Roles of Business Community in Rapid, Sustainable Development

11:17:49 AM | 6/28/2019

“Roles of the business community in rapid and sustainable development” is the theme of the Midterm Vietnam Business Forum (VBF) 2019, held in Hanoi by the VBF Alliance in collaboration with the Ministry of Planning and Investment, the World Bank and International Finance Corporation (IFC).

Deputy Prime Minister Trinh Dinh Dung said rapid and sustainable development is a consistent and thorough policy and viewpoint in Vietnam's development strategy. First of all, Vietnam must deal well with the relationship of economic growth with social development and environmental protection. Economic growth must help improve the quality of people's lives, achieve social progress and social justice. The country must develop its economy fast to avoid being left behind, while maintaining sustainable economic growth, adopting green growth, and developing clean energy and renewable energy.

He also reaffirmed major solutions that the Government of Vietnam has determined to further execute in the coming time: Maintaining the macro environment and stabilizing the society and politics. This is a competitive advantage amid a volatile and unpredictable world.

Second, it is necessary to focus on restructuring the economy together with selecting a reasonable growth pattern to further promote economic restructuring, reform State-owned enterprises, banking and financial system, handle bad debt, control budget deficit and public debt, reform tax system to reduce financial burdens for enterprises and improve social welfare and security.

Besides, Vietnam needs to focus on transforming an extensive growth model to a model that harmoniously combines extensive growth and intensive growth based on effective use of natural resources, investment capital and scientific achievements, and technological advancements to improve productivity, quality, performance and competitiveness of Vietnamese products and economy.

Vietnam will also prioritize investment in sustainable infrastructure development in order to create smart connectivity, reduce transaction costs, and improve business, investor and economic competitiveness.

In particular, the Government encourages stronger investments in education, science and technology, improves the quality of human resources, and support the business community towards a circular economy and business innovations.

Another important task, according to Deputy Prime Minister Dung, is to improve institutions, with focus placed on improving institutional quality and legal policies towards increasing transparency, health, safety and efficiency to adapt to new production background in the Fourth Industrial Revolution.

Another task for Vietnam is further developing the business-centered innovation ecosystem; perfecting the institutional system to really encourage innovation, entrepreneurship and creative entrepreneurship; encouraging enterprises to invest in technological innovation, research and development (R&D) and artificial intelligence. Administrative tools are not recommended for use to interfere with business-led innovations.

Deputy Prime Minister Dung affirmed that the business community is the driving force for growth, the actor and the force to realize the Government's goals.

“By complying with standards on environmental protection, gender equality, labor rights, fair salary, staff training and development, community development, businesses are assuming their corporate social responsibility for common business development and social development,” he added.

On that basis, he underlined three aspects of corporate social responsibility: economics, legality and ethics.

Economically, enterprises need to balance their profit goals with satisfactory treatment to employees, and create the chance for workers to develop their profession and expertise. They also need to take advantage of scientific advances to discover new resources, promote technological progress and develop products; strongly link domestic sectors to provide quality-guaranteed goods and services that ensure quality, product safety and healthy competition.

Legally, businesses must fully fulfil all legal provisions for related parties by complying with regulations on competition, customer protection, environmental protection, promoting fairness and safety, and offering initiatives against misconducts. They cannot exist for a long time without seriously fulfilling their legal responsibilities.

Ethically, although these are not legal constraints, the moral aspect of the business is extremely important to the community.

Minister of Planning and Investment Nguyen Chi Dung said, Vietnam's economic landscape is mixed in the first six months of 2019, featuring a variety of difficulties, challenges and opportunities. However, the domestic economy still fared well, but growth quality is not as high as expected. Productivity is still low due to internal economic factors.

For that reason, Vietnam needs to increase and utilize resources, attracting technology, readily join and capitalize on achievements and opportunities generated by the Fourth Industrial Revolution.

In the coming time, the Government and central agencies should further promote administrative reform, actively apply e-Government model, and simplify administrative procedures to save time and expenses for businesses. Ministries, branches and localities should closely follow contents and requirements of the Government's Resolution 01 and Resolution 02 on major tasks and solutions on implementation of socioeconomic development plans and State budget plans in 2019.

