The record-short promulgation of Resolution 35 on business support and development to 2020, with principle objectives, effective and feasible tasks and solutions, and specific and clear responsibility assignments, clearly demonstrates the high political will of the Government and the Prime Minister in shaping a favourable, safe and friendly business environment in order to build up a strong, competitive and sustainable capable Vietnamese business community. However, the business community expects more drastic reforms in some issues and fields in the coming time.
Unsustainable business development
According to Vietnam Chamber of Commerce and Industry (VCCI), in spite of positive results, there were still signs of unsustainable development in the past year. Specifically, with respect to business capacity, the efficiency of labour employment in the 2007 - 2015 period did not improve much, but even dropped from 17.3 times in 2007 to 14.2 times in 2015. The efficiency of capital use by the business also decreased. The rate of loss-making enterprises rebounded in the 2011 - 2015 period with an average of 40.9 per cent. Their profitability on assets in the economy fell from 6.6 per cent in 2012 to 3.2 per cent in 2015.
Business sentiment in improvement of “margin on each product unit” in 2017 is currently lowest among other indicators (Labour productivity, total sales, etc.), showing that the use of capital by Vietnamese businesses remains a heavy drag when Vietnamese products do not create high added value.
In three consecutive years (2014, 2015 and 2016), domestic enterprises were constantly under-represented in relation to foreign businesses and downgraded in all three aspects: Continuous trade deficit irrespective of the country’s overall performance, shrinking share of exports to 28.4 per cent in 2016, and lower commune growth rate than the country’s overall export growth (4.8 per cent versus 8.6 per cent in 2016).
Corporate governance of Vietnamese companies was limited. This weakness also caused them to “grow slowly” - large in number, but poor in quality. With just 700 listed companies and with limited application of poorer corporate governance practices than ASEAN 4 countries, this is a big challenge for Vietnamese companies to build the trust of investors, business partners and develop brands.
Stronger reforms needed
To effectively carry out Resolution 35/NQ-CP in the coming time, VCCI recommended some specific contents.
The agency suggested adding a group of solutions to perfect macroeconomic institutions: Focusing on reviewing and removing regulations allowing State agencies to interfere too deeply in markets such as land market, labour market, capital market, technology market and industrial market, considering a proposal to the law-making National Assembly for amending the Land Law towards formation of people's property rights to land and assets on land; ensuring rapid conversion of land use purposes; and supporting land accumulation using market pricing mechanism.
In addition, five groups of solutions in the resolution suggested by enterprises will continue to be implemented. The Government must have more radical and innovative solutions to reforming administrative procedures as well as in organising, implementing and supervising the deployment of single-window model and public administrative centre model; improve business - government dialogues; thoroughly research and drastically address problems against the business in a timely and satisfactory manner to avoid the pending and unsettled status. The Government will continue to improve procedures on tax reporting, invoice use, tax settlement, tax arrears, tax fines, tax complaint inspection and settlement for enterprises. Some procedures developed to tackle fraud need to be transformed into audits rather than applying them to all honest enterprises. VCCI suggested that localities must respect and effectively carry out business start-up movements while restricting herd-driven movements. They also need to diversify and creatively develop business start-up and development support services.
In addition, the Government should supplement regulations on technology and products made by science and technology companies. They should be prioritised for use in government procurement projects and for use in State-funded projects. The Government needs to consider building lending programmes for technology renovation in small and medium enterprises with reasonable interest rates and payback terms to enable them to apply modern technology and increase the competitiveness of Vietnam.
In particular, it is necessary to ensure the right to business and equal access to resources and business opportunities for enterprises; review and amend Decree 210 on investment attraction in agriculture; settle emerging problems in land policies, link high-tech and clean-tech agriculture development chains, and exploit and control pharmaceutical resources.
Due to currently high lending interest rates, the Government should offer policy support and tax cuts to facilitate enterprises to stabilise investment and development in this tough period. It should also flexibly apply loan security methods, increase minimum wages based on corporate conditions, improve worker skills to raise productivity and reduce labour costs, especially in labour-intensive sectors such as textile and garment, leather and footwear.
Anh Mai
Vietnamese
