Challenges & Opportunities in New Normal

9:50:18 AM | 12/29/2020

“Challenges and opportunities in the new normal” is the theme of the annual Vietnam Business Forum 2020 organized in Hanoi by the Vietnam Business Forum Consortium (VBF).

The Vietnam Business Forum Consortium (VBF) is an ongoing policy dialogue channel between the government of Vietnam and domestic and international businesses, designed to create favorable conditions for the development of the private sector, facilitate the investment climate and contribute to sustainable economic growth in Vietnam.

New approaches in policymaking to attract development investment

According to Deputy Prime Minister Pham Binh Minh, amid global economic crisis, Vietnam is still assessed to achieve an impressive growth rate, forecast at 2.5-3% in 2020, by many international organizations. A series of measures to support business, boost public investment and stimulate consumer demand have been launched by the Government. The Prime Minister also set up a special working group responsible for enticing foreign investors in the new context.

In 2020, with the determination of the Government, a series of multilateral trade promotion activities have been launched, including the signing of the Regional Comprehensive Economic Partnership (RCEP), the enforcement of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and many bilateral and multilateral trade agreements which are being enforced for a common goal of creating an enabling business environment, said the Deputy Prime Minister.

To support the business community in the coming time, the Government will adopt drastic solutions for macroeconomic stability that facilitates growth, flexibly regulate monetary, fiscal and other policies, boost consumer demand and foster digital transformation, he added.

Besides, Vietnam will motivate private investment and foreign investment in infrastructure and facilities, effectively enforce bilateral and multilateral trade and investment agreements to take advantage of international investment opportunities, actively build scenarios to respond to changes in trade and investment policies in other countries.

In addition, the country will create the appeal of the economy to help businesses expand their markets and attract high-quality investment.

“The new normal requires new ways of making policies on development investment attraction. To achieve rapid and sustainable development, the business community is the core force of that strategy,” Deputy Prime Minister Pham Binh Minh affirmed.

Many new opportunities in integration

Dr. Vu Tien Loc, President of the Vietnam Chamber of Commerce and Industry (VCCI), said, 2020 is the year the business community has faced many tough difficulties and challenges. However, Vietnam has still emerged as one of the bright spots on the world economic picture. According to many domestic and foreign organizations, Vietnam's GDP will expand by 2-3% in 2020 and Vietnam is one of a few growing countries in the world.

Many new opportunities have opened for the Vietnamese business community, such as the adoption of the EU - Vietnam Free Trade Agreement (EVFTA) and the EU - Vietnam Investment Protection Agreement (EVIPA) in June 2020, the signing of the Regional Comprehensive Economic Partnership (RCEP) on November 15, 2020, the conclusion of the Vietnam - UK Free Trade Agreement on December 11, 2020 and the Vietnam-Korea Textile Origin Aggregation Agreement on December 13, 2020. The National Assembly has also passed a number of important laws, including the revised Enterprise Law, the revised Investment Law, the revised Construction Law, and the Public-Private Partnership Investment Law.

The economy of Vietnam and the world is expected to face numerous difficulties in 2021, he said. The business community hopes the Government will take concrete and quick measures to immediately clear bottlenecks that hinder businesses from taking advantage of integration opportunities from FTAs in general and from EVFTA in particular to recover from Covid-19 and keep growing.

In particular, on human resources, the business community proposed building and carrying out technical worker training programs for essential supporting engineering industries. Regarding infrastructure, VCCI and the business community proposed the Government to direct the effective enforcement of the Public-Private Partnership Law and the Public Investment Law, with priority given to ongoing transport infrastructure to connect key production areas (agriculture and industry) to international border gates.

The business community expects the Government can assist businesses to enhance product competitiveness although this is the work of the latter, particularly building the capacity and quality of trade promotion through a diplomatic mission network or spending resources for trade promotion organizations such as the Vietnam Chamber of Commerce and Industry (VCCI). Domestically, for agricultural products that partner countries have specific requirements on technical standards, food hygiene and safety (e.g. irradiation and preloading inspection), the Government supports establishing technical centers to guide producers and exporters to fulfil requirements; conduct free or preferential commodity inspection based on given standards of importing countries, work with designated technical units to quickly achieve technical requirements.

