Vietnam - Target of International Retailers

Townsend said that the shopping habits of the Vietnamese people had changed since Vietnam shifted to a dynamic market economy. At present, local consumers do not have much time for shopping, so convenience and high quality of services are what they require. However, the local retail market remains under-developed, partly because of a lack of buildings, exclusively used for trade centres. As a result, there are not many choices for local distributors who want to promote their trademarks. This has also constrained the involvement of foreign firms. Meanwhile, the number of retailers in Vietnam remains modest and the local professional retail market is developing slowly.

 

At present, trade centres are concentrated mainly in Ho Chi Minh City and Hanoi. Ho Chi Minh City has at least seven trade centres with a total area of over 8,000 square metres for lease. The biggest centre is the Thuan Kieu Plaza. Other major centres include Diamond Plaza, Saigon Center, Saigon Square, Zen Plaza, Saigon Tax Plaza, Saigon Superbowl and An Dong Plaza. Occupancy rate of the centres is very high with rent is put at between US$15 per square metre per month and US$100. In Hanoi, there are three major trade centres, including Trang Tien Plaza, Vincom City Tower and BigC with over 12,000 square metres between them. The centres have occupancy rates and rental similar to those in Ho Chi Minh City.

 

Townsend said that in the coming time, Ho Chi Minh City would have over 100,000 square metres more for concentrated trade centres, which were being planned or built. At the same time, Hanoi would have 250,000 square metres for the same purpose. The trade centres would become operational in two or three years. Hanoi will have eight towers inaugurated, including Cau Giay Plaza and Ciputra Mall, which is the largest trade centre in Hanoi at over 10,000 square metres, the Garden, ICC building, Luxury Mall, Pacific Palace, Melinh Plaza, Viet Tower and Syrena. Ho Chi Minh City will see ten more trade centres put into operation soon, including Artex Building, Hiep Phu, Hung Vuong Plaza, Saigon Paragon, Binh Phu, Times Square, Saigon Pearl, Tan Da, Saigon M&C Tower and Sport City.

 

Effective legal frame needed to fight pirated goods, Preben Hjortlund from Eurocham

We all admit that Vietnam has made significant progress in recent years. In 2005, foreign investment was back to levels seen before the occurrence of the Asian financial crisis. This may be considered as a positive sign for the foreign-invested enterprise community’s confidence in Vietnam’s development. However, we would like to mention that Vietnam should further improve its legal framework for effectively fighting pirated goods. This is for protecting not only foreign-invested enterprises but also Vietnamese enterprises, which are beginning to build their trademarks successfully.

 

Operation costs in Vietnam remain high. As such, charges of telecommunication services remain higher than the international level. Also, prices and rental of land are much higher than many other countries in the region. Last year, many members of Eurocham had to pay much more for office and equipment rental.

 

Not implementing policies on taxation and customs procedures in a timely and full manner, especially some of the Government’s recent decisions, has raised concerns among our members. One of the concerns regards Vietnam’s tariff policies. As it occurred in the past, Vietnam’s import tax rate is changeable. As a result, the feasibility of existing projects should be reconsidered. This, in turn, may hamper Vietnam’s long-term attractiveness as an investment destination. We propose that the Vietnamese Government should reconsider its recent decisions on tax rates, so investors can calculate negative effects of the unpredictability of policies on their investment decisions.

 

Also, it often takes a long time to refund taxes. The Customs Law is sometimes interpreted as opposing other laws and regulations of Vietnam. Whether the goods clearance is quick or not depends mainly on ‘relationships’ instead of the law or completed procedures. The Vietnamese Government is piloting a project on electronic customs procedures. This work is necessary and we believe that the system will help get rid of slow paper work and opportunities for corruption. Before that goal is achieved, we hope that the Vietnamese Government and customs agencies will continue their reform efforts to reorganise the sector and remove corruption.

 

This year, many Japanese companies began to invest in Vietnam. However, many Japanese investors have expressed their concern about poorly developed infrastructure facilities in Vietnam, such as in industrial parks, goods circulation facilities, including roads, seaports and airports, water and electricity supply. After facing the summer energy shortage in Hanoi, many companies are worried about a similar situation next summer. Also, many managers have expressed their concerns about a shortage in the local labour market. Recently, it has become difficult to recruit a large number of workers and to hold on to skilled workers.

 

An important condition for the establishment and development of new enterprises, especially small and medium-sized enterprises, is business development services, including training, legal consultancy, intellectual property, accounting and auditing, management, and scientific and technological services. At present, the Government is encouraging the development of these services. However, the implementation of the policies remains constrained, so business development service supply in Vietnam is still under-developed.

 

As far as we are concerned, the Government should take measures to boost the market by allowing the private sector to join the market instead of keeping it for the State-owned sector only. On the other hand, the Government should help business associations to build codes of ethics for organisations and individuals, who supply business development services.

 

Statistics show optimistic business and production results of enterprises in 2005. However, enterprises are not as optimistic as managers because of uneven growth patterns. Also, if price increase is excluded, the real increase value is not high. This is partly because during the building and implementation of legal documents, many authorised agencies seem so cautious within the business circle, that they have issued many unreasonable regulations, hampering the development of enterprises.

 

For example, the law allows enterprises which have high demand to negotiate with land owners to get land use right, but enterprises cannot because there are many owners of a small piece of land of around 6,000 square metres. When they succeed in getting land use right, they cannot build their workshops and facilities because they have to wait to be master-planned. In addition, the prices set for non-agricultural business and production land are too high, so enterprises cannot pay all at once. In addition, land tax rates remain high, resulting in a higher land rent, around seven times higher than 2004. It is reported that there is a decree on the amendment to the present decrees on land. Enterprises hope that the Government will make a basic and complete amendment only once instead of gradual and long-term amendment as proposed by drafters.