Macroeconomic alterations rewrite the playbook

Macroeconomic alterations rewrite the playbook

A strong wave of domestic institutional reform is creating internal momentum to boost the investment climate and drive a breakthrough in business alongside the new US tax policy with profound impacts on Vietnam.

Vietnam aims to complete the legal framework for new economic models, including digital platforms, fintech, AI, and digital assets. Upcoming amendments to 30 laws, along with tax incentives and investment promotion policies, are expected to drive a major shift in the country’s economic structure.

To expedite the legislative process for these policies, ensuring swift, effective implementation that delivers tangible value to businesses, experts emphasise the necessity of comprehensive institutional conditions, resource availability, and synchronised coordination across all levels and sectors.

Phan Duc Hieu, a member of the Economic and Financial Committee of the 15th National Assembly (NA), informed VIR that on June 2, during discussions on the amended Enterprise Law, the government proposed a general limit on conditions for private bond issuance.

“As National Assembly deputies, we always assert that setting a general limit is inappropriate; instead, considerations should be based on the business sector and the company’s legal compliance history,” he said. “A flawed institutional framework poses significant risks for businesses, as they lack clear compliance guidelines.”

Hieu emphasised that compliance criteria will be a focal point in upcoming policy development.

“Businesses must factor legal compliance costs into their operational expenses to ensure safety. This legislative amendment differs from previous ones. It is not merely about additions but about removing barriers. This time, the focus is on elimination, resulting in simpler documentation,” said Hieu.

Resolution No.198/2025/QH15, passed by the NA in May, introduced policies to foster private economic development, targeting enterprises, business households, and individuals. However, the resolution addresses only part of the work; institutionalisation remains paramount. Businesses are hopeful about the forthcoming amendments and supplements to 30 laws, including those on innovation, bidding, and investment.

“Earlier this year, during an extraordinary session, we amended the Public Investment Law to enhance decentralisation. Previously, the government approved projects with a total investment of $400 million, but now it approves projects with capital up to $1.2 billion. Currently, localities and investors hold primary decision-making authority,” said Hieu.

According to him, if this round of amendments fails to yield results, further revisions will follow by year-end. This legislative amendment focuses on creating more favourable mechanisms for the business community.

“Regarding some solutions in Resolution 198, the government has promised to issue guiding decrees in this session to immediately implement mechanisms like procurement, limited bidding, or direct appointment for critical projects,” he added. “If major, vital projects always open for international bidding, and it’s the first time such work is undertaken in Vietnam, no Vietnamese enterprise has the experience, making it challenging for them to win.”

Truong Thanh Duc, director of ANVI Law Firm, noted that the current context is rapidly changing. Previously, businesses constantly pushed and pressured the government, but now the situation is reversed.

“In the past, businesses were already running at full speed. Now they need to accelerate even more. Previously, a Party resolution took at least six months, even up to three years, to complete, whereas now it’s finalised within 1-2 months.”

Duc expressed confidence and hope that everything is progressing swiftly and positively. Of course, there are some noteworthy points, such as the VAT rate of 8 per cent.

“With the current pace of change, achieving the plan may take at least one to two terms, by which time opportunities may be missed. The legal system is the core bottleneck. Instead of amending thousands of laws, just one amendment may suffice,” he noted.

Sharing additional insights on existing issues in the bond market, Trinh Quynh Giao, CEO of PVI Asset Management, highlighted that Vietnam’s market faces a liquidity problem with bonds, causing investor apprehension.

“Businesses aiming to attract capital only dare to set a five-year term. This mismatch between supply and demand, coupled with regulations prohibiting investment in capital restructuring, means only the initial cycle is feasible. Companies can repay over five years but can’t secure further investment, even if the project and company remain sound. This effectively blocks capital from insurance sources,” she said.

The second issue is that real estate companies are also hesitant to issue bonds. Sharing practical experiences with top-tier real estate firms, Giao observed that bond regulations are now too stringent.

“Previously, bonds could be used for working capital, and now they’re restricted to specific projects,” she added. “Therefore, the bond market’s decline isn’t solely due to trust issues but structural problems. Currently, banks account for 77 per cent, while insurance companies like ours inject capital into banks via bonds.”

VIR