Besides, to catalyze business recovery and development in the coming time, the business community expects the Government to further improve the business environment and enhancing national competitiveness, with a focus on reforming administrative procedures and business conditions, reducing costs for businesses, Dr. Loc added. The Government needs to substantially build e-government so as to widely apply information technology to resolve administrative procedures and increase online public services of Category 3 and Category 4. The Government is expected to continue to ease burdens on businesses, apply risk management principles in inspection; work out and execute effective and substantial business support programs, with focus placed on micro, small and medium enterprises, actively research and provide information on market, credit and labor market; and facilitate access to business support programs for companies facing hardships caused by the Covid-19 pandemic.

Ms. Virginia B. Foote, Chair of the American Chamber of Commerce in Vietnam – AmCham

The Government of Vietnam has prioritized administrative reform. We continue to work with the Prime Minister's Advisory Council on Administrative Procedure Reform and we are grateful to the Government for these efforts. It is important that all companies and investors have a fair, transparent, predictable and rationalized regulatory environment that values innovations - not just to attract new and growing investment, but also facilitate imported goods.

For example, the development of a healthcare system and the import of drugs have been hampered by regulations and the access of patients to life-saving drugs and vaccines has been thus difficult. This lateness also reduces the predictability and sustainability of companies and discourages continued investment in public-private partnerships. We look forward to working on finding long-term solutions and consulting for policy reforms for building an advanced healthcare system.

Another example is difficulties resulting from restricted foreign ownership rate that seems to hinder investment in innovation and growth. Additionally, streamlining approval processes for major infrastructure projects like LNG can help facilitate investments for those projects and provide critical infrastructure needed to attract other FDI sources.

The tax system still has many burdens on administrative procedures while the 20% tax rate of Vietnam is competitive. Statistics show that the tax payment process in Vietnam still has many burdens as compared to neighboring countries. Many companies appear to be suffering from unfair and non-transparent audits and penalties and interest rates. We expect real improvements to the advance pricing agreement (APA), create necessary stability and predictability to integrate into global supply chains.

Mr. Kim HanYong, President of the Korea Chamber of Commerce in Vietnam (KoCham)

Due to Covid-19 outbreak, the Government of Vietnam has adopted many enabling policies to support businesses to cope with the pandemic. However, the licensing of several large-scale South Korean projects in Hanoi and Ho Chi Minh City is slower than expected due to the lack of clear legal guidance, and this creates numerous difficulties in investment. Therefore, we hope that the Government of Vietnam understands this reality and has clear guidance on implementation of regulations for local authorities. This will help local authorities to promptly grant permits for projects that are behind schedule.

Besides, we suggest that the Government of Vietnam consider building nuclear power plants. To support sustainable growth, a stable supply of electricity is an important issue for the Government of Vietnam to consider.

I understand that the Ministry of Industry and Trade of Vietnam is currently preparing to develop the National Power Development Plan (Power Planning 8) for the 2021 - 2030 period, which is a medium and long-term power supply plan. The expansion of new renewable energy sources, including solar energy, will be a top priority for the Vietnamese government to pursue, and we all agree on this agenda. I understand that power plants mainly bear the loading in the grid, with stable and uninterrupted power generation being essential to this plan.

Towards this end, now is a very appropriate time for Vietnam to consider nuclear power development, which was previously suspended in the medium-long-term planning. I strongly believe that we will be able to cooperate with the Government of Vietnam to provide stable electricity in the future as Korea has a lot of experience and know-how with nuclear power plants.

Mr. Kenneth Atkinson, President of British Chamber of Commerce in Vietnam - Britcham

The current FIT pricing mechanism for wind energy will expire on November 1, 2021, leaving wind power developers not enough time to bring their projects into operation before that deadline - 91 wind power projects approved in July 2020 will be added into the Power Development Plan 7 (PDP7) and are still waiting for the approval of the Ministry of Industry and Trade.

This deadline does not allow them enough time for preparation and completion of new projects, especially offshore wind power. We recommend extending the time to apply the FIT pricing mechanism by at least 2 years to December 31, 2023.

Besides, according to solar energy developers, extending the time to apply the FIT pricing mechanism from June 30, 2020 to December 30, 2020 was not enough. FIT should have a longer application period to allow businesses to develop solar power projects, especially rooftop solar power. Therefore, we recommend announcing the new FIT application for solar energy on time and with a longer application period.

Source: Vietnam Business Forum