International businesses seek restoration of supply chains

February 22, 2022 | 10:00
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While Vietnam is working to spur economic recovery and development, international businesses are seeking stronger actions to develop supply chains to facilitate their future expansions.
International businesses seek restoration of supply chains
Global investors are pinning hopes on strong Vietnamese recovery, Photo: Duc Thanh

Concerns and expectations are the common feelings Hong Sun, vice chairman of the Korea Chamber of Business in Vietnam (KorCham), has experienced over recent years when it comes to the annual Vietnam Business Forum (VBF), which is a policy dialogue rendezvous between the Vietnamese government and the business community.

The annual Vietnam Business Forum is taking place on February 21, attracting representatives of international businesses as well as policymakers.

Themed on restoring the economy and development supply chain in the new normal, the event comes at a time that is important for both foreign and domestic companies and provides an opportunity to develop an enabling environment that drives innovation and sustainable growth.

The top issues of discussion are expected to include restoring supply chains to ensure the circulation of goods and safe and smooth production; attracting investment flows into large-scale investment projects; improving regulatory reforms to international standards; and developing human resources, competitiveness, and a sustainable economy.

Sun represents thousands of South Korean businesses and investors in Vietnam and raises a voice for them at various events. In 2022, he is again in the hot seat with both old and new issues, especially the restoration of supply chains.

“Many problems among South Korean businesses and investors have been solved thanks to strong efforts by the Vietnamese government. Some others are emerging and we expect the government’s support to continue to make success in Vietnam with future plans there,” he told VIR.

As Vietnam is now taking action to promote economic recovery, what KorCham members and other international businesses mostly expect is how to restore and develop supply chains, thus promoting a sound recovery because it is the key for them to gain future success. To this end, they expect a continuation of the safe pandemic prevention policy, as well as digitalisation reform.

According to the British Chamber of Commerce Vietnam, one of the key factors for the restoration and recovery is the reopening of cross-border travel and favourable procedures for entry policy for executives, incoming investors and tourists.

Tetsu Funayama, chairman of the Japan Chamber of Commerce and Industry, said that overcoming supply chain disruption was one of the major problems facing Japanese companies in 2021. They have great expectations that the VBF will work with the Vietnamese government to continue in a post-pandemic direction.

American investors also hope to see more predictable, streamlined procedures for executives, incoming investors, and technical support teams to maintain operations and facilitate expansion and new investment. That is according to a representative of the American Chamber of Commerce, which represents more than 650 corporate and 2,500 individual business representatives throughout Vietnam.

“We recommend eliminating the need both for entry approval and for so many notarised documents. It is also our hope that the doors for tourism can begin to open to help the badly-hurt hospitality industry,” the representative added.

To enhance supply chain capabilities, thus ensuring the smooth circulation of goods and increasing competition, international businesses also expect the enhancement of the investment climate, improvements in administrative reform and legal enforcement, further support for the manufacturing sector, and the development of the digital economy and sustainable energy.

A representative of the Organization for Economic Cooperation and Development said that about 70 per cent of international trade involves global value chains, in which flaws have been cracked open thanks to the pandemic. “It has been underlined how the interconnectedness of our global economy exposes our global value chains to disruptions,” he said. “These value chains are critical to the delivery of essential goods. They cross borders numerous times before they are incorporated into a final product and shipped to consumers all over the world. This implies that local disruption can have global impacts.”

With the world attempting further to move on from lockdowns, the Vietnamese government has taken many measures, such as promulgating new or amending many legal documents, providing support packages in order to gradually remove difficulties, enhancing supply chain capabilities, and contributing to quickly restoring production and business activities of enterprises. However, the application of regulations and policies in localities still has some shortcomings that have failed to create favourable conditions or add trust in investors. Some provisions in legal documents are still contradictory, causing difficulties in application.

In an effort to further facilitate business recovery, the government is doing more with bolder actions. Prime Minister Pham Minh Chinh last week signed Decision No.204/QD-TTg in order to approve the members of the government’s Administrative Reform Steering Committee, with the PM as committee head, while also accelerating digital transformation efforts.

Alain Cany - Chairman, EuroCham

International businesses seek restoration of supply chains

Nearly all of the issues raised by our Nutritional Foods Group Sector Committee have been resolved, including the fixing of contradictions in guiding customs documents related to tariff application, and regulations on microorganism limits.

Some issues raised by our Human Resources and Training Sector Committee have also been addressed, such as the burdensome requirement for foreign workers to leave Vietnam as part of the new work permit application process. In the healthcare sector, we applaud the approval of reduction and simplification of regulations pertaining to business activities under the management of the Ministry of Health and the ongoing development of the National Strategy for Pharma with a vision to 2045.

Even with these remarkable improvements, we estimate that less than half of the matters raised in EuroCham’s VBF Position Paper 2020 have been fully solved, improved, or are currently in the process of being improved. Many solutions are still pending because they need to be handled at a macro-level. We understand that the government needs more time to study and settle these complex issues.

We know that our ongoing dialogue with the government will lead to continued policy progress, which will facilitate Vietnam’s impressive ongoing economic development.

Jenkin Chiang - Co-founder and managing partner SLP

International businesses seek restoration of supply chains

The pandemic and also ongoing trade tensions between the United States and China have deeply affected Vietnam’s economy, driving more manufacturing investments and e-commerce.

These trends have increased both short-term and long-term demand for industrial real estate. SLP intends to meet customers’ increasingly diverse warehouse demands by leveraging our development, operational expertise, and extensive global customer network to be a leader in Vietnam’s rapidly modernising logistics landscape.

In these challenging times, the government has continued to make regulatory approval processes more transparent and flexible to attract more direct foreign investment to support economic recovery. In addition, we expect more state investments in infrastructure to make Vietnam the most competitive country in Southeast Asia.

Consistent with government policies and positive macro trends, SLP, together with its strategic partner GLP – a global investment manager and business builder in logistics, real estate, infrastructure, finance, and related technologies – has launched GLP Vietnam Development Partners with an investment capacity of $1.1 billion, which is one of the largest logistics development funds in the region.

Marko Walde - Chief representative German Industry and Commerce in Vietnam

International businesses seek restoration of supply chains

More than half of German companies in Vietnam expect their businesses to improve. Eighty-three per cent of participants in a recent survey of ours intend to invest further in Vietnam, and 33 per cent assume an increase in employment in the upcoming months.

For the mid-term expectation, we look forward to an increase in investment from Germany, based on the constantly improved conditions here. Many high-valued projects are expected to flow into Vietnam in the long term, including from Germany.

Our investors would bring their well-known technology in management and training, allowing more value-added production and less waste of material and resources.

However, I also see that participating in free trade agreements would also create challenges for Vietnamese products, in terms of intellectual property rights, global competitiveness, and origins of the product’s materials.

Local companies should improve their competitive advantages as soon as possible. Vietnam should adjust policies to speed up the development of supporting industries in terms of educating highly qualified workforces, exchanging experiences, and digitalisation.

We think these are essential strategies for Vietnam to develop sustainably.

By Bich Thuy

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