All systems go for Vietnam’s essential energy transition

Nguyen Chi Dung - Minister of Planning and Investment

In order to promote socioeconomic recovery and business development, the government has redirected a number of strategies under the temporary regulation of safe and flexible adaptation to the pandemic.

These redirections include easing import and export procedures to prevent the disruption of supply chains, promulgating policies on the extension, exemption, and reduction of a number of taxes, fees, and charges, and ultimately creating favourable conditions for businesses to minimise damage and maintain production. Thanks to these timely policy adjustments, Vietnam’s economy in 2021 achieved positive growth despite challenging situations.

With macroeconomic stability ensured and inflation controlled, stable development was seen in most industries. State budget revenue exceeded 16.4 per cent of the estimate. Total import and export turnover increased 22.6 per cent to $668.5 billion, the highest ever.

Processing and manufacturing increased by 6.37 per cent, continuing to be the driving force behind growth; trade and services also showed signs of improvement. The stock market developed rapidly, with the capitalisation scale increasing by over 46 per cent compared to 2020.

In 2021, nearly 160,000 new businesses were established or returned to operation. Total investment capital increased 3.2 per cent compared to 2020.

Foreign direct investment capital reached over $31 billion, up 9.2 per cent compared to 2020, showing that investors continue to believe in the government’s pandemic prevention as well as the investment environment. In terms of innovation, e-commerce, digital transformation, tech applications, and other new business models are increasingly attracting funding.

These encouraging economic achievements were obtained thanks to the contributions from the business community as well as both domestic and foreign investors.

Pham Minh Chinh - Prime Minister

Vietnam gained positive achievements in socioeconomic development in 2021, ensuring social welfare for millions of people and maintaining political stability and social security. This was achieved thanks to the people and business communities, as well as the support of international partners.

The country has learned valuable experiences from the difficult context of 2021. Firstly, the more difficult and complicated situation, the more we should maintain our bravery, solidarity, perseverance, and wisely choose the right path and solutions. Secondly, it is necessary to build an independent, self-sufficient economy, stabilise the macroeconomy, ensure major balances, not disrupt supply chains, and harmoniously combine monetary and fiscal policies.

For issues such as epidemics, natural disasters, climate change, and resource depletion, Vietnam applies a global approach, international solidarity, and upholds multilateralism. In these and other issues, we highlight a whole-people approach, promoting the great solidarity of the whole nation and taking the people as the centre, the goal, and the driving force.

For the socioeconomic recovery and development programme, we see that the internal resources of people, natural resources, and cultural traditions are fundamental, strategic, long-term, and decisive; while external resources of institutions, finance, technology, governance, and human resources are important and create breakthroughs.

Additionally, Vietnam is strengthening digital transformation, including in infrastructure, governance, and the economy, as well as boosting green transformation. Vietnam calls for ensuring fairness and justice in the process of the green transition. We would like to continue receiving support from the international community in improving institutions as well as diversifying capital sources, green and clean technologies, governance, and human resources.

I hope that businesses and associations continue to accompany and support Vietnam in the process of rapid recovery and sustainable development based on the benefits of both sides, and sharing risks together. All ministries and agencies will carefully study, absorb, and respond to the valid opinions and recommendations at the VBF to resolve shortcomings of implementation, remove legal barriers, provide better policies to the business community and international organisations, and promote the development and recovery of the production chains.

Tran Thi Lan Anh - Secretary general Vietnam Chamber of Commerce and Industry

In order to restore and develop the supply chain, we propose to promote IT applications in administrative procedures towards fully online public service delivery. Over the last two years, it has been difficult to approach customers and partners to conduct business transactions, especially services related to the issuance and certification of documents.

There are still many shortcomings, such as some procedures not accepting online submission or electronic signatures and digital signatures in the registration and approval process, or some procedures still requiring submission of original hard copies, among others. It is necessary to accelerate the delivery of level-4 public services across most administrative procedures and aim towards full online delivery of administrative procedures for businesses and citizens.

In order to promote IT application, it is necessary to develop and implement specialised training programmes for technical workers in the current most essential supporting industries. The government needs to have industry-specific skills training programmes that are relevant to the supporting industries as part of key value chains, and part of a specific strategy to attract shifting foreign investment. It is necessary to improve the quality of human resources based on scientific assessments and forecast changes in the labour market and employment in the next 5-10 years.

