The Vietnam Business Forum (VBF), a sideline activity of the Consultative Group (CG) meeting for domestic and foreign enterprises, opened in Hanoi on December 4, providing a good opportunity for the Government, the business circle and donors to discuss and propose solutions to improve the investment climate in Vietnam.

The event was held by the International Finance Corporation – the World Bank’s private sector arm – in cooperation with the Ministry of Planning and Investment. Chairmen of the forum were Minister of Planning and Investment Vo Hong Phuc, WB country director in Vietnam Ajay Chhibber and IFC Country Manager Sin Foong Wong.

Investment climate in Vietnam

Speaking at the forum, Minister of Planning and Investment Vo Hong Phuc said the Vietnamese Government has been exerting great efforts to improve the investment climate with a view to pooling all resources at home and abroad for national development.

Vietnam is preparing all necessary conditions to attract and use effectively the increasing inflows of foreign investment in Vietnam. The country will fulfil bilateral and multi-lateral commitments during the international integration process, perfect market mechanism, and simplify administration procedures, and improve financial and banking systems.

Most speakers highlighted Vietnam’s improvements in the investment climate over the past year. The Business Sentiment Survey 2007 showed that the business environment was satisfactory for both domestic and foreign enterprises to conduct business in Vietnam. The result was also acknowledged in the WB/IFC Doing Business 2008 Report, whereby Vietnam’s ranking in Ease of Doing Business moved up from 94 last year to 91 this year.

The respondent enterprises said that the coming three years would be significantly better. This positive outlook might be associated with the improvements in legislation made by the government in view of WTO accession and the reform initiatives expected to take place as committed by the newly-appointed Government cabinet of Vietnam.

The survey also showed that the majority of respondent enterprises (90 percent) have planned to expand their operations over the next three years. Very few (10 percent) reported that they would remain the same.

However, there are some areas that need to be improved if Vietnam wants to become a more competitive place to do business. They include infrastructure, intellectual property rights protection, effectiveness of administration services, taxation administration and payment, availability of skillful labour and regulatory framework.

Topics of discussion with the Government

Banking and capital market, land and property, port and telecom were “hot” topics of discussion at the forum.

In term of banking, the working group gave some comments on draft legal papers on forex control, draft decree on the organization, governance and operation of commercial banks, foreign currency lending draft and consumer finance.

On behalf of the State Bank of Vietnam (SBV), deputy governor Phung Khac Ke affirmed that the SBV would ensure the compliance of WTO principles in order to avoid discrimination.

Regarding the procedures for establishment of foreign banks in Vietnam, deputy governor Ke said the SBV had received 19 applications for establishment of foreign bank branches and 5 applicants for establishment of 100 percent foreign owned bank.

However, only three applications have been accepted in principle (Commonwealth Bank of Australia, IBK of the Republic of Korea and Fubon of Taiwan).