The factors keeping Vietnam low in the ranking are old problems. The country has not made much improvement over the year and the speed in the reforms is not as high as that of neighbouring countries.
In the evaluation report of the World Bank (WB) and the International Finance Corporation (IFC) on Ease of Doing Business in 2013 published on 29th October, 2013, Vietnam ranks 99th out of 189 economies, one level lower compared to last year.
Experts give a good review to Vietnam in areas such as construction licensing (ranking 29th) and credit access (ranking 42nd). However, despite the implementation of many reforms to improve the business environment for enterprises, Vietnam’s ranking has not improved due to some familiar reasons including investor protection, access to power and tax paying.
The “investor protection index” stood at 157th, higher compared to the previous year yet still the lowest in the evaluated indexes.
According to Ms Pham Thi Thu Hang, General Secretary of Vietnam Chamber of Commerce and Industry (VCCI), this index is improved mainly thanks to the releasing of new regulations such as Circular 121/2012/TT-BTC on Corporate Governance applicable to listed companies. Besides, many issues such as the level of responsibility of the board members, the possibility for shareholders to express their opinions of the business strategy of the business (especially minor shareholders), have improved. She said that in the future, the funding from shareholders, especially institutional investors, is the basic source for business to innovate technology and growth model.
Dr Tran Dinh Thien also commented that the investor protection index increased because of procedural factors rather than the actual environment since in this report, macro factors were not mentioned. Over the past three years, macroeconomic instability is the main cause of the closure of a series of businesses.
The “access to power index” ranked 156th. According to statistics from experts from the WB, it takes an average of 115 days for a business to connect electricity for business operation; each family spends 17 percent of their income for electricity consumption.
The tax index of Vietnam which ranks 149th may make many people wonder when other criteria’s ranking such as the frequency of tax payment and tax rate increased. Answering this problem, experts from the WB shared that “although Vietnam’s business environment has improved, those of other countries are not standing still, they also improve their environment. For example, Thailand has reduced the rate of social insurance for businesses to help them reduce tax costs; Malaysia has implemented online tax declaration and payment. That is why Vietnam’s ranking has yet to improve.”
Experts also published the following statistics. It takes one third of the working days a year for small and medium enterprises in Vietnam to complete tax procedures. Dr Tran Dinh Thien said, “Paying taxes costs a lot of time and has become permanent and got even worse this year. Enterprises have been maltreated for years, which is really concerning.”
Ms Pham Thi Thu Hang also suggested, in 2012, although the government had many preferential policies to extend tax for businesses, few businesses made more profit. Maybe the tax burden comes from fees and value added tax. The question is how to reduce this burden in 2014.
There remain many issues to discuss the lifting of “credit loans” ranking. The macro environment in general and credit system of Vietnam in particular contain many peculiarities that the WB and IFC report could not access and calculate. For instance, the cross-ownership of bank and business. Dr Tran Dinh Thien admitted that actually, credit in the last period has been difficult to access. We cannot require expert group to understand the practical details of credit loans in Vietnam.
In conclusion, the major problems behind the low business environment ranking of Vietnam in 2012 are still the old problems. The improvement is not enough to meet the need, and the speed of improvement is not as high as that of neighbouring countries. Besides, the rankings of the criteria are not even. As Dr Tran Dinh Thien said “the crook in business environment is what poses difficulty for businesses.”
TM
Đăng ký: VietNam News