The Office of Government in collaboration with the Vietnam Chamber of Commerce and Industry (VCCI) and relevant agencies will organise a meeting between the Prime Minister and businesses on April 28, 2014 in Hanoi. Ahead of this event, Vietnam Business Forum interviewed Dr Vu Tien Loc, VCCI President.
The Prime Minister’s Meeting with Businesses 2014 is an important, eagerly awaited event for the business community because this is a direct dialogue channel with the government for businesses to share difficulties in production and business processes, and propose solutions to problems facing them. Could you please tell us about the issues many companies are concerned about?
The meeting has become an important forum for the business community to directly share difficulties in production and business activities and propose to the Government new feasible solutions to facilitate enterprises to develop dynamically and effectively, thus contributing to successfully implementing the socioeconomic development objectives and tasks set for 2014 – 2015.
This year’s meeting will mainly focus on emerging policy issues (tax, customs, import and export, etc.); capital mobilisation and credit access; domestic market development, export boosting and accelerated international integration; access to land and production base; administrative procedures; labour relations; business connectivity and value chain formation.
According to the Vietnam Business Insight Survey (VBiS) carried out by VCCI in late 2013, the overall production and business situation improved compared to 2012. Is the situation brighter in 2014?
Companies are still facing certain difficulties in production and business activities in the first quarter of 2014. The number of companies dissolved or temporarily suspended rose 9.6 percent year on year to 16,745 in the quarter. Of these, 3,846 firms registered to temporary end operations, up 7.8 percent year on year, 10,318 companies terminated operations without registration with authorities, up 9.3 percent, and 2,581 companies were dissolved, up 13.6 percent.
Structurally, many sectors saw positive trends in the first quarter of 2014, like personal services (new business establishment rose 52.1 percent, business terminations sank 3.3 percent); finance, banking and insurance (new establishment climbed 18.9 percent, business terminations fell 14.7 percent); and electricity, water and gas production and distribution (new establishments were up 57.3 percent, business terminations decreased 5.4 percent).
Some industries are being strongly restructured such as art and entertainment; information and communication; agriculture, forestry and fisheries; and real estate business.
For this meeting, VCCI has collected proposals and recommendations from business associations and companies nationwide. What are emerging issues that need to be changed?
Some difficulties and problems against the business community relate to various fields. Regarding the business environment, according to summarising proposals of the business community and economic experts, legal documents do not discriminate between private and State enterprises. But, in reality, the discrimination is expressed quite clearly. A large part of private enterprises, mostly small and medium-sized enterprises (SMEs), are not treated equally with SOEs and FDI firms.
So, to build a fairer business environment, companies asked the Government to continue improving the system of legal documents on business, including provisions on the guarantee of greater business freedom and equality for all business entities. The effective supervision over monopolistic SOEs, especially those engaged in electricity, telecommunications and petroleum, is necessary. Besides, private companies should be allowed to take part in these fields to reduce the absolute monopoly of SOEs in monopolistic fields. Meanwhile, SOEs should not transgress into areas allowed for private businesses. SOEs should be present in important areas which play decisive roles and serve as the groundwork for the development of other economic sectors.
Furthermore, the business community also proposed the Government, central agencies and local authorities announce development plans, policies and legal documents in a public, transparent and timely manner. Legal documents and policies need to be fully published on websites of relevant authorities to enable businesses ease of access.
To make the policy consultation with the business community more practical and more substantive, the business community proposed the Government strengthen the participation of citizens and businesses in policymaking processes, lawmaking and international negotiation.
Notably, troublesome administrative procedures are still a major problem for most businesses. So, they suggested the Government continue accelerating administrative procedure reform and perfection to facilitate companies to operate in such fields as market entry, export-import, taxation, land, investment, construction, environmental resources and labour. To this effect, the Government needs to review and drastically lower costs of implementing administrative procedures, intensify government – investor dialogues, apply electronic administrative procedures, enhance human resource training, and raise accountability and integrity of State employees. In addition, to have an objective measure for practical results of Government-backed administrative reform solutions, VCCI suggested the Government assign VCCI and business associations to conduct independent periodic surveys and studies to assess the quality of administrative procedure implementation and put forth recommendations to the Government.