Seck Yee Chung - Vice president VBF Associate Chambers

It is encouraging that the government has policies that help with softening the impact of the economic difficulties caused by the pandemic and safety measures, as well as incentives to attract investment.

These policies relate to corporate income tax incentives for businesses, supporting employees and employers affected by the pandemic, reducing land rent by 30 per cent, reducing contributions to the unemployment insurance fund, and more.

However, there are cases where foreign investors applied for investment incentives, and competent authorities hesitated to grant them even to the leading companies in the industry because they became overly cautious as to recognising the fulfilment of the conditions to enjoy the applicable incentives. Foreign-invested enterprises that applied for the loan package to pay employment-ceasing wages are required to provide additional documents together with the required documents.

Therefore, we recommend that if the laws and regulations provide an incentive for investors, they must clearly describe and elaborate on the conditions to grant such an incentive so that the competent authorities will not hesitate to grant the incentives. The incentives granted and/or lawful status of the investors shall not be deprived retroactively as well as in the future during the period of the operation term of the enterprises, or the period provided by the law on the grounds of changes in laws and regulations or policies after the grant.

John Rockhold - Chairman American Chamber of Commerce Vietnam

This VBF comes at an important time for both foreign and domestic companies and provides an opportunity to partner to develop an enabling environment that drives innovation and sustainable growth.

The most important factor for a favourable investment climate and maintenance and growth of manufacturing supply chains is a fair, transparent, predictable, and streamlined regulatory environment that values innovation – not only to attract new investment but also to maintain and grow the investment already here. We will continue to advocate for the strengthening of the US-Vietnam trade and investment partnership, including through the Indo-Pacific Economic Framework.

In today’s world, you cannot separate the digital economy from the real economy. Digital transformation significantly reduces costs, provides products and services to a broader range of consumers and businesses, and increases access to newer and bigger markets. Vietnam has already experienced strong growth in e-commerce, fintech, edtech, and the creative economy, and recent changes in behaviour have accelerated that growth.

To reach its full potential, Vietnam needs to ensure an enabling regulatory environment. We encourage an open and interoperable regulatory environment that enables access to information, data privacy, protection of intellectual property, cybersecurity, and free, fair, reciprocal trade in digital services, and that conforms with global norms. Our member companies are eager to partner with Vietnamese companies to assist their digital transformations and foster a new generation of tech startups to support Vietnam’s goal of the digital economy accounting for a quarter of GDP by 2025.

Kim Han Yong - Chairman Korea Chamber of Commerce in Vietnam

To accelerate economic growth and investment revitalisation in Vietnam, it is necessary to provide an environment that meets global standards in which companies can invest and quickly respond to changes in circumstances.

Recently, there have been some improvements in regulations in this country, such as the revised Law on Tax Administration and the amendment of the agreement for the avoidance of double taxation between Vietnam and South Korea. In this regard, I respectfully request that the government will provide clear guidelines to ensure that these regulations are consistently applied nationwide, while also providing more seminars to disseminate these changes to South Korean businesses operating in Vietnam.

We hope there is an opportunity for Vietnam to recover and become an even more attractive investment destination through an overall review of the tariff system as well as the investment environment of related enterprises, and at the same time review and implement improvement measures.

Kenneth Atkinson - Founder, Grant Thornton Vietnam

The heavily-hit tourism industry needs support in the form of waivers in VAT and corporate income tax for tourism companies; reducing electricity prices for hotels; and establishing a fund for companies to apply for interest-free loans to overcome liquidity and cashflow troubles. Domestic airlines should offer subsidised airline tickets for a three-month window to boost domestic travel with a full refund policy.

A reclassification in Vietnam of COVID-19 to endemic, treating coronavirus in the same way as we treat flu or other endemic diseases, would be the final solution to living with COVID-19. So a general reopening of the country to tourists as soon as possible, and tourism visas up to three months people who, over winter, months may prefer long stays in warm-weather beach destinations are good solutions for the industry to resume.

Additionally, sustainable and green tourism is a key success factor for countries competing for international tourists, so we propose a concept away from low-budget, high-pollution mass tourism to high-spending, low-pollution tourism. We should create more policies and regulations banning plastic, styrofoam, and other environmentally-harmful materials and transition into a sustainable way of life.