Paralleling Reform and Integration Efforts

 

Never in history has the voice of businesses had as great importance as now. The Government has made a great effort and reform is underway. The business sector continues to develop and a majority is still viable, despite growing competition. Many businesses and entrepreneurs have asserted their positions and been appreciated domestically and internationally.

 

The initiation of the second wave of reform, placed under the new constitutional space of the Constitution of 2013, has provided plenty of advantages for businesses. In 2015, the Government continued to make breakthroughs in economic institutional reform marked by such milestones as the enforcement of the Law on Enterprise and the Law on Investment, and the issuance and enforcement of the second Resolution 19/NQ-CP on improving the business environment and enhancing national competitiveness, which clearly specifies key tasks and specific agenda for reform.

 

Recently, the Government continued to issue Resolution 36a on electronic government. Needless to say, Resolution 19 and Resolution 36a will have synergetic effects and forces of fundamental change on the mode of operation of State bodies and facilitate business operations.

 

One other particularly important success is that the Government concluded negotiations and signed a series of free trade agreements (FTAs) with leading partners with the world's top standards. Vietnam has become the intersection of the largest, most important trade agreements of the world in the early 21^st century. With these pacts, Vietnam is ahead of many countries in the region from 5 to 7 years. To see the progress, we can look at the WTO where Vietnam is a late member. We are at a very important point of time when domestic reform determinations and international integration efforts are proceeding hand in hand to create momentum for the second wave of reform.

 

Bilateral and multilateral FTAs signed will bring new opportunities to Vietnamese businesses to expand markets and attract foreign investment, while also creating momentum for domestic institutional reform.

However, it is noted that all these favourable conditions can only benefit companies with active and good preparations, and with drastic institutional reforms of the Government for a better business environment and a stronger corporate competitiveness.

 

In Vietnam, 98 per cent of businesses are classified as medium or small in scale, of which 96 per cent are rated micro and small and only 2 per cent are mid-sized. This is a weak point of the business community because Vietnam needs big and medium-sized businesses to unite in chains and networks to connect the Vietnamese economy with the world when its market is opened following the enforcement of trade agreements.

 

Currently, VCCI has promoted many SME support programmes to enable SMEs to meet upcoming integration requirements like disseminating integration information and impacts of market opening on each sector, to help them plan production and business operations in the chain. Hit and run strategy will fail in the time of integration.

 

Businesses also need to prepare for a fair game with domestic and foreign partners. Thus, improving competitiveness is a core element. Besides, it is necessary to immediately carry out production and business plans, reorganise production, reorganise supply sources to ensure intra-regional requirements in order to take advantage of tariff preferences and overcome technical barriers.

 

One important measure to simplify customs procedures is a non-cash tax payment. State agencies and banks must have solutions to free businesses from difficulties in applying electronic tax payment. E-tax payment is also a motivation for businesses to renovate their governance models toward greater transparency and modernity to keep up with international trend changes and regulations of State management agencies. A foreign entity always wants to work with companies with transparent accounting. Indeed, using too much cash will cast suspicions on foreign partners and companies will thus find it harder to do business with them.

 

However, it is a long way from registration to implementation, because tax payment receipts and tax value paid electronically remain low. To realise the target of at least 90 per cent of companies paying tax via electronic means, Vietnam needs measures to remove obstacles relating to the common law system and coordinate tax authorities, support entities like banks and payment intermediaries, and businesses.

Many companies proposed that the tax sector needs to improve its system software for easier working. Whenever a new regulation is effective, it must be updated into the software, and companies must be notified about the software upgrade, enabling them to follow new regulations and the software. The Government must direct big information technology companies to develop and operate information systems to upgrade transmission lines to ensure smooth and quick tax declaration and payment.

 

Banks and payment intermediaries must also work with each other to support electronic tax payment. According to survey processes, the State Treasury needs to open only one account at a commercial bank. Money transfer will be very difficult if the interconnection between two banks is not good, or it is very annoying if taxpayers input incorrect information of recipients already on the system.

 

An effective functioning government will need fewer resources for functioning and to be more transparent. The journey for Vietnam to successfully build e-government and become one of leading countries in the region by the degree of business facilitation will be long or short, fast or slow, depending on the methods and coordination of stakeholders.

 

2016 will be another year of macroeconomic stability and growth recovery for Vietnam. With domestic reform impetus and enormous opportunities from FTAs, we can mobilise a variety of domestic and foreign resources for development. Vietnam will start a new, stronger and more sustainable development cycle. However, 2016 will continue to be a tough year for the business community.

 

Our biggest challenge is still institutional reform. To avoid being caught in the middle income trap, and to become wealthier, the only way is to carry out further consistent reforms, advance institutional reforms and drastically integrate into the world based on the Party guidance, Constitution 2013 and very positive action plans of the Government, particularly Resolutions 19/CP-2014-2015. If we achieve world standards of institution and governance in the shortest time, we will have a powerful force of enterprises - the vanguard force that leads us to integrate and go beyond success.

 

By sectors, agriculture is the most worrying in integration. Vietnam’s agriculture is fundamentally based on smallholding production and far from meeting international standards. Small, segmented production leads to high costs, low productivity and difficult control of food safety. Such an agricultural sector will not be able to produce goods and compete with rivals. We export a lot of rice but we do not have a popular rice brand. Previously, pangasius and shrimp from Vietnam occupied high-end markets in America and Europe, but their names in these markets were stained, forcing them to seek more easygoing, lower-grade markets.

 

Agriculture will be an integration advantage of Vietnam on the condition that it must have high-tech agriculture. Obviously, we have to restructure our agriculture, reorganise production based on soil, climate, labour and geographic location conditions. Similar requirements are also posed with the tourism industry and other industries in which Vietnam has other competitive advantages.

 

Integration is a challenge for small and medium-sized enterprises (SMEs), but they are also very durable, very resilient. The Government has made breakthroughs in institutional reform and businesses must also improve themselves and enhance professionalism and creativity to become trusted partners in the world. But, an SME and start-up supporting programme is necessary.

 

We cannot win on the economic front if all people do not join in. It is vital to develop the private economy as people determine the success or failure of the economy. This is a decisive internal force. For its part, the Government must create conditions, infrastructure and laws to fan citizens' entrepreneurship.

 

A better roadmap has begun to take shape, and the roadmap is irresistible.