Improving Investment Environment: Vietnam Should Have a Transparent Legal System

Improving Investment Environment: Vietnam Should Have a Transparent Legal System

In order to help foreign-invested enterprises overcome difficulties and obstacles in their activities, during an annual meeting between the Prime Minister and representatives from foreign-invested enterprises within the Prime Minister’s meeting with enterprises, foreign-invested contributed their comments.

 Alain Canny, President of EuroCham

What foreign investors are expecting for most during the meeting is more effective policies Vietnam will issue to improve the investment environment. I think, to that end, Vietnam should join the World Trade Organisation as soon as possible, improving the existing Enterprise Law and improve the investment environment and competitiveness of Vietnam.

Vietnam’s capital market is underdeveloped. Vietnam has recently opened a securities trading floor in Hanoi and considered the Law on Financial Instruments but Vietnam should develop credit infrastructure facilities, information database and credit rating systems, and create a legal corridor for corporate insurance for foreign-invested enterprises to pour investment capital in Vietnam. Vietnam has equitised many enterprises but the country should accelerate the listing of these companies on the stock market to attract foreign direct investment capital.

Water Blocker, representative from AmCham

From the point of view of policy researchers, we wish that Vietnam would issue an open and effective administrative system.

Customs, import and export procedures, costing enterprises much time, and instable customs pricing system represent major obstacles for enterprises. Complicated land and business licence procedure, and ‘unnamed’ costs are hampering enterprises. Many localities are pretending not to understand administrative procedures or trying to trouble enterprises.

Mise, representative from the Association of Japanese Enterprises

Also regarding transparency and stability of investment-related policies, there is another fact: the Vietnamese investment environment has improved but the improvements have not reached enterprises yet due to a lack of transparent information from central to local agencies. Many localities do not clearly understand investment policies of the Government, so they often hamper enterprises’ development. More concrete and transparent regulations on foreign investment, and especially the ‘one door’ policy will create a transparent vision of Vietnamese investment attraction policies.

Nguyen Bich Dat, deputy minister of planning and investment

Over the past years, in particular since 2004, Vietnam has taken many measures to make a change in foreign investment attraction. Accordingly, individual income tax has been cut from 50 per cent to 40 per cent. The new Land Law has removed complicated procedures for a simplification of land procedures for investors. Vietnam has applied a ‘one price’ mechanism for enterprises, helping them improve their competitiveness. Also, airplane fares and international telecommunication charges have been cut by 22 per cent on average; charges of leased lines, between two and 22 per cent and charges of domestic and international leased international channels for enterprises have fallen by between 25 and 35 per cent. This has helped reduce enterprises’ input costs.

However, to improve the investment environment further, Vietnam should develop master plans for foreign investment attraction in combination with agencies and regions to create unique policies on investment support and encouragement.

The Government should assign sectors with concrete norms for foreign investment attraction, so that the sectors will open door for foreign investment, helping reduce monopoly and promoting the ISO quality management system in their administrative management.

A representative from a French-invested sugar enterprise

Vietnam’s investment attraction policies are not effective enough. The sugar industry is an example. Vietnam has licensed many foreign invested projects in this industry. As a result, enterprises have fought each other for material supplies and many small-sized plants have high production costs. Vietnam can correct its mistake by equitising, restructuring and merging these enterprises to improve their competitiveness. Production costs of raw sugar products in Vietnam are much higher than prices of imported products. Therefore, with merging these enterprises, it will be impossible to increase their production capacity and reduce production costs.

Mai Thanh Hai from the Association of Foreign-invested Enterprises

Many foreign-invested enterprises want to expand their operation, building new factories and plants in new places. Whether they will enjoy tax priorities as they did when they first built their plants and factories in Vietnam or not remains unclear. As a result, many enterprises do not expand their production despite favourable conditions in infrastructure facilities and material supplies.

Reported by Thi Van