Representatives of nearly 200 foreign-invested enterprises (FIEs) operating in Ho Chi Minh City gathered at a dialogue on March 16 with Dinh La Thang, newly-appointed chief of the municipal party commission, to convey their concerns over the business environment in the city, ranging from administrative procedures to tax and customs issues.
Cumbersome Administrative Procedures
A representative from the Japanese Business Association of Ho Chi Minh City (JBAH) stated that cumbersome and non-transparent paperwork was a major hindrance to foreign investment into Vietnam.
Sharing the same view, Vo Van Hue from the EuroCham in HCM City said that a large number of European companies had representative offices in the city and they were facing troubles with administrative procedures. This is an urgent issue that the local government needs to tackle, he added.
Another executive of an FIE complained of lengthy paperwork, especially the sub-license issue, which has overly consumed time of businesses.
Tax and Customs Troubles
Herb Cochran, executive director of the American Chamber of Commerce in Vietnam (AmCham Vietnam) in the city, said that there were tax issues that needed to be dealt with.
For instance, a HCM City-based AmCham member received tax breaks from Can Tho City for a project it carried out in that city. However, HCM City’s tax authorities denied those breaks and forced the firm to pay due taxes.
Another representative from a South Korean company complained that his firm was afflicted by the customs authorities. Specifically, the firm has been denied reductions in tariffs as stipulated by the government.
In addition, the absence of responsible officials in many cases has consumed time of the company. “The changing legal framework has been a headache for businesses,” he added.
Troublesome Regulation on Used Machinery
One of the most opposed regulations is Circular 23 of the Ministry of Science and Technology, which will come into force in July 2016. The circular bans the import of machines and technological devices that have been used for more than 10 years, instead of five year previously.
AmCham Vietnam and JBAH asked for the cancellation of this regulation, saying that it discourages foreign investors in Vietnam.
Mr. Cochran from AmCham argued that many machines have a life span of more than 20 years or more since they are regularly maintained and refurbished. In addition, it violates the WTO’s Technical Barrier to Trade (TBT) agreement.
Mr. Thang speaks with Nguyen Thanh Phong, chairman of HCMC's People's Committee. (Photo: VnExpress.net)
Party Head Pledges Easier Paperwork
In response to worries of FIEs, Dinh La Thang, a rising politician in Vietnam, asked local government officials to review regulations and resolve troubles faced by the foreign business community.
Mr. Thang affirmed that the municipal authorities would create the best conditions for businesses operating in the city, to make the locality an economic and financial hub.
He also asked FIEs to continue expanding operations, improve technologies and elevate labor productivity. Moreover, FIEs need to be transparent to enhance mutual trust, he said.
He tipped that the city was working on dialogue mechanisms and setting hotlines so that troubles could be removed more frequently. The city was implementing the electronic government for more transparent paperwork.
Speaking at the dialogue, Su Ngoc Anh, director of the city’s Planning and Investment Department, said that foreign investors put over $40 billion in 5,800 projects in the city between 1988 and 2015.
The city attracted $4.5 billion in foreign direct investment (FDI) in 2015, rising 38% year-on-year and accounting for 19.8% of the total in Vietnam.