Together with administrative procedure reform, the business community asked the Government to further strengthen the fight against corruption and bureaucracy.
Judicial reform is also among the issues that companies are very interested in, especially now that there are increasing numbers of cases resulting in wrongful conviction, upsetting the public. People’s courts at all levels should continue to improve the quality of their performance to enhance social justice. In addition, to promote the development of the arbitration institutions and methods of settling disputes by arbitration, there must be clear rules to ensure that arbitration rulings are strictly enforced, avoiding cancellation or non-recognition of the arbitration ruling.
The economy and the business community are entering a new stage of development with restructuring towards a modern and sustainable structure becoming a vital issue. What will the business community recommend to the Government at this meeting?
The Government specific plans and roadmaps and is aggressively directing SOE restructuring. The business community asked the Government to further step up SOE equitisation and divestment from non-core business fields to allocate resources for more urgent and necessary fields. At the same time, it needs to define tasks SOEs must do to complete the “new mission of SOEs” – playing a leading role in building the socialist-oriented market economy.
Of over 500,000 enterprises nationwide, up to 98 percent are private enterprises, which are generally characterised by low-quality human resources, weak corporate governance and no long-term business strategies and orientations. Hence, restructuring businesses using modern standards is required for every enterprise. But, the reshuffle of private enterprises need the great support from State bodies and business associations, particularly support for personnel training.
Capital access is a perpetual difficulty for Vietnamese enterprises. Do they have any proposals regarding this matter?
In 2013, according to the provincial competitiveness index (PCI) survey, up to 91 percent companies said they could not borrow a loan without collateral assets. The discrimination to private enterprises is quite common from bank to bank. As many as 54 percent complained that interest rates and lending conditions for private enterprise are always tougher than those for SOEs. Many businesses said they could not access preferential loans and low-rate commercial loans with medium and long-term maturity.
To address this discrimination, the business community proposed the Government publicise information regarding capital access for businesses in the coming time by urging banks to simplify lending procedures, especially those applying preferential credit programmes; pilot chain lending programme for production chains, production models using advanced science and technology, and linking models in agricultural production chains with reasonable interest rates. Particularly, commercial banks should develop financial leasing to help SMEs expand production capacity amid limited capital viability, and help SMEs renovate technology. The Government also should advocate the formation of SME Credit Guarantee Fund to support them satisfy lending conditions imposed by loans.
Apart from capital access, tax and customs are also issues of concerns for many enterprises. Would you mind telling us some recommendations enterprises submit to this meeting?
With respect to policy issues, the business community proposed applying the corporate income tax rate of 20 percent to all taxpayers and seeking measures to reduce VAT to stimulate the market. Tax policies must be built on long-term, stable bases. In addition, when the Government pilots preferential tax mechanism on SMEs, it should encourage SMEs to apply professional accounting regimes. However, this requires an upgrade to tax declaration support system.
Businesses also proposed customs authorities to improve electronic customs procedures. Although e-customs has been adopted, the number of papers in need of signatures and seals is still quite high. Furthermore, electronics clearance is necessarily deployed to quicken export and import of goods to ensure delivery and prestige for enterprises. The lack of coordination and information of tax units sometimes results in wrong information on the system, particularly regarding fee payment for customs declaration papers.
In addition, businesses also wish the customs and tax sectors should coordinate with relevant agencies to upgrade information technology infrastructure and develop the exchange of information into a synchronous electronic approach. This will not only facilitate import -export activities, but also help to build a centralised consistent database on customs and tax.
Thank you very much!
Đăng ký: VietNam News