Business climate sunny thanks to decisive steps
Business climate sunny thanks to decisive steps
In order to make it more favourable for investors to do business in Vietnam, the government has been making great efforts to improve the country’s business and investment climate.
Mai Tien Dung, Minister and Chairman of the Government Office, told VIR about these efforts and the government’s future plans to create a more business-friendly climate in the country.
The government has taken decisive actions in reforming the Vietnamese business climate in order to boost economic growth and support people, enterprises, and investors. What results have been achieved so far?
The government, the prime minister, ministries, agencies, and localities have been actively making solutions to improve the domestic business climate in service of the business community. The number of newly established enterprises has been increasing strongly, showing that the efforts of the government, ministries, and localities have been highly appreciated by high-profile international organisations.
For example, Vietnam has moved up 23 notches in the World Bank’s latest Ease of Doing Business rankings, from the 91st to the 68th place out of 190 economies.
Also according to the World Bank, the logistics index of Vietnam was ranked 39th out of 160 nations in 2018 (up 25 places against 2016). In 2016 and 2017, Vietnam was among the four ASEAN economies showing the highest indexes on cross-border goods trading.
The time for direct customs clearance at Vietnam’s border gates has been reduced by three hours (from 58 to 55 hours) for exports and by six hours (from 62 to 56 hours) for imports. The cost for direct customs clearance at the border gates for a goods package has been reduced by $19.
It is estimated that with more than 11 million customs declarations in 2017, enterprises saved more than $200 million on customs clearance. Enterprises also saved more than 16 million hours of storage for exports with 5.36 million export declarations, and more than 34 million hours of storage for imports with 5.72 million import declarations.
The World Economic Forum also raised Vietnam’s national competitiveness index for 2017-2018 by five ranks compared to 2016, from 60th out of 138 nations and territories to 55th out of 137 nations and territories. Vietnam’s sustainable development index also ranked 57th among of 156 nations and territories (up 11 places, the third rank in the ASEAN).
In addition, Vietnam’s economic growth hit 6.81 per cent last year. According to the World Bank, the rate will be 6.8 per cent this year. Administrative procedures in Vietnam have become increasingly synchronous, simple, and transparent, as well as more in line with international practices.
Business conditions have been reduced. Since earlier this year, Vietnam has cut 1,700 lines of goods subject to specialised examination when being imported and 968 business conditions. It is expected that more than 3,000 lines of goods and over 2,800 business conditions will be cut or simplified in the near future.
Regarding the implementation of the “one-stop shop” mechanism, nearly 30 cities and provinces have established public administrative centres to solve administrative procedures for people and enterprises.
In the first nine months of this year, 96,611 enterprises were established with the total registered capital of VND963.4 trillion ($42.63 billion). The total capital
inserted into the economy was VND2.84 quadrillion ($125.9 billion). The total number of newly established enterprises and enterprises resuming operations hit nearly 108,400.
Besides, since early this year, there have been 2,182 newly established foreign-invested projects registered at $14.12 billion.
These figures have been made possible by decisive measures from the government, ministries, and localities in reforming Vietnam’s investment climate.
How have the improvements in the domestic investment environment benefit the business community?
As I have said, improvements in the business climate have facilitated enterprises joining the market and boosted business and investment. The biggest benefit for enterprises is the reduction of costs for business operation and production. For example, in the customs sector, enterprises had to sacrifice nearly 30 million days for specialised examinations in 2016, at a cost of VND14.3 trillion ($632.74 million). However, the cost for this procedure for one goods package has been reduced by $19 since then.
As for food safety, the government enacted Decree No.15/2018/ND-CP on February 2 to remove all procedures for specialised examination for five groups of products. Some 90 per cent of food goods packages are no longer subject to this type of examination before they get customs clearance. This has helped save nearly 2.9 million days of work, or VND2.5 trillion ($110.62 million).
Which lines of reforms do you find particularly important?
I would say that in all orientations, those touching on the institutional setup are the most important. The reformation of administrative procedures and reception of recommendations and feedback from organisations and individuals about mechanisms, policies, and regulations have helped government agencies to continue perfecting institutions in general and policies on the business climate in particular.
Besides, law enforcement agencies continue improving administrative procedures and simplifying dossiers in order to cut down compliance costs at both government agencies and enterprises.
In addition, it is necessary to maximise the use of the competitive advantages of localities and regions in order to lure in investment,
contributing to localities’ socioeconomic development. However, localities must reform themselves more so that they will not lag behind others.
What challenges will the government need to address so as to improve the business climate?
One of the biggest challenges is that ministries and relevant government agencies show varying levels of initiative in reforming the business environment. While there have been some ministries which have been actively removing and reducing business conditions, such as the Ministry of Industry and Trade and the Ministry of Construction, many other ministries have been less active.
The removal and reduction of lines of goods subject to specialised examination and the simplification of procedures for specialised examination have also been progressing rather slowly and ineffectively at ministries and government agencies. There are plenty of cases where ministries and relevant government agencies examine the same goods, which undermines enterprises’ performance.
To create significant changes in the business and investment climate, it is important that the most favourable conditions be offered to the business community. In the near future, long-term solutions such as the eradication and reduction of business conditions and reform of specialised examinations must receive special attention from ministries and relevant government agencies via concrete actions.
In addition, more solutions to reduce costs for enterprises must be applied, such as the provision of public online services in solving issues related to enterprises, the deployment of the national public service portal and the national one-stop shop, the ASEAN Single Window, as well as the reception and settlement of recommendations and feedback of people and enterprises.
Government agencies must also organise periodical dialogues with the business community. Besides, the role of the prime minister’s Consultancy Council for Administrative Procedure Reform in proposing initiatives for reforming mechanisms, policies, and administrative procedures must be promoted.
Another solution of no less importance is the development of e-government services, with a roadmap towards a digital government and a digital society as part of Industry 4.0.
In addition, it is also necessary to increase the active participation of all people and enterprises to further the government’s efforts to reform the domestic business and investment climate.
