Vietnam Business Forum- A Better Investment Environment Predicted for 2006

Local and foreign enterprises attended the 2005 Vietnam Business Forum themed ‘Overcoming infrastructure weaknesses, increasing enterprise competitiveness,’ in Hanoi on December 5, 2005, which is a traditional activity on the sideline of the Vietnam Consultative Group Meeting. Since its establishment, the forum has acted as a useful bridge linking enterprises with the Government.

 

This year’s Vietnam Business Forum took place when Vietnam was preparing for a completion of the five year socio-economic plan (2001-2005), and a beginning of the 2006-2010 socio-economic development plan. According to Deputy Prime Minister Vu Khoan, despite many challenges, in particular natural disasters, fluctuation of prices in the world market, the outbreak of epidemics, including bird flu, Vietnam still has enough evidence to be satisfied with the achievements recorded over the past five years and in 2005 alone, which are even higher than expectations. Vietnam’s average gross domestic product (GDP) growth rate has reached 7.5 per cent per annum over the past five years. In 2005 alone, the figure hit a nine year high record of 8.4 per cent. This was driven by a growth rate of 4.4 per cent in agriculture, forestry and fisheries, 10.7 per cent in industry and construction and 8.4 per cent in services. Vietnam’s total export turnover was put at around US$32 billion, up by 20 per cent.

 

The achievements manifested the Vietnamese Government’s efforts to take measures to improve the business environment and solve difficulties for enterprises as pledged at the 2004 Vietnam Business Forum.

 

According to Deputy Minister of Planning and Investment Cao Viet Sinh, many laws and sub-laws had been issued to perfect the legal system and improve legal mechanism for economic development. Important laws include the Enterprise Law, the Investment Law, the Land Law, the Intellectual Property Law and the Bidding Law. These laws were made to be in conformity with the market economy, to meet the requirements of the economic reform and international integration, and to facilitate business operation, the development of a multi-sectoral economy, and the expansion of goods and services markets.

 

Alongside the laws, the Government issued many decrees providing guidelines on the implementation of the laws, such as decrees guiding the implementation of the Competition Law and the Land Law. In particular, based on inputs and comments of enterprises at forums, some decrees effecting directly operations of enterprises had been amended and supplemented. For example, the Decree N⁰ 11/2005/ND-CP, which replaces the Decree N⁰ 45/1998/ND-CP on technology transfer, removes the cap of payment for technology transfer, allowing various payment methods and removing a mechanism on approving technology transfer contracts, which is replaced with a procedure for contract registration; the Decree N⁰ 93/2005/Nd-CP, which was issued on a basis of the amendment and supplement to the Decree 105/2003/ND-CP on labour recruitment, has basically settled difficulties on the recruitment and management of foreigners, working in Vietnam.

 

Apart from building and issuing legal documents and mechanisms, the Vietnamese Government has actively helped enterprises settle their difficulties, encouraging the private sector to get involved in infrastructure and housing development. The Ministry of Planning and Investment on October 5, 2005, submitted a proposal on synchronising policies on encouraging the private sector, including foreign-invested sector, to join infrastructure development projects to the Prime Minister for consideration and approval.

Import and export, customs, land, and immigration and emigration procedures have been renewed to create more favourable conditions for enterprises.

 

Sinh said that Vietnam had signed 48 agreements on investment protection with foreign countries and territories and has been accelerating its negotiations for an accession to the World Trade Organisation (WTO). With the implementation of the above-mentioned agreements, including the Agreement on Investment Liberalisation, Encouragement and Protection with Japan, the Vietnam-US Bilateral Trade Agreement, and international commitments when Vietnam joins WTO, the Vietnamese investment environment will become more open as the regulations on restrictions for several services will be repealed towards a one-price policy for both local and foreign enterprises.

 

Deputy Prime Minister Vu Khoan stressed that despite its great achievements, Vietnam could not rest on its laurels as many challenges and difficulties remained ahead. Vietnam’s target is to escape its under-development by 2010. There is no other way for Vietnam to achieve the goal but to maintain a high growth rate, at least around 7.5 and eight per cent per annum. To that end, during the drafting of the Civil Aviation Law, the Information Technology Law, the Real Estate Law, and the Social Insurance Law, which will be submitted to the National Assembly for approval in its next session, enterprises should continue to contribute their input and comments.

 

Khoan also stressed that Vietnam should repeal all subsidies, including price and interest subsidies. This may pose a significant challenge for many enterprises, which are getting used with the State’s subsidies. To overcome such difficulties, Vietnamese enterprises should promote technology application, management renewal, business and production effectiveness increases and production cost cuts. At the same time, enterprises should pay more attention to the quality of growth.

 

To improve the quality of growth, the deputy prime minister said, Vietnamese enterprises should fully tap the potential of the three fields of agricultural, forestry and fisheries products, support industries and services. It is vital that Vietnam attaches importance not only to rapid development but also to sustainable development. For this purpose, Khoan said he hoped that Vietnamese enterprises would focus on human resources development in both production and management, creating more welfare for workers and ensuring environmental protection.