Hence, Vietnam needs to further improve national competitiveness and raise its standing in the World Bank (WB)’s annual rankings, particularly currently low indices.

Predictable law changes
Mr. Nobufumi Miura, President of Japanese Chamber of Commerce and Industry

Currently, Vietnam’s public debt has been managed to the highest limit and Vietnam therefore needs to promote private investment in infrastructure projects. However, investors are facing high risks in the current public-private partnership (PPP) model. To encourage foreign businesses to join PPP projects, the Government needs to clarify the allocation of risks between the Government and private stakeholders and provide comprehensive support for private parties to ensure reasonable investment returns.

We want to ask for the application of the “Foreign Exchange Guarantee System” and the application of the “Foreign Law” as the governing law.

To accelerate new industries, including supporting industries, the Government needs to align laws and regulations and apply them consistently to law change predictability. Legal or regulatory changes in a short time and unreasonable explanations to those changes will disturb stable business operations. This will increase office costs, resulting in hardships to establish and operate industries.

We recommend that the Government take appropriate measures for enactment and amendment of laws and regulations and give a reasonable timeframe for future changes.

Considering more effective solutions to address congestion and pollution
Mr. Tomaso Andreatta, Vice President of the European Chamber of Commerce

Banning motorbikes is not considered an effective solution to improve traffic congestion and environmental pollution and reduce traffic accidents in big cities. The ban can also create a big challenge for the motorcycle industry, which has long-term investments in Vietnam for domestic and international market development.

Local authorities should consider more effective solutions to address traffic congestion, environmental pollution and consider people’s needs for feasible master plans and avoid unwanted economic consequences.

In the near future, it may forbid absolute motorcycles, which are considered the main cause of air pollution. In the long term, authorities should adopt practices in developed countries, where advanced public transport and infrastructure are used effectively in combination with motorcycles.

A number of high-end motorbike products made by EuroCham member companies are being faked. Consumers are confusing genuine and counterfeit products.

In many cases, counterfeiters do not exactly copy genuine products but deliberately change some decoration details, making it hard for owners of genuine products to protect their intellectual property rights.

We suggest that the Government of Vietnam establish more independent centers to assess and identify signs of intellectual property infringement in intellectual property disputes. In addition, there should be a mechanism allowing intellectual property owners to review assessments of the Vietnam Institute of Intellectual Property Science as well as establish specialized courts to handle these issues.

Considering incentives for energy efficiency and investment from the private sector
Mr. Peter Rimmer, representative of the British Business Association in Vietnam

The weak power grid infrastructure plus a 12% annual growth of electricity demand is challenging businesses in energy. According to the current General Power Plan, the share of coal-fired thermal power is expected to rise from 49% in 2020 to 53.2% in 2030. This will increase pollution, a serious problem currently faced by many big cities. Alternative renewable energy options have high potential in the Vietnamese market. However, consideration should be given to incentives for energy efficiency and investment from the private sector.

Investors are concerned about Vietnam's low FiT (feed-in-tariff) electricity price and the solvency of electricity trading contracts.

To pave the way for renewable energy projects, Vietnam needs to adjust electricity prices, regulate the market and provide more private financial products for the private sector. We support the shift of electricity pricing to market-based pricing mechanism. This will also encourage many private investors to participate in the renewable energy market.

Renewable energy is a sustainable power source
Mr. Mark Gillin - representative of the American Chamber of Commerce in Vietnam (AmCham)

This year marks the 25th anniversary of normalization of Vietnam-U.S. trade relations. Bilateral trade relations have developed strongly. In the past 25 years, the two-way trade value has increased from US$220 million to over US$60 billion.

The United States has always been Vietnam's largest export market, and Vietnam is also one of our highest-growing export markets globally.

However, there is a thing that Vietnam needs to resolve soon - Increasing supply shortages of electric energy. This requires a balanced pricing structure to encourage efficient use and develop private electricity production such as rooftop solar power through more reasonable feed-in-tariff contracts.

To have a sustainable power source, Vietnam needs to develop more renewable energy sources and continue to upgrade its power transmission and distribution system. AmCham's member businesses are the world's leading experts in this area and are eager to assist Vietnam in fulfilling its environmental, health, economic and geopolitical security goals in the course of developing energy.

Quynh Chi