Focus points for reforms in hardships

December 22, 2020 | 16:11
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As the Ministry of Planning and Investment is busy compiling the 2021 version of Resolution No.02/2020/NQ-CP – the annual document outlining orientations for improving the local investment environment – on the threshold of the Vietnam Business Forum set to take place this week in Hanoi, Phan Duc Hieu, deputy director of the Central Institute for Economic Management, shines a light on the major points to be addressed in the year ahead.
1523 p7 focus points for reforms in hardships
Prime Minister Nguyen Xuan Phuc meeting with representatives of the business community

Due to COVID-19, the World Bank and the World Economic Forum will not work on their Doing Business and global competitiveness index rankings as usual. Does this affect the assessment of the implementation of Resolution 02, as well as the targets setting in the upcoming year?

The impacts are of course unavoidable, but it must not pause reform efforts. We have seen positive results from the implementation of Resolution 02, like the exemption of business licence tax in light of Decree No.22/2020/ND-CP, shortening building permit licensing process (Law on Construction), and improving investor protection (Law on Enterprises 2020), among others.

Several activities, however, are left uncompleted, particularly specialised control of export-import goods. Meanwhile, the current business conditions set out in diverse laws are hindering business operations.

Successful implementation of Resolution 02 in the past year, however, has created a hallmark, entailing significant improvements in the local business environment.

What priorities have the Ministry of Planning and Investment proposed in this updated version of Resolution 02?

Tasked with compiling the 2021 draft, the Central Institute for Economic Management has proposed four groups of measures to improve the business environment in 2021.

First is strengthening cooperation and connection among state management agencies in tackling entanglements and legal barriers to investment and business activities. In fact, the lack of connection and coordination among management agencies were flagged as the main causes for many uncompleted works in the past.

Therefore, if this bottleneck is not settled, many more targets might not be reached, even if each ministry and sector are making positive efforts.

Secondly, strong digital transformation in state management, as well as sharing and ensuring e-connections among state management bodies to build a digital government, is a must.

Thirdly, it is important to continue supporting enterprises to resume production and business to alleviate COVID-19 implications, and last but not least, we must carry out further institutional reforms, supporting them to restructure production and business towards sustainable development goals. Of course, unfinished works under Resolution No.02/2020/NQ-CP and Resolution No.02/2019/ND-CP will be reiterated in the 2021 draft.

How do these moves attest to the government’s commitment to improving both the local business climate and the country’s competitiveness?

The government’s constant commitment in improving these areas is surely a prerequisite to the accomplishment of targets in the annually set Resolution 02.

The international business community highly appreciates the great efforts by the Vietnamese government to improve the business environment and expects the resolution to usher in new improvements as 2021 fast approaches.

Until now, we have received many proposals from businesses related to inconsistencies and unsettled issues in the current legal system governing investment and business activities.

Updates about the new situation and new proposals from businesses will help guide Vietnam’s orientations for creating a better business climate in the years to come.

Korea Chamber of Commerce in Vietnam

Amid COVID-19, the Vietnamese government has implemented various favourable policies to support companies to overcome the pandemic’s economic impact.

However, licensing for some large South Korean projects in Hanoi and Ho Chi Minh City have been delayed due to lack of clear legal instructions, causing difficulties in investment activities.

We sincerely hope the Vietnamese prime minister will understand this situation and clarify guidance of regulations to local authorities. This will hopefully lead to local governments to issuing the required licences of the delayed projects in a very timely way.

In addition, in order to support sustainable growth, stable power supply is a critical matter for the Vietnamese government to consider. To this end, it is the right time to consider the development of nuclear power, which has previously been discontinued in the mid to long term plan.

We are able to cooperate with the government for stable power supply in the future since South Korea has a lot of experience and know-how in the production of nuclear power plants.

American Chamber of Commerce

The digital economy, including e-commerce, e-banking, modern cloud computing, and e-government, comes out of the necessity to reduce face-to-face transactions and cash permanently. The whole world is leaping ahead on these technologies, as these systems and appropriate cybersecurity can save time and money.

An accelerated implementation of these objectives can permanently reduce administrative costs and time burdens for all businesses and will attract new investors looking for global standards and ease of doing business. It will provide the foundation for smart city infrastructure and services.

One administrative burden is the tax system. While Vietnam’s corporate income tax rate of 20 per cent is competitive, data shows that filing and paying taxes in Vietnam is still too cumbersome compared to neighbouring countries. Too many companies are also suffering from what seems to be unfair and non-transparent reassessments with penalties and interests. We hope to see real progress on advance pricing agreements which create stability and predictability for integrating into global supply chains.

Singapore Business Group

The process of licensing foreign-invested companies in Vietnam still experiences a number of administrative challenges. The state agencies should thus implement a comprehensive online system for application submission and accept electronic signatures.

The new Law on Investment introduces the negative-list approach, under which foreign investors shall be entitled to market access conditions applicable to domestic investors in any business line that are not included in the list of business lines with limited or conditional market access applicable to foreign investors.

According to the guiding draft decree, the list of business lines with conditional market access is rather long (51 business lines), and includes “new business lines not yet carried out in the territory of Vietnam at the time the Law on Investment takes effect”. We would like to remove these umbrella provisions from the list of business lines with conditional market access.

Japan Chamber of Commerce and Industry

There are differences in administrative systems and business practices between Vietnam and Japan, and it is difficult to accept these. However, bridging these differences through the efforts of both parties seems to be an important theme for Japanese companies to continue our business activities and for Vietnam to attract more foreign direct investment in the future.

We would like to ask the support of the government to achieve this with a broad perspective. With the support, an excellent relationship will be built between Japanese companies who have expanded business into Vietnam. Provincial governments, which will be propagated to other Japanese companies who consider expanding business overseas, could enable a virtuous cycle and increase investment attraction.

European Chamber of Commerce in Vietnam

The EU-Vietnam Free Trade Agreement will remain the top priority for us. Taking full advantage of this agreement will be key to the success of Vietnamese companies in the future. However, a lot of work remains to be done on simplifying administrative procedures.

For instance, until now, due to difficulties with the existing public-private partnerships (PPP) regime, investors, particularly foreign private investors, have simply either relied on constituting an investment project under the Law on Investment or implemented build–transfer projects. Although the PPP legislations constitute important developments, the existing legal regulations fail to resolve some serious issues.

We therefore see the need to develop a pipeline of visible projects, improve capacity and coordination among relevant government agencies, and prepare the practical implementation of a comprehensive regulatory framework for PPP projects in Vietnam.

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