Though Vietnam has made significant progress in creating a more business-friendly environment, experts have urged the government to further strive for removing impediments in legal regulations and administrative procedures that are inhibiting foreign direct investment (FDI) in the country.
According to Nobufumi Miura, chairman of the Japan Business Association in Vietnam, the robust growth of the Vietnamese economy has acted as a catalyst for Japanese firms to intensify their production and business activities in the Southeast Asian country.
Indeed, many have mapped out new investment schemes and capital injections for the future.
Despite this, a number of investors have complained about the difficulties they met in the course of their operations in Vietnam due to the low predictability of the nation’s policies and legal regulations.
In fact, many businesses have been unable to react promptly to the sudden changes in such policies and some have even been forced to halt their production and business on occasions.
“We hope that the Vietnamese government will set forth adequate solutions to help enterprises avoid damage when it executes new policies and legal regulations,” Miura said.
Besides, Miura claimed that cumbersome administrative procedures have hindered enterprises from increasing their investment. He expected the government would carry out a proper solution aimed to quicken the decision-making process of authorities through further decentralizing power and clarifying the responsibilities of competent agencies.
Hong Sun, vice chair of the Korean Chamber of Commerce in Vietnam, said many companies from the Republic of Korea have pumped additional capital into the country’s high-tech sector. However, in order to further absorb investment inflows into high-tech production, Vietnam must make vital adjustments to existing laws and institutions.
Meanwhile, Virginia Foote, vice chairwoman of the American Chamber of Commerce in Vietnam (Amcham), said Amcham sees great opportunities in Vietnam, for both domestic and foreign enterprises. There has been a partly shift of production facilities from China, then Vietnam is well placed to take advantages of this opportunity, she asserted.
However, she noted that tax rates and policy-related issues are considered major barriers for foreign firms operating in Vietnam.
Lindsey Ice, economist at global economic analysis and forecasts provider Focus Economics, said that the red tape associated with administrative procedures represents an important hindrance for many firms in Vietnam, explaining that a complicated network of administrative makes it difficult for firms to register, pay taxes, and perform other administrative tasks.
Moreover, she said, firms often have to deal with multiple agencies that may lack cohesion in policy procedures, suggesting though the government has taken concrete steps to streamline procedures and strengthen institutional frameworks, continued progress will need to be made in order to further boost FDI.
Public policy focused on easing the costs of doing business is essential for promoting a more business-friendly environment, Lindsey said.
The Vietnamese government has so far also spelled out targets to improve the country’s business environment. It has issued a resolution, targeting to climb 5-7 places in the World Bank’s ease of doing business rankings and reach the top four in Southeast Asia in 2019.
It also sets to climb 15-20 places in the next three years. Vietnam last year ranked 69th among 190 economies in the World Bank’s business-friendliness rankings.
To meet the targets, the government has so far ordered ministries and local authorities to review and trim off vague business conditions before the third quarter of this year with an aim to improve the country’s business environment.
It also required the government agencies must not make more business conditions which are against the law, noting officials who implement new business regulations incorrectly will be severely punished.
The Ministry of Planning and Investment is entrusted with evaluating how these changes benefit businesses practically and reporting to Prime Minister Nguyen Xuan Phuc in June.