Towards Concrete Actions

Source: Pano feed

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The Midterm Vietnam Business Forum (VBF) 2013, themed “New Phase of Economic Reform: From Agenda to Action,” has been concluded in Hanoi. This is a structured and ongoing policy dialogue between the Vietnamese Government and the local and the foreign business community for a favourable business environment that attracts private sector investment and stimulates sustainable economic growth in Vietnam.


Many recommendations deployed


Deputy Prime Minister Vu Van Ninh said with comprehensive measures, Vietnam had managed to achieve positive changes in the first five months of 2013. The Government’s solutions aimed at removing difficulties against production and business activities such as tax break, tax refund, credit rechanneling, interest rate support for priority sectors, administrative procedure reform, etc. have produced initial results.


However, the Vietnamese economy still faced a lot of difficulties caused by lacklustre markets, weakening competitiveness of enterprises and products, growing inventories, and corporate bankruptcies.


Before this reality, the Government has closely monitored and continuously directed ministries, localities and branches to stick to business support contents. “We especially appreciate the Government’s efforts for macro-economic stability and inflation control and its implementation of many business support measures, especially consistent measures stated in the Government’s Resolution 02,” said Dr Vu Tien Loc, VCCI President of the Vietnam Chamber of Commerce and Industry (VCCI) at the Vietnam Business Forum.


He said many opinions and recommendations of enterprises have been sent to the Government in the past six months and promptly resolved. Markedly, amendments and supplements to the Law on Corporate Income Tax (CIT), the Law on Value Added Tax (VAT), the Law on Enterprises with more incentives and facilitations for investors have been submitted to the lawmaking National Assembly. Specifically, businesses proposed lowering corporate income tax to 20 percent and then the Government submitted two CIT rates, namely 20 percent on small and medium-sized businesses and 22 percent on large businesses. VCCI asked for the elimination of advertising and marketing cost ceiling (no more than 10 percent) and the Government raised it to 15 percent. VCCI also recommended restoring incentives for expanded investment projects as well as new investment projects of the FDI sector, proposed establishing the National Wages Council comprising of Government officials and social partners and the Government has taken it into consideration. Specially, enterprises proposed the Government to arrange VND30 trillion to support residential housing for low-income people and support businesses and this measure has helped warm up the frozen real estate market.


Besides, the Government is instructing investors and contractors to accelerate the progress of major projects with important social and economic development impacts like the restoration and upgrading of National Road 1, the construction of Lach Huyen International Port, Noi Bai International Airport, Southern Port System, etc. to speed up disbursement and create jobs for participating businesses.


Consistent with macro stability


Investors continue to make recommendations to the Government in order to stabilise the investment and business environment and support enterprises to overcome difficulties to develop more sustainably in the future.


At the forum, Deputy Prime Minister Vu Van Ninh told ministries and branches to consider and accept sound and legitimate recommendations from businesses and introduce effective measures to improve the investment and business environment.


He affirmed that Vietnam will continue sticking with macroeconomic stabilisation objectives, maintaining reasonable growth, ensuring social security, and accelerating economic restructuring process to lay the stepping stone for sustainable growth in the coming years.


He said the Government will seek to lower lending interest rates, narrow the gap between deposit rates and lending rates to a reasonable level, focus loans on priority sectors to resolve difficulties in production and business activities of enterprises. It will also accelerate credit supports for low-income earners to purchase residential housing. It will further improve the performance of banking system, strengthen management and supervision to ensure system safety, and carry out credit institution restructuring scheme in the 2011-2015 period.


Concerning fiscal policies, the Government will strengthen budgetary collection management to prevent losses; tighten budgetary spending management to enhance economy and efficiency; review and rearrange spending tasks, reduce or reschedule the implementation of tasks deemed not to be urgent. The Government will also continue directing the implementation of effective solutions to remove difficulties in production and business activities of enterprises, especially tax break, tax exemption and credit support policies.


Notably, according to Deputy Prime Minister Ninh, the Government is resolute to regulate gasoline prices based on market mechanism, advocate electricity and coal price adjustment policies, and ensure publicity and transparency of public services like education and health care.


Specially, the Government will accelerate the equitisation of State-owned enterprises (SOEs), continue divesting in SOEs where the State does not need to be controllers. It will complete mechanisms and policies on control and supervision in SOEs, especially major corporations and economic groups while focusing on enticing multinational corporations to invest in big projects utilising advanced technologies, creating major progress in industrial restructuring, promoting the development of subcontracting industries, and facilitating domestic businesses to develop.


The Government will intensify cooperation in market and price management, strictly punish and publicise law violations, effectively prevent transfer pricing, tax evasion, market manipulation, smuggling, etc.


In public administration reform, to improve State management efficiency, accelerate the fight against corruption and waste, the Government is committed to improving the quality of regulatory documents, specifying the responsibility and accountability of policymaking agency heads, ensuring suitability, feasibility and effectiveness of regulatory documents ad quickening the issue of instructive documents for policy enforcement.


Mr David Whitehead, Chairman of AusCham Hanoi


At a high level, in Vietnam, there appears to be strong support for foreign direct investment (FDI) and there has been very positive recognition of the contributions of FDI to Vietnam’s economic growth. However, at a grass roots level, some FDI enterprises are still finding it difficult to conduct business here. Meanwhile, other ASEAN countries such as Indonesia, Thailand, Cambodia and now Myanmar have emerged as attractive investment destinations. The impact of the global economic recession can also impact FDI, however, global FDI capital has been increasing over the past few years. If Vietnam does not create a more favourable investment climate, then FDI might continue to decline.


We would like to recommend that the Vietnamese Government and business associations, using forums such as the VBF and the Advisory Council for Administrative Procedures Reform (ACAPR), work even more closely together to improve the investment climate in Vietnam.


Mr Preben Hjortlund, Chairman of EuroCham


In 2013, the Vietnam’s economy continues to deal with huge challenges. To improve the business environment, to remove difficulties for enterprises whose resources have eroded after years of economic downturn, EuroCham proposes three issues needed the Government’s care.


For pricing issue, the Government continues to display an ambivalent attitude towards free market pricing, and in various sectors (such as energy) price changes now require approval. This type of price control is clearly worrying for investors who expect to be able to set prices themselves within the normal boundaries created by cost and competition.


Regarding the position of State business sector, it is estimated that 40 percent of the economy is in the hands of the State sector, which in itself is not a problem. However, in those areas, State companies generally receive favourable treatment – through loans, access to land, limited profit targets etc – and are inefficient. This is hampering growth of the economy. Eurocham sees that the Government starts equitisation as soon as possible, to obtain a more competitive market in which the market mechanism can do its work.


Concerning intellect property rights issue, Vietnam is currently competing internationally based on low labour cost. The Government has expressed the desire and need to move away from a labour intensive economy into technology and value added areas. But unless there is real, implemented protection of intellectual property rights, investors are unlikely to bring their technology to Vietnam, and Vietnam will remain in the low labour cost trap.

Quynh Anh




Đăng ký: VietNam News

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