Waiting for support policies to reduce costs for businesses

Enterprises face many difficulties due to high costs, even including many unofficial expenses. Photo: Hong Nu.

The burden of unofficial expense

Recently, Mr. Pham Dinh Doan - Vice Chairman of the Central Council of Vietnam Business Association, Member of Executive Board of Vietnam Chamber of Commerce and Industry (VCCI) has stated that the administrative procedure reform and cost reduction for businesses were having a great impact on them. In fact, if enterprises do good business, their profit is only 2-4% per year, while according to the VCCI survey, the informal cost of enterprises is up to 6-8%. This is a big difficulty for enterprises, especially small and medium ones.

A new study released by the Central Institute for Economic Management (CIEM) showed that businesses are suffering a lot of unreasonable costs as soon as they enter the market: from start-up costs; expenses of production and business establishments; capital expenditures; costs of science and technology; cost of compliance with safety and quality standards to the cost of compliance with regulations on fire prevention; cost of the procedures for tax payment and refund ... In addition, companies also faced many inspections, high land costs ... and also unofficial costs. According to enterprises and experts, the unofficial fees are quite common and exist in both large and small enterprises.

One business shared that they often face difficulties due to the burden of land rent, which increased 4-5 times in some localities, creating difficulties for businesses in expanding their business. Therefore, economist Dr. Dang Hung Vo said that large enterprises only have more money, but no easier access to land. Many people having land but do not pay land use fees, so they cannot make use of it. Meanwhile, enterprises need to use land to do their business to gain profit, and then the land fee can be paid.

Efforts to cut

From the beginning of February, 2018, Prime Minister Nguyen Xuan Phuc said that 2017 was chosen as the year of "cost reduction for businesses". In 2018 the Government will continue to focus on reducing costs for businesses, therefore the impact on the business community will be clearer and the results of the tasks and solutions implementation in 2017 will be more effective. Therefore, the Government continues to set out the tasks such as: reforming administrative procedures related to land, tax, customs, agriculture, rural areas; applying information technology, doing start-ups, reducing procedures and operating costs for people and businesses; fundamentally improving and creating strong changes in criteria of business environment and competitiveness of the economy; regularly organizing dialogue with enterprises, and timely handling their feedback and recommendations...

Thus, over time, many ministries and branches have made positive results in cutting down costs, by simplifying many administrative procedures and business conditions. A typical example is the Ministry of Finance with solutions of applying information technology to shorten time as well as implementation costs for both management agencies and enterprises. According to the General Department of Taxation, at present it has supported businesses in successfully implementing electronic invoices, so far nearly 3,000 companies have used this form. The use of electronic invoices has contributed to reduce the time and expense of invoices for businesses, to limit fraud and to reduce the time to process administrative invoices as well.

However, to get more substantive results, businesses have recommended that ministries and industries need to understand in depth the desire of enterprises to make reasonable plans. Mr. Chu Dinh Long - Director of Cat Loi Trading & Service Co., Ltd (Hanoi) - suggested ministries, sectors and localities to actively study and propose the Government specific mechanisms and policies of financial and land support for businesses; because officials and authorities often take advantage of unclear and general regulations to make it difficult for businesses. According to Mr. Nguyen Van Quang - Director of Garment 9 Joint Stock Company (Nam Dinh), the ministries should consider adjusting the salary and insurance mechanism to match the current labor price; helping the textile industry overcome difficulties, avoiding the fact that some countries in the region are taking advantage of cheap labor.

Besides the above contents, enterprises also proposed a review for an adjustment of tolls, BOT, to reduce transportation and logistics costs. Enterprises also suggested improving specialized inspection, because a product that is tested by many ministries will increase the time and cost of businesses…

But overall, it can be clearly seen that all concerns of businesses are distinctly recognized by management agencies, as evidenced by the guidelines from Government for reviewing BOT fees, reducing the proportion of shipments that need to have specialized inspection to 15% instead of 30 to 35% as they are currently. Therefore, enterprises are able to hope for a transparent, convenient and less expensive business environment in the future.