Lang Son: Consistent Solutions for Better Investment Environment

Like others in the country, businesses in Lang Son province have faced a lot of difficulties and challenges since 2011, like shrinking consumer demand, rising input costs, difficult access to credit sources, and increasingly fierce competition. Hence, the number of newly established enterprises decreases while the number of downsized and bankrupt companies is on the rise.

 

Currently, the province has over 1,400 operational enterprises of all economic sectors. Most businesses (90 percent) are rated ultra-small, small and medium-sized with the average investment capital of just VND7-9 billion (US$300,000 - 400,000) each. Up to 50 percent of companies are registered to operate in trade and service fields, 40 percent to operate in production, processing and construction fields and the rest in other sectors.

 

In the first six months of 2013, inflation was kept under control, credit interest rates continued to be lowered, outstanding loans improved, and tax break measures introduced by the central government and the province helped enterprises to deal with difficulties effectively. A proportion of enterprises have recovered, restored stable operation, and started to attract capital flows. However, in general, a majority of businesses still continue to face difficulties, particularly industrial manufacturing, construction material construction and mining companies.

 

Despite such a difficult context, Lang Son province enterprises are determined to make every effort to maintain production and business activities, create more jobs, ensure incomes for employees, and contribute more to social welfare and socioeconomic development of the province.

 

In recent years, the Provincial People’s Committee has focused on directing the implementation of the Government’s resolutions on business support, market support and bad debt settlement. The central contents are to create a favourable environment for market entry, reduce credit interest rates, facilitate enterprises to access credit loans, restructure debts, clear inventories, and exempt, reduce and reschedule taxes for enterprises. In 2012, the province set up a working group responsible for advising, directing and resolving difficulties and obstacles in credit operations at banks as well as business and production activities of enterprises in Lang Son. The group is led by a vice chairman of the People’s Committee and its members are leaders of relevant units in the province.

 

As of the end of June 2013, total outstanding credits reached VND9,935 billion, up 11.9 percent over the same period of 2012 and 1.3 percent over December 31, 2012. Particularly, medium-term and long-term loans accounted for 63.5 percent of total loans, up 9.8 percent. Outstanding loans for enterprises accounted for over 53 percent of total outstanding loans in the province, but only some 39 percent of enterprises had credit relationships with banks; others did not meet borrowing conditions or their business plans lacked feasibility. The province has directed banks to lower interest rates for old loans to at most 15 percent and 13 percent. As much as VND2,620 billion worth of loans were given lower rates. Banks also rescheduled payment terms for VND460 billion in 2012 and VND224.6 billion in the first six months of 2013.

 

In addition, the province continued to focus on applying synchronous measures to improve the investment environment, drastically reforming administration procedures, adjusting investment attraction mechanisms and policies, building more infrastructure works in dynamic economic regions, and strengthening the capacity of investment, trade and tourism promotion apparatus. The province also supports enterprises with market and legal information and improves the Provincial Governance and Public Administration Performance Index (PAPI). (In 2012, Lang Son province’s PAPI ranked 13^th out of 63 provinces and cities in the country.) Besides, the province enlists support and assistance of the Government, ministries and central agencies on policies and investment resources.

In 2012, net revenue of Lang Son province-based companies was approximately VND12,000 billion, down 15 percent from 2011. Their profit before tax was VND80.1 billion, down 21.5 percent from 2011. They paid VND310 billion of taxes, down 15 percent from 2011 and equal 11.6 percent of the province’s total budgetary revenue. They created 25,000 jobs for local workers and paid an average monthly salary of VND3.5 - 4 million each. In the first six months of 2013, their gross revenue was VND3,000 billion and they paid VND130 billion to the State Budget.

In 2012, Lang Son province’s PCI ranked 34^th out of 63 provinces and cities in the country, climbing 19 spots from 2011. This progress showed the high effort of governments at all levels in the province to overcome difficulties and challenges in the past time.

 

From now to 2015, the province will continue to concentrate on making the local environment favourable for the development of production, trade, import and export, investment, and tourism with synchronous, comprehensive measures mentioned above. The key contents are to build infrastructure for dynamic economic zones, create clean land fund for fresh and existing investment projects, supplement investment attraction mechanisms and policies, step up administration procedure reform, build professional, responsive administration apparatus to enhance the administering and coordinating capacity of governments from provincial to grassroots levels, and proactively resolve problems and obstacles against enterprises, organisations and individual people.

 

Provincial leaders will listen to aspirations and proposals of enterprises in both direct and indirect forms to support them to develop sustainably. Lang Son province will continue to improve both PCI and PAPI indices.