New opportunities

According to a report released at the Vietnam Business Forum, held recently in Hanoi, by the Ministry of Planning and Investment, the World Bank (WB) and the International Finance Corporation (IFC), the enterprises who took part in the survey said that Vietnam has made considerable improvements in its investment environment, especially in access to land and foreign currency exchange. These findings have in part confirmed the “Doing Business 2008 Report” where Vietnam has risen by 35 points on the “Access to credit” rankings.

This year’s survey was based on opinions collected from 234 businesses, showing remarkable increases from 96 in 2005 and 202 in 2006.

Out of the 234 respondent enterprises, 70 percent were domestic and 30 percent foreign - a reversal of the pattern over the past few years. This result can be attributed to a much more active participation by local business associations in this year’s survey. It also indicates that domestic business groups and enterprises are better aware of their roles in reporting their concerns and contributing their opinions to senior Government officials to help improve the investment invironment.

Notably, foreign enterprises appreciated Vietnam’s efforts to upgrade its law and regulations in line with international regulations and practices, as indicated by 42 percent of foreign respondents taking notice of improvements in “ Conformity to international regulations and practices”

Meanwhile, domestic enterprises have said that Vietnam’s admission to the WTO will require foreign enterprises to comply with international regulations on restructuring enterprises and improving their business activities. In return, domestic enterprises will be able to get access to the world’s most advanced technologies and financial resources. However, in order to have such a positive impact, the Vietnamese Government should accelerate reform to increase domestic enterprises’ competitive capabilities and transparency of the legal environment and also improve its infrastructure and administrative services.

Investment environment improved

There are some areas that businesses said needed to be improved if Vietnam wants to become a more competitive place to do business. They include infrastructure, intellectual property rights protection, and the effectiveness of administration services.

The availability of skilled labour is also an urgent issue. Respondent businesses expressed concern over the shortage of skilled labour – a factor which hampers businesses’ competitiveness.

Ly Dinh Son, vice chairman of the Vietnam Association of Small and Medium-sized Enterprises, said that land allocations to small-and medium-sized enterprises (SMEs) are an urgent issue in many localities. While some have succeeded in attracting foreign investors and major domestic enterprises to invest in their industrial zones and parks, SMEs always claim to have difficulties securing space for their production facilities in those industrial areas.

Dang Duc Dung, vice chairman of the Hanoi Business Association, shared the same opinion. He suggested that policies relating to real estate should be reformed quickly to mitigate the boom in house prices. This would help businesses and citizens concentrate their financial resources on business activities, technology and human resources development instead of the real estate sector.

Regarding Vietnam’s business environment, Minister of Planning and Investment Vo Hong Phuc pointed out three factors which need to be improved – human resources, infrastructure and land. Mr Phuc said the quality of human resources still remains low, with just 30 percent of the labour force being skilled. Infrastructure construction is also in need of capital investment. The Government’s plan of action has given top priority to developing infrastructure projects in a bid to maintain a high and stable growth rate. Land is an urgent issue, particularly in the context that the real estate market is overheating and the cost of land is getting higher. Along with strong reform in administrative procedures, the Government is seeking measures to allocate land and secure stable land prices for investors to build economic zones and industrial parks.