Business community pushes quicker administration reform

News Desk
Viet Nam News
Publication Date: 03-06-2009

The business community has urged the Government to speed up administration reform, reform taxes, improve infrastructure and provide credit for small- and medium-sized enterprises to hasten economic growth.

Acknowledging that the Government had coped well with the global recession, business leaders at the Viet Nam Business Forum (VBF) yesterday said they expected to see healthy economic growth this year.

Some 400 international and local officials and businesspeople met at the forum organised by the World Bank Group’s private sector arm - the International Finance Corporation in co-operation with the Ministry of Planning and Investment.

The two-day forum discussed current business environment, banking and capital markets, manufacturing, distribution, tourism and the latest working results of several VBF working groups from the past six months.

The meeting in HCM City prepared for the Mid-term Consultative Group Meeting, to be held in Buon Ma Thuot City in the Central Highland province of Dak Lak next week.

"The Vietnamese Government’s policies, along with an effort from the business community, have helped the country’s economy achieve remarkable growth of 3.1 per cent for the first quarter of this year," said Minister of Planning and Investment Vo Hong Phuc in his opening speech.

"At the forum, we want to hear contributions from international and local businesses about what we did and what we should do next," Phuc added. The nation’s economy began to pick up from April and May, with the industrial sector and construction recording significant growth.

The National Assembly has set a goal of 5 per cent economic growth this year.

"Viet Nam is doing much better than other economies. We also are seeing some very early positive signs and hope in the next round of the stimulus package that these early signs result in an actual recovery, a strong and a robust recovery," said World Bank’s Country Manager Victoria Kwakwa.

"Viet Nam in the second half of the year will do well," she said.

The chairman of the HCM City Business Association, Huynh Van Minh, asked the Government to launch comprehensive administrative reform, especially in personnel, to ensure that all officials know exactly what they can do to support businesses and create a safe legal corridor for business operations.

Alain Cany, chairman of the European Chamber of Commerce in Viet Nam (EuroCham), said the complexity of administrative procedures and inconsistent, poorly co-ordinated implementation of laws and regulations among agencies and authorities presented a serious hindrance to running a successful business in Viet Nam.

Though praising the Government for amending the new personal income tax law on expatriate employees, Alain said many EuroCham members still shouldered tax burdens of up to 50 per cent.

Brian O’Reilly, board member of the Australian Chamber of Commerce in Viet Nam (AusCham), asked the Government to establish a transparent business environment which includes a personal income tax and other tax regime that is internationally competitive.

American investors said they were worried about infrastructure deficiencies and inadequate logistics.

"Many international financial organisations have contributed massive loans to develop transport infrastructure. However, the effective use of these funds have been constrained by inefficiencies and corruption," said Thomas Siebert, chairman of the American Chamber of Commerce in Viet Nam.

Financial markets
The Government and the State Bank of Viet Nam have encouraged domestic demand through its economic stimulus package, which has ensured that the trade deficit remained at a low level for the first five months of the year.

The Banking Working Group said it had seen good progress since the last VBF, which demonstrated the value of a continuing dialogue between policymakers and businesses.
The group suggested a forward-looking roadmap for the banking industry and efficiency, and clarity in the way the market and the regulation should work to ultimately reduce the "cost of delivery" of banking products and services.

The Capital Markets Working Group congratulated the Vietnamese Government for acting swiftly, flexibly and with force, to tackle the threats to the economy.

"The financial markets in Viet Nam reflect the situation with low volatility in interbank and bond rates, and a positive sentiment to real estate and equity markets," said Dominic Scriven, head of the working group.

The working group also noted that competitive pressures had changed and that undue shocks to the financial markets, through rapid, unannounced changes in monetary, fiscal or regulatory policy, should be avoided.

It also said that it was necessary to create a unified regulatory structure for all monetary and capital market entities and a private sector pension fund scheme.

The Manufacturing and Distribution Working Group hailed progressive changes in Viet Nam’s legal system to achieve compatibility with international practices.

However, the working group recommended amendments to the Investment Law on the cancellation of requirements for investment licences to domestically-invested projects, the announcement of the time period expected to issue resolutions providing guidelines for implementing WTO’s commitments, and the compulsory sale of foreign currencies.