High hopes put on economic institutional reforms in 2020

High hopes set on economic institutional reforms in 2020.

A research team of the Central Institute for Economic Management under the Ministry of Planning and Investment cited the review of the World Economic Forum (WEF) as saying that Vietnam's competitiveness has seen impressive improvements with the jumps of 10 spots from 77 to 67 and 3.5 points in 2019. As many as 8 out of 12 indexes improved, including institutions, information technology application, skills, product markets, labor market, market size, business dynamics, and innovation capacity.

Vietnam Chamber of Commerce and Industry (VCCI) reported that over the past time, the government has made great efforts to create a business environment and encourage the new establishment of enterprises. The government also directed ministries, sectors and localities to take specific actions to improve the rankings and the business environment.

In spite of some improvements in tax administrative procedures, tax refund - related procedures remain a deadlock.

Tax inspection activities have not been improved as up to 33 percent of the surveyed businesses said that tax officials have tried to make disadvantaged conclusion for them and 30 percent of these firms made complaints about informal costs emerging from tax inspections. The bankruptcy process of enterprises, investor protection and import-export procedures remained at a standstill.

Vu Tien Loc, Chairman of the Vietnam Chamber of Commerce and Industry (VCCI) said the business community highly appreciates the results from the Government’s economic administration during 2019 with great efforts to leverage growth and reforms. Amid increasing global difficulties, Vietnam still gained its economic highlights in terms of growth, reform and integration during 2019.

Loc expected 2020 will be a year of new breakthroughs in terms of business institutional reform and administrative procedures.

Although, the government has made efforts to improve the business environment, especially the elimination and simplification of conditional business lines… business conditions are still the main obstacle that hinder the growth of enterprises. Vietnam is now ranked 5^th in ASEAN in terms of business climate, far from the rankings of Singapore and Malaysia.

The barriers facing businesses mainly focus on the incomprehensive management of legal documents between state management agencies, and specialized inspection entities and even slow reforms. Blameworthily, some newly issued documents go against the direction of the government while there are different implementations of the same policy.

Nobufumi Miura, Chairman of the Japan Business Association in Vietnam said that it Vietnam needs to ensure stable legal frameworks and investment encouragement measures. Any change in tax policy will make impacts on business plans and investments of enterprises.

Accordingly, many businesses are also hesitant to enlarge their investment as they are concerned about unstable tax rates and hinderances. The burden of taxes and fees will lessen the attractiveness and competitiveness of Vietnam’s investment environment.

According to experts, to make the Vietnamese economy a bright spot amid global slowdown, the country should give top priority to perfecting its economic institution. The most important thing to spur growth and socio-economic development during 2020 is to remove business - related barriers and enhance the connection of domestic small and medium sized enterprises amid the widespread Industry 4.0 and the increasing implementation of free trade agreements (FTA).

Given this, it is necessary to focus on reviewing and resolving the overlapping and conflicting legal documents related to doing business, investment, construction, land and environment, housing, bidding and others.

The VCCI representative said the elimination and simplification of business conditions and administrative procedures should be a must to incline towards breakthroughs in business institutional and administrative procedure reforms.

At least 20% of the existing procedures should be removed to save time and costs for people and businesses.

“This year would see complete improvements in the business environment in order to create a more favorable business climate", Loc from VCCI said at the Annual Vietnam Business Forum (VBF) 2019.

Deputy Minister of Finance Vu Thi Mai noted the ministry is compiling documents to guide the implementation of the revised Law on Tax Administration and the amended Securities Law while amendments to the government’s Decree No. 134/2016/ND-CP will be issued in the first quarter of 2020 with additional favorable conditions for import and export as suggested by domestic and foreign businesses.