Survey Shows Business Costs in Vietnam Too High

Survey Shows Business Costs in Vietnam Too High

The cost of doing business in Vietnam is among the highest in the region, according to a survey by the Central Institute for Economic Management (CIEM) and other local financial consultancy firms.

The conclusion is not surprising considering Vietnam’s low development rate, which a 2004 World Economic Forum (WEF) report puts at 77 among 104 countries in the study.

High transportation fees, an antiquated tax system, and steep legal fees tend to scare international business away.

Nearly all of the 80 enterprises polled in Hai Phong, Hanoi, Danang cities and Quang Nam province (19 of them foreign invested) have complained about the high maritime fees in particular, thought to be the highest in the region.

As for direct export to the US, the transportation fee for a 40-foot container is reportedly at US$3,000, much higher than the US$2,000 for China and US$2,500 for Thailand.

Legal fees as well hamper business. A report by the Vietnam Chamber of Commerce and Industry (VCCI) puts the time needed to start a business in Vietnam at 63 days, while the same process takes only two days in Australia and 46 days in China.

The time for implementation of a contract, meanwhile, is reportedly 50 days in Singapore and 120 days in Vietnam.

Then there are the unofficial “fees” for doing business. In one case, the Hai Phong-based Good Looking Company Ltd said that its goods had many times been stuck at customs awaiting the payment of  “additional fees” for clearance.

The Danang-based Kogyo Company also complained of troublesome arbitrary amounts levied by officials.  

Dinh Chu Phuong from the Vietnam Auditing Company (VACO), which joined the research work, said that despite the announced corporate income tax rate of 28 per cent, many enterprises suffer 40 per cent tax in reality, as many expenses haven’t been accepted by tax agencies as deductible expenses.

Costs that should be fully deductible, such as advertising and marketing, are not allowed to exceed 10 per cent of the total legitimate expenses.

Deputy head of the Macro Economic Policy Section under CIEM, Phan Thanh Ha, hopes the survey will serve as a reference document for the Government to make decisions on reducing input costs for businesses in Vietnam before the window of opportunity closes.
VietNamNet