“Integration and institutional reform are always the twins that generate main drivers for Vietnam's development,” said Dr Vu Tien Loc, President of the Vietnam Chamber of Commerce and Industry (VCCI), at the Vietnam Business Forum (VBF) 2018 recently held in Hanoi.
Turning opportunity into reality
He said the EU-Vietnam Free Trade Agreement (EVFTA) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), two new-generation free trade agreements, mark an important step for Vietnam in the process of climax global integration to reach the highest standards of the world.
Notably, on November 18, 2018, PWC published a survey of nearly 1,200 leading CEOs from 21 APEC economies. Vietnam overtook China as the most attractive economy to foreign investors for a second straight year in 2018. The top 5 included China, the United States, Australia and Thailand. According to the survey, 34 - 40 per cent of respondents in Vietnam expect new free trade agreements (FTAs) will help them increase their sales in the future.
Global trade and value chains are shifting and Vietnam is forecast to be among countries most benefitting from this process.
However, according to Dr Loc, all is just a chance. Domestic institutional reform is key to translate opportunities into reality. Integration and institutional reform are always the twins that that generate main drivers for Vietnam's development.
He said that the business community highly appreciates the Government’s reform efforts in the past year, particularly in two bright aspects: administrative reform programme that aims to cut 50 per cent of business conditions and specialised inspection, and initial efforts to build e-government and digital economy.
Nevertheless, the outcome has not been as good as expected. As of September 2018, up to 58 per cent of businesses (according to the VCCI survey) still had to “seek” conditional business licences and 42 per cent of them said they faced difficulty in getting permits and only 13 per cent of business registration procedures were conducted online. 68 specialised inspection procedures can be carried out on the National Single Window (NSW).
Construction permit procedures have initially been linked to fire prevention procedures but the degree of connectivity is low.
Corporate tax payment has been more favourable, mainly thanks to information technology application, but unclear tax laws result in inconsistent interpretation between enterprises and tax authorities, and even among tax authorities.
Property registration procedures have improved but remain unconnected with construction, public notarisation and tax payment procedures.
Administrative reform has progressed in many localities, but online deployment remains sluggish and unfavourable.
In addition, the single-window mechanism is working in some localities, he said. Government-business dialogues are also organised. Public administration centres or coffee business corners are carried out in many localities. But, these models have not been widely applied or produced substantial effects.
Inspection reform has made positive progress but up to 40 per cent of enterprises are subject to more than two inspections a year and 14 per cent reported replicated examinations.
“Such figures show that the business environment has improved, though the gap between reform results on paper and in reality is still wide. There are still a lot of things to be reformed,” Dr Loc said.
Reform agenda needs to be more drastic
To further improve the business climate and promote business development, specific solutions are needed, he added. Specifically, there are consistent criteria in reducing business and investment conditions and specialised inspections: What to be kept and what to be removed. Therefore, it is necessary to agree on business condition standards to ensure effective and consistent enforcement.
“The business community applauds the Ministry of Construction for taking the lead in establishing a ministry-level interagency single-window centre. This model should be replicated and add administrative procedures under the jurisdiction of different agencies,” Dr Loc said.
Enterprises only need to submit documents at one state agency and enterprise information will be automatically exchanged among agencies once requested, without requiring submitted documents at each agency. It allows them to conduct many procedures at the same time instead of one by one.
Besides, business associations should be assigned to prepare contents and attendants to answer questions raised by people and enterprises rather than authorities. Independent bodies are needed to supervise this process.
Provincial inspectors are tasked to conduct corporate inspections. Inspections must be planned in advance to achieve three targets: Reduce inspection visits; avoid replicated inspections; and maximise inter-agency inspections instead of separate actions. Applying risk management principles in inspection and control must be considered mandatory rather than optional.
Central and local authorities also need to enhance transparency and publicity on their websites, particularly information about development plans, investment plans and projects, public investment projects and public-private partnership (PPP) projects.
“Although Vietnam has done a lot to improve the business environment, reform results have not come as expectations and reform efforts still need to be accelerated, especially in the context of enforcing new-generation free trade agreements (FTAs), if Vietnam does not want to lag behind ASEAN's leading economies. Thus, the Vietnamese business community supports more aggressive reforms backed by the Government and the Prime Minister, including two very important ones: Cutting burdensome administrative procedures and developing e-government,” Dr Loc affirmed.
Quynh Chi
Vietnamese
October 2024
Hanoi
