per cent has, to a considerable extent, impeded the company's business. The company has missed several big contracts valued at tens of billion Vietnamese dongs because it was not allowed to spend the over-ceiling expense on broker service though that expense might have rendered high profits.

Mr. Nguyen Tien Ha, an auditor of AASC Audit Company, said that the ultimate goal of the Government’s new regulation is to grant greater autonomy and accountability to enterprises. In the future, the equitisation process will transform most current State-owned companies. The money spent is not allocated from the State budget but from shareholders and individuals' pockets. All expenses will be made transparent and efficient. Therefore there is little likelihood of irresponsible expense on advertisement and reception.

Mr. Ha said, "The regulation that requires expenses of over VND100,000 to have an invoice has also been removed. Enterprises only have to write inventories and take responsibility for their activities. This move is tantamount to the removal of the 10 per cent limit on advertisement and reception expense. As far as I know, the State is striving to adopt more rational and flexible management measures for the ultimate goal of greater business efficiency."

• K.Phuong --H.Tho