The Seventh “Vietnam-Japan Joint Initiative” roundtable conference was chaired by vice chairman of Ho Chi Minh City People’s Committee Nguyen Huu Tin and Japanese consul general on October 14 the city. This is a positive upbeat in a trend that Vietnam is preparing to welcome the second wave of investment from Japan.
According to chairman of the Japanese Business Association in Ho Chi Minh City (JBAH) Mr. Waki, after 12 years in operation, the association has 291 business members. This proved that after China, Vietnam is the second most attractive destination for Japanese investors. The figure US$180 million of Japanese direct investment in Vietnam in the first eight months of this year showed that FDI flow from the foreign country to Vietnam is continuing to rise (up 100 per cent on-year).
Many big projects have been licensed so far this year such as Yamaha Motor (US$48 million), Mabuchi Motor (US$40 million)... Big corporations such as Canon and Honda are also preparing plans for expansion investment in Vietnam. According to Mr. Waki, the boom of investment will become stronger if Vietnam continues its reforms and completes its investment environment.
At the conference, Japanese firms raised concerning and detailed problems. Mr. Suzuki Naofumi from Suzuyo Co. complained that local custom officials often check 100 per cent of their goods instead of 1-10 per cent as regulated by the government. “We want to clearly understand about conditions for applying 1-10 per cent check?” Import procedures in Vietnam have been simplified. However to foreign companies, it still stipulates that they have to have import licences before registering for import. Furthermore, they must have original documents.
According to current regulations, customs departments don’t receive files registering for a check on Saturday. However, operations of factories day-by-day are more boisterous requiring quicker reaction from state bodies. It is proposed that there should be a temporary procedure-solving mechanism when customs departments are closed.
Vice head of Ho Chi Minh City Customs Department Le Quy Trung answered: Pursuant to circular No. 32 of Finance Ministry and decree No. 101/CP, check ratio of 3-5 per cent is applied for exports while 5-10 per cent is for imports. In case there are signals of fraud, customs officials will check 100 per cent of import packages. Thus, the fact raised by Mr. Suzuki is not pursuant to current rules. The department will make a probe into the case and bring out punishments to violators following laws. Ho Chi Minh City Customs Department has provided a hotline number for businesses. If customs officials contravened regulations please immediately inform customs leaders. The regulation of not receiving files on Saturday is part of import procedures regulated by the Ministry of Trade therefore it lies beyond the customs department’s competence. The department will collect contribution ideas from enterprises to submit for the government’s consideration.
Another issue was tabled for taking reaffirmation from Ho Chi Minh City People’s Committee about the accuracy of the announcement No. 08/TBLT/GTCC-HEPZA passed June 22, 2005. The regulation contains: “Businesses in Tan Thuan Export Processing Zone and Tan Tao Industrial Park with more than 500 employers have to pick up or pay fares for 25 per cent of their workers.
Following the ideas of 40 Japanese companies operating in Tan Thuan Export Processing Zone, the announcement is unfeasible. Vice chairman of Ho Chi Minh City People’s Committee, Nguyen Huu Tin affirmed that the city’s transport system is now overloaded. Hence, the announcement is a recommendation that doesn’t force enterprises to obey. “We have instructed management boards of export processing zones and industrial parks to answer enterprises using documents,” he said.
Meanwhile, representative of the JETRO in Ho Chi Minh City Mr. Nakano Takashi wondered whether Vietnam’s government is applying the regulation that foreign representative offices in Ho Chi Minh City can operate for just only five years then they must change into branches. According to Mr. Nakano, many members of the Japanese Business Association in Vietnam are operating under their reprentative offices in many fields that do not allow for the establishment of branches. Answering this question, director of Ho Chi Minh City Trade Service Mr. Pham Hoang Ha affirmed that there have not been any legal documents requiring representative offices to change into branches after five years in operation. The government is considering the operation time of a representative office to be higher at five years instead of three years as is currently the case. After five years of operation, representative offices can ask for an extension.
One hot issue in the FDI sector is the basic salary hike which is attracting much attention from Japanese employees. Mr. Watanabe Yutaka from Towa Industrial said that the Labour Ministry is considering the scheme of increasing minimum salary for employers at FDI by 40 per cent. The sudden increase will have a negative impact on investors. The ministry should consider cautious steps, he suggested. Vice director of Ho Chi Minh City Planning & Investment Service Luong Van Ly explained: The Labour Ministry and Vietnam Chamber for Commerce & Industry (VCCI) are gathering ideas from FDI firms from regions of the country before submitting them for the government’s approval. A higher basic salary will negatively affect Vietnam’s investment environment. However, he also said that the current salary level was not suitable to the market when prices of almost all goods and services have increased.
Other problems about supportive industry and intellectual property rights violations were also raised by Japanese companies requiring Vietnam’s state bodies to consider them and their solutions. Mr. Nguyen Huu Tin said they will immediately find measuresto overcome obstacles belonging to the jurisdiction of the city’s authorities, . The city is determined to create the most favourable conditions to attract more investors.
Hai Nguyen
Vietnamese
