Surveys show foreign firms’ satisfaction with Vietnam

With new reforms in the pipeline, Vietnam remains seen as an investor-friendly nation for foreign firms
Photo: Le Toan

Atsusuke Kawada, chief representative of the JETRO Hanoi Office and vice chairman of the Japan Business Association in Vietnam, said JETRO was implementing a programme to select over 1,600 Japanese small- and medium-sized enterprises to support them in investing in some developing nations including Vietnam.

“These enterprises are selecting Vietnam as a prioritised place of investments. The number of Japanese enterprises will increase in Vietnam, both in the manufacturing and non-manufacturing industries,” he said.

Early this month, representatives from Japan’s Showa Denko Group worked with the northern province of Ha Nam’s authorities on implementing a hi-tech project to cultivate safe vegetables in the province’s Dong Van 2 Industrial Zone.

ISE Food Group, the biggest chicken egg provider in Japan, also expressed its intention to set up an egg production project in Ho Chi Minh City.

Kawada said, under a recent JETRO survey on Japanese firms’ business in Vietnam, 57.5 per cent of Japanese firms in Vietnam liked “Vietnam’s stable social and political situation”, and 53.7 liked “Vietnam’s cheaply-priced labour”. Meanwhile, nearly 47 per cent considered “Vietnam’s market size and growth potential” as a strong magnet for investment.

Some 66.1 per cent would “expand investment” in Vietnam, as they continued to regard it as an important investment location, while 84.4 per cent said their revenue would increase in Vietnam.

The Vietnam Chamber of Commerce and Industry (VCCI) also released a survey on Vietnam’s business environment which assessed the opinions of 1,491 foreign enterprises from 43 nations in Vietnam. According to the survey, the majority of respondents said they felt secure when doing business in Vietnam where they saw low taxes, convenient sites, and policy certainty.

Vietnam’s value added tax and corporate income tax (CIT) rates are 10 and 22 per cent, respectively. These rates are lower than in China, Indonesia, and Malaysia where the CIT is 25 per cent. In the Philippines and Myanmar the VAT rate is 30 per cent and CIT stands at 12 per cent.

62 per cent said they would increase investments even if they received no tax incentives in Vietnam, because the location, market size, infrastructure, and human resources were ideally suited to their business strategies.

The surveyed enterprises said they could forecast policy changes in Vietnam far better than in China, Cambodia, Thailand, Indonesia, Malaysia, Laos, the Philippines, and Myanmar. 94 per cent said Vietnam’s political climate was more stable than these nations.

“This is very important as businesses always want a stable political climate and a predictable policy environment, so that they can build their long-term business strategy,” said VCCI’s Legislation Department head Dau Anh Tuan.

Notably, the respondents said they could have an impact on Vietnam’s policy making process better than in other Asian nations, via dialogues with the government, the National Assembly, and local authorities.

Prime Minister Nguyen Tan Dung has enacted a resolution on continuing the improvement of Vietnam’s business climate, under which ministers and leaders of localities are directly responsible for bettering the competitiveness of their sectors and localities.

The average tax payment time is targeted to be reduced to 121.5 hours per year, while the time spent on processing employee insurance is expected to be trimmed down to 49.5 hours per year.

The resolution also aims to cut the time taken to establish a new business to six days, down from 16 days where it currently stands, while the time for firms to connect to the national power grid will be brought down to 36 days, instead of 60 as is currently the case.