VBF optimistic economy has turned the corner

June 14, 2009
LookAtVietnam - International agencies at the Vietnam Business Forum last week revealed their belief in Vietnam’s economic recovery.

“Some primary data suggests that the economy showed signs of strengthening in April and that the construction sector, a major economic sector, has been picking up,” said Victoria Kwakwa, World Bank country director in Vietnam.

Vietnam is showing early signs of economic recovery despite being among countries hit hard by the global credit crisis. The World Bank said the government had been moving in the right direction by working closely with the forum to address concerns.

“The government indicated that in the coming months, several things would be done in response to issues raised in the dialogues. This is good in that it helps reduce red tape, enables investors to do business more smoothly and reduces the cost of doing business,” said Kwakwa.

Specifically, the government’s core mission is to simplify administrative procedures (Project 30) by 2010. Prime Minister Nguyen Tan Dung has expressed his commitment to Project 30, which uses the internationally-proven Regulatory Guillotine approach. The simplification of procedures on all levels of government will involve a prime minister-appointed Special Task Force working with 87 other task forces from 24 ministries, agencies and 63 provinces.

Pham Van Phuong, deputy head of the Government Office, said the project was finishing administration procedure statistics for all levels. As of May 22, the figures read that there were 3,929 administrative procedures, 1,873 legal documents at the ministerial level and 46,303 administrative procedure samples in 63 provinces and central cities.

The review phase will run from August, 2009 to May, 2010 and will focus on administrative procedures. The implementation phase will be conducted from June, 2009 to December, 2010 to monitor implementation and offer evaluations.

“After completing the statistics in June, we will review all documents and procedures to make public the national database on administrative procedures on all ministry, province, district and commune levels, by September,” said Phuong.

Fred Burke, co-head of the Vietnam Business Forum’s (VBF) Manufacturing and Distribution Working Group, said the VBF would join the Project 30 Advisory Council working groups to identify notarisation, consularisation and legalisation of foreign legal documents for local enterprise establishment by August, 2009.
“Notarisation of foreign documents is costly, time consuming and wasteful.

Requiring simple administrative documents to be notarised, legalised consularised, translated and again notarised is very costly. This process consumes hundreds of dollars and it takes weeks or even months in some countries, dramatically lengthening the time it takes to perform even the simplest of administrative tasks,” said Burke.

“Project 30 is very important to Vietnam, but it is important to see this as part of comprehensive efforts towards administrative reform. The project is just one part of the story. Efforts will still be needed for the entire business environment of Vietnam to be affected,” said Kwakwa.

Alain Cany, chairman of Eurocham, said the chamber believed the reforms’ success would further Vietnam’s development as a favourable place for doing business and raise the level of foreign direct investment (FDI).

“There is strong feedback from not only our members, but across the business community that the approval process for setting up businesses in Vietnam is still laborious. For example, investors must approach a number of government agencies in a specific sequence, making the process unnecessarily time consuming,” said Cany.

The chamber, therefore, recommended that Vietnam would move to a “single window” approval system. It would then be the responsibility of the relevant ministry to coordinate with other governmental bodies where necessary.

Thomas Siebert, chairman of Amcham, said that as FDI to Vietnam plunged in the first months of 2009, it was important to remember that high quality foreign investment would flow to countries with the most favourable conditions.

Continued deficiencies, such as lack of contract sanctity and basic rule of law, hurt Vietnam’s competitiveness. Administration reform, including simplifying the approvals process, giving adequate time for comment and review of laws, and reducing the tax burden for businesses and investors, was essential to improving Vietnam’s competitiveness, he said.

One way suggested for Vietnam to improve its investment climate without great expense was by focusing on soft infrastructure through laws and regulations. Quick progress can be made with customs procedures by eliminating physical checks.

“Customs issues including valuations, procedures, transparency, regional variations and interpretations and World Trade Organization compliance, remain an issue for AmCham companies and reduce Vietnam’s ability to be a hub in the greater mekong sub-region and ASEAN,” said Siebert.



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