Vietnam Business Forum 2017: Vital steps needed to go forward
Before the Vietnam Business Forum 2017 takes place on December 12, a series of recommendations and suggestions from domestic and foreign enterprises have been discussed.
Few days ago, Executive Director of American Chamber of Comcerce (AmCham) Adam Sitkoff has expressed his optimistic with regard to the Vietnams’ economic prospects. This was not overrated as American companies have invested nearly 9.5 billion USD in Vietnam as of November 2017 in various sectors in the economy.
However, in some cases, investments do not materialize due to challenges dealing with corruption and an over-complicated, restricted, and unclear licensing and regulatory environment. For example, the requirement on certification of announcement of conformity with food safety regulations in Decree 38/2012/ND-CP on guiding the implementation of the Law on Food Safety is highly disruptive to the operations of the food and beverage industry, resulting in higher costs while not bringing any value to food safety management.
Another concern is Decree 181/2013/ND-CP guiding the implementation of the Law on Advertisement which requires a Vietnamese entity to only engage a locally licensed advertisement agency. This requirement not only exposes Vietnam to potential violations of the “national treatment” principle under their World Trade Organization accession agreement, but also restricts opportunities for small and medium enterprises (SMEs) from promoting their products and services domestically and internationally when they advertise their products and services on cross border platforms like Google or Facebook. With limited budgets for advertising and marketing, the Vietnamese SMEs find these platforms the easiest and most effective way to promote their products and services. Unlike large 4 Challenges of Changes in Policy on Foreign Investors in Vietnam Hanoi, 07/12/2017 enterprises, these SMEs do not need and cannot afford the engagement of advertising agencies for their advertisement and marketing activities.
Moreover, Decree 54/2017/ND-CP guiding the implementation of the Law on Pharmacy includes provisions that are inconsistent 3 Challenges of Changes in Policy on Foreign Investors in Vietnam Hanoi, 07/12/2017 with the Law and their enforcement would force some current foreign investors to close their fully licensed warehousing and transportation services -- causing a loss of hundreds of millions of dollars for the investors and a disruption of supply of thousands of life-saving medicines.
On the other hand, changes in policies and regulations in investment are inevitable due to economic requirements, new context from both supply and demand of the world’s FDI, as well as the capabilities to absorb FDI of Vietnam.
However, according to Prof. Dr. Nguyen Mai, these changes will have both positive and negative impact. Moreover, the issue would be the implementation process. For example, Vietnam’s business environment has increased 14 places in the Doing Business report of the World Bank, and increased 5 places in the Global Competitive Index of the World Economic Forum. As such, issue sometimes do not lie in the changes in regulation and policies, but in the way administrative agencies implementing law. More importantly, decreasing the cost and complication of doing business will benefit Vietnamese-owned businesses, many of which are SME’s, and will spur entrepreneurship, which will, in turn, ensure Vietnam’s future competitiveness and growth.
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Vietnam news in brief - August 24
Read The Hanoi Times to stay up to date on developments in Vietnam.
- Growing number of FDI firms moving to Vietnam
- Vietnam Gov’t committed to facilitating Adani Group’s US$2-billion port project
- Vietnam Railway proposes US$87 million for Hanoi–Dong Dang railway upgrade
- Vietnam’s North-South high-speed railway to be designed for 350km/h
- Vietnamese gov’t urged to address impact of global minimum tax
- Samsung plans drastic investment increase in Vietnam over next three years