2018: Continuing to reduce costs for businesses

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The above is the opinion of the Prime Minister answering a question from National Assembly member Nguyen Phi Thuong, at the delegation of the National Assembly of Hanoi on policies to reduce costs for businesses in 2018 and strategy to encourage domestic enterprises to strengthen relations with FDI enterprises.

Implement multiple solutions

On reducing costs for businesses, the Prime Minister said that after the Prime Minister's Conference with enterprises in May 2017, the theme of 2017 was chosen as “reduce costs for businesses”. Some enterprises and associations proposed in 2018 to continue to focus on reducing costs for businesses for the impact on the business community to be clearer, and to promote the results of the implementation of tasks and solutions that were launched in 2017.

In Resolution No. 01/NQ-CP dated 1st January, 2018 of the Government on major tasks and solutions to implement the socio-economic development plan and state budget estimates in 2018 (Resolution 01), the Government continues to set out tasks such as: reform of administrative procedures relating to land, tax, customs, agriculture, rural areas, information technology applications, start-ups, real-time reduction of executing procedures and operating costs of people and enterprises; Fundamentally improving and creating strong changes in the business environment for the competitiveness of the economy by regularly organizing dialogue with enterprises, promptly processing the feedback and recommendations to enterprises.

With the tasks and solutions set out in the Resolution No. 01 mentioned above, it can be said that the Government continues to strongly implement the policy of “reducing costs for businesses” in 2018.

Cutting costs regularly, raising the efficiency of using the State budget is a major policy of the Party and our state. Government Resolution No. 01 of 2017 has proposed measures to implement the plan to restructure the state budget for the period 2016-2020, arranging expenditures and reducing regular expenditures to gradually increase spending structure of development investment. Under the Resolution No. 01 of 2018, the Government continues to implement “accelerating the restructuring of the state budget towards increasing the proportion of domestic revenue by ensuring the proportion of 26% for development investment and the proportion of regular expenditures of 64.1% of total state budget expenditure. This is to ensure social welfare, defense and security according to the estimates assigned by the National Assembly”.

Resolution No. 01 of 2018 clearly states that ministries, branches and localities should concentrate on deploying the Resolution of the Party Central Committee on some issues of continuing the renovation and rearrangement of the apparatus of the political system effectively; To step up the administrative reform to raise the efficiency and effectiveness of directing the administration of administrations at all levels; maintaining discipline; To consolidate and rearrange the administrative apparatus of the State; To reduce the internal focal points of the ministries, the ministerial-level agencies, the agencies attached to the Government and the General Department.

Reduction of public service delivery units to achieve the objective of reducing public service delivery by 10% by 2021; continue to effectively implement payroll streamlining policies; To review and consolidate the functions, tasks and organizational structures of the agencies and units under the ministries, branches and localities in order to ensure their streamlining, effective operation and closely link with the streamlining policies.

Solutions to link domestic enterprises and FDI enterprises

The issue of strengthening linkages between domestic and FDI enterprises has been recognized by the Government for a long time. From 2013, the Government has issued Resolution No. 103/NQ-CP on the orientation to improve the efficiency of attracting, using and managing foreign investment, with many specific measures to promote the spillover of the foreign investment zone in the domestic economic sector.

In the past time, the foreign investment sector has made quite clear benefits and has begun to spill over into other areas of the economy through the introduction of new technologies and know-how, International standards in production and services, skill development of the workforce as well as employment creation in the supporting industries and tourism sectors.

The connection between domestic and FDI enterprises has initially achieved positive results. Some FDI companies have planned to cooperate and support Vietnamese enterprises to develop supporting industry network. Vietnamese enterprises are beginning to penetrate the supply chain of some multinational corporations such as Samsung, LG, etc. If in 2014, there are only 4 Vietnamese enterprises that are first-class suppliers for Samsung. 2017 has 29 Vietnamese enterprises as the direct supplier to Samsung and the localization rate has reached 57%.

According to the Provincial Competitiveness Index (PCI) survey in 2016, about 14% of private enterprises have FDI clients operating in Vietnam. From FDI enterprises, there are about 26.6% of FDI enterprises' inputs purchased in Vietnam. This rate is not high, but it is also a positive signal showing the improvement of the linkage between the FDI sector and the domestic business sector over time.

However, the results are slower than expected by the Government and the level of competition is increasing in the region. One of the main reasons is that policies promulgated to promote linkage between domestic and FDI enterprises have not been implemented well and effectively. At the enterprise level, the domestic enterprises themselves still have many limitations in raising the capacity of technological innovation to actively participate in linking with the FDI sector.

The core issue is that each domestic company must take the initiative in taking advantage of preferential policies and competitive advantages to improve the quality of products and services, and at the same time to have strategies to reach out to foreign companies to join the value chain. Foreign investment policy does not automatically create links and promote deep participation in the global value chain of domestic enterprises. Foreign investment policies will be promoted in parallel with other policies on trade, labor force skills development and training, as well as improved framework and capacity building of institutional force.

The solution to strengthen the link between domestic and FDI enterprises is to accelerate the implementation of policies and solutions issued recently to improve business investment environment, improve capacity; support enterprises in developed countries are capable of becoming partners, suppliers of multinational corporations, participating in the supply chain in line with the development level of enterprises; Support domestic enterprises to improve their capacity in technology, management and human resources, encourage domestic enterprises to apply advanced management systems, improve competitiveness and meet the requirements of FDI enterprises. The Establish linkage clusters by sector and adopt policies to attract enterprises to join the supply chain.

In addition to attracting investment from multinational corporations, attention should be paid to attracting competitive secondary investors who are able to join the production chain and create high added value. Some sectors where domestic enterprises are weak and lacking; Encourage FDI enterprises to actively cooperate with domestic enterprises, find cooperative models for each product.

On enhancing export capability, the Government issued Decision No. 1137/QD-TTg dated 3rd August 2017 approving the Scheme on enhancing the competitiveness of Vietnam's export commodities up to 2020, towards 2030, especially measures to improve the capacity of export enterprises.