As part of the project “Governance for comprehensive growth” funded by the United States Agency for International Development (USAID), the Central Institute for Economic Management recently held the conference “Improving business environment and enhancing competitiveness“. Taxation and customs were two main contents discussed by experts at the conference.Still many challenges
According to Dr Nguyen Dinh Cung, Director of the Central Institute for Economic Management (CIEM), recent years, although the government together with all ministries and agencies had made great efforts to reform the institution and improve business environment; however, the national competitiveness of Vietnam was still low compared to other countries in the ASEAN region and in the world. Major problems included difficulties in business establishment procedures, insurance of investors’ rights, property ownership and rights of intellectual property, the efficiency of state performances, tax paying, access to power and handling of businesses unable of payment. Also according to Dr Cung, the main cause of those challenges was due to the lacking of awareness in many ministries, agencies and local authorities in the importance of improving national competitiveness as Vietnam expanding business to international arena. Additionally, many political-social organisations, professional associations, and business communities had not substantially contributed to the task of enhancing national competitiveness.
Specifically, in two areas of tax and customs there were still many points which need to be greatly changed. As analysed by Dr Cung, current export procedures of Vietnam was too time-consuming, 21 days on average, and cost about US$610 while that procedures in Malaysia could be finished within 11 days with the costs of US$450. Thus, it could be calculated that if Vietnam had shortened the export procedure down to 7 days, its GDP would have increased by about US$27 billion. Meanwhile, according to the Doing business report of the World Bank (WB), Vietnam was also among the most time-consuming countries in the region in terms of tax paying with 872 hours per year, four times more than the average of the Asia – Pacific countries and also higher than Indonesia (259 hours), Thailand (264 hours), the Philippines (193 hours), Malaysia (133 hours) and Singapore (82 hours).
Supporting the view of Dr Nguyen Dinh Cung, Mr Joakim Parker, Director of the Vietnam USAID Office said that the Vietnamese Government currently considered raising the ranking of the business environment as a priority. He believed that Resolution 19 would create real improvements to business environment, enhancing the competitiveness of Vietnam in the international arena.
Do not place too much expectation at Resolution 19
On March 18 2014, the Government issued Resolution 19/NQ-CP on duties, major measures to improve business environment and enhance national competitiveness. The resolution is a package of innovative solutions to reduce cost, time and risk in business activities in Vietnam with the goal within two year (2014 -2015), Vietnam will reach the same standards of the countries in ASEAN six namely Indonesia, Thailand, Singapore, Philippines, Malaysia and Brunei following indicators of the World Bank. Accordingly, the Ministry of Planning and Investment is responsible for two indicators which are business establishment and investor protection. Meanwhile the Finance Ministry’s mission is to complete the 14-day export clearance procedures and 13-day import clearance procedures (down 7 days from the current). Tax payment time of business is to be cut down to 171 hours/year (currently 872 hours). The Ministry of Industry and Trade and EVN is to reduce the power accessing time to 70 days at most, compared with 115 days at present, the average of ASEAN is 50.3 days. However, the problem Vietnam is facing at the moment is that after almost three months, only one third localities across the country have had an action plan; many ministries and agencies seem yet to be fully aware of the importance of the Resolution and haven’t drafted out detailed plans.
Talking about these issues, Mr Nguyen Cong Binh, Deputy General Director of the General Department of Customs said that although in recent years the customs sector has been proactively applying e-customs clearance, simplifying procedures. However, there are places not applying technology but still able of fast clearance because there was not much problems arise. By contrast, in the “centres“, such as Hanoi or Ho Chi Minh City, which had too many activities, the clearance been too slow. For example, the electronic clearance only took five minutes, but shipment owners did not take goods as scheduled. That fact requires senior authorities to issue a consistent set of evaluation criteria, a measurement basis.
In addition, Mr Binh also emphasized the necessity of investing more in upgrading infrastructure, especially information technology infrastructure. Currently the sector had been implementing the work of improving competitiveness through the Vietnam Customs Development Strategy toward 2020. Accordingly, the basic procedures and customs management must be simple, effective, harmonious and compliance with standards and international practices; Customs procedures should be mainly done technologically in key areas. Implementation of e-customs procedures: by 2015, 100 percent of the Customs Bureaus, 100 percent of the Customs Departments in key areas (ports, airports, international border gates, key economic zones), 60 percent of basic types of customs 70 percent of imports and exports, 60 percent of enterprises implementing e-customs procedures. However, in real-life application, Mr Binh also acknowledged shortcomings such as the implementation of e-customs required effective and synchronous collaboration in information technology in various sectors such as tax, treasury.
According to Ms Hoang Lan Anh, Deputy Director, the Reform Department, the General Department of Taxation said that compared with the number of 1,050 hours before, the current 872 hours even though it hadn’t yet to meet the expectations but should be seen as an initial success. But in reality, Vietnam was still an economy in transition to a market economy, accompanied by the use of too much cash. That situation caused difficulties for financial agencies to control income improvement and property declaration. Therefore, besides the work of simplification, tax agencies were still under pressure in the fraud controlling in tax declaration, VAT refunds. In addition, Ms Lan also pointed out that the indicator “taxpayer time” in Vietnam actually included both the time of tax and social welfare payment of employees (such as social insurance) which took up 355/872 hours. Therefore, along with the tax department, health insurance also needed to conduct administrative reform to help improve this indicator.
Sharing the same opinion, Ms Nguyen Thi Cuc, President of the Vietnam Taxation Advisors Association said that if Vietnam went for the goal of consistent development and national competitiveness improvement then in the tax sector, it also needed to develop professional tax agents, as this would help shorten the procedure, reducing risk to tax authorities, the current number of 700 businesses declaring tax through tax agents was too little compared with the practical demands.
Anh Phuong
Đăng ký: VietNam News