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VCN - A representative of the Investment and trade working group said that legislatures might consider amending the Land Law to allow companies in Vietnam to mortgage land use rights to foreign lenders. This is because companies in Vietnam have difficulty accessing competitive financing sources outside of Vietnam since they cannot mortgage factories and land use rights to foreign lenders. Additionally, businesses suggested that Vietnam diversify markets and improve the efficiency of post-harvest activities, including packaging.
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Need to change mechanisms and policies to promote resources
On March 17 in Hanoi, the Vietnam Business Forum Alliance, including the Ministry of Planning and Investment, the World Bank (WB), and the International finance corporation (IFC), held the annual Vietnam business forum (VBF) with the theme "The business community accompanies the Vietnamese Government in promoting green growth". Speaking at the forum, Soren Roed Pedersen, co-chair of the Vietnam Business Forum Alliance, said that VBF's overall goal in the past 25 years was to represent the voice of businesses, to convey difficulties and obstacles in the business community's activities to the Government, and to join hands with the Government to create a business environment.
|Institutions and laws must be continuously improved to remove difficulties for production and business. Photo: H.Diu|
"With the theme 'The business community accompanies the Vietnamese Government in promoting green growth', we understand that this is an inevitable but long-term path. Therefore, it is necessary to change mechanisms and policies to promote resources and motivation. Thus, many difficulties and challenges need sharing and discussion," said Soren.
At the meeting, 12 working groups of VBF raised obstacles and difficulties in terms of each segment's mechanism and legality, such as energy, agriculture, digital economy and economy, trade, infrastructure, taxes, and customs. Sharing at the forum, David John Whitehead, Agricultural Working Group, said that high inflation in export markets, including the US and the EU, has reduced import demand for seafood products since the fourth quarter of 2022. This trend might last until the first quarter of 2023. However, in the second half of 2023, the world economy is expected to recover, and the demand for seafood imports will increase. "It is expected that in 2023 and the following years, the market requirements will become more stringent, forcing the industry to innovate, improve resilience, and pinpoint opportunities to build a sustainable agriculture sector with an emphasis on environmental responsibility while focusing on circular agriculture as part of the circular economy," said David. Vietnam also needs to continuously diversify markets and improve the efficiency of post-harvest activities, including packaging.
The procedure is still complicated
According to Tran Anh Duc, Investment and Trade Working Group, many positive points have been seen in improving investment and business registration procedures recently. However, some complicated regulations still require paper copies, while businesses are now mostly turning to online work. Furthermore, regarding administrative procedures, many businesses complained about complicated paperwork in areas such as retail business related to the Departments and the Ministry of Industry and Trade. In addition, even more than six months, many procedures have not been approved for licensing. Therefore, we recommend improving and accepting e-procedures to reduce business administrative costs.
Many joint venture enterprises that have come to Vietnam since the early 1990s need to be renewed after 30 years of operation. Enterprises expect to have specific instructions to extend projects and business contracts. Doing this will also affirm Vietnam's position in prioritizing attracting foreign investment.
Regarding the legal framework for land and real estate, the real estate business sector faced many difficulties, partly due to procedural problems. For example, some businesses said it took 3-5 years, even more than five years, to complete all procedures for developing real estate projects in Vietnam. In addition, many legal documents have overlapping provisions that cause difficulties and prolongation. Therefore, we hope that the relevant authorities will listen and actively remove difficulties and improve the law for businesses.
Recently, it can be seen that the strong efforts of the State, for example, the People's Committee of HCM City, has listened and made a list of seven real estate businesses that need to be prioritized to remove obstacles. This is an effective solution while waiting for the legal document to be corrected. The regulations on land, housing, and real estate business do not guide the criteria for foreign-invested enterprises, which leads to a general understanding and interpretation that when there is any form or level of foreign investment, the enterprise will be considered foreign-invested and faces regulatory restrictions on housing and real estate business. Foreign investors often establish multiple ownership tiers to minimize this uncertainty. In line with the Law on Investment, enterprises with 50% or less foreign investment capital should be considered domestic investors when applying to make the next level of investment.
"Notably, according to the Law on Real Estate Business 2014 (Clause 3, Article 11), there is a specific right to allow foreign-invested enterprises to invest in construction for real estate business (for example, logistics, warehouse leasing) in industrial parks, industrial clusters and high-tech zones. However, the most recent draft of the Law on Real Estate Business (amended) seems to have removed this right (while remaining in place for overseas Vietnamese). Since many foreign-invested enterprises are subleasing industrial land to conduct real estate business, this expected trend change will cause many fluctuations and hinder investment activities in industrial real estate in Vietnam.
Companies in Vietnam have difficulty accessing competitive financing sources outside of Vietnam because they cannot mortgage factories and land use rights to foreign lenders. Legislatures may consider amending the Land Law to allow companies in Vietnam to mortgage land use rights to foreign lenders," said Duc.
For the proposal on wanting to mortgage land to borrow foreign capital indirectly through a Vietnamese credit institution, the Ministry of Planning and Investment representative said that he would note the comments and report to the Prime Minister at the high-level session of the Annual Business Forum on March 19.
By Xuan Thao/ Ha Thanh