Foreign business associations identify key issues at Vietnam Business Forum.
This is a key moment for Vietnam, the beginning of a new era, with Party Congress XII early next year and the election of leaders for 2016-2020, Chairman of the American Chamber of Commerce (AmCham), Ms. Sherry Boger, told the Vietnam Business Forum on December 1.
Focus for 2016
Vietnam has been extremely successful in international economic integration in general and with the US in particular, Ms. Boger said: “This year, total trade between our two countries is likely to increase by more than 20 per cent and reach $45 billion and could exceed $80 billion by 2020 if present trends continue and even more with the TPP.”
Moreover, Vietnam has increased its standing as the leading ASEAN supplier to the US, with a share of 22 per cent that could exceed 30 per cent by 2020.
The TPP is not yet a reality, she went on. “It covers many issues we have discussed for years at the VBF,” she said. She offered a framework and focus for efforts in 2016, such as regulatory coherence, transparency and meaningful public comment (TPP Chapter 25), education, which is a key development driver (Chapter 23), efficient customs administration and trade facilitation (Chapter 5), and participation by Vietnamese enterprises in global supply chains.
Ms. Boger also highlighted two matters. Firstly, Circular No. 23, issued on November 13 and to come into effect on July 1, 2016 (replacing Circular No. 20), which is universally opposed by foreign direct investment (FDI) and domestic business associations.
“It would cause delays in customs processing, have a negative impact on modernization and industrialization, especially of supplier industries, discriminates against domestic industries, and is not in accordance with Article 2.2 of the WTO Technical Barriers to Trade Agreement or the TPP Chapter on Technical Barriers to Trade,” she said.
Secondly, since the Immigration Law became effective on January 1, 2015, US citizens can receive single entry Vietnamese visas that have a three-month validity, while Vietnamese citizens can receive multiple-entry US visas with a one-year validity. “We raised this issue at the June 2015 VBF and heard in July that US citizens would receive multiple-entry visas of one-year validity but we have not yet seen any,” she said. “We hope that this issue will be resolved soon.”
As Vietnam continues on its path to further international integration and its promotion of itself as an attractive FDI destination, EuroCham highlighted five key issues that need to be resolved to substantially enhance Vietnam’s competitiveness in global trade, which will also benefit the European business community in Vietnam, Vice Chairman of the European Chamber of Commerce (EuroCham), Mr. Tomaso Andreatta, told the Forum.
The five key issues are the protection of the environment and energy, improving logistics in a sustainable manner, improving the legal system by opening it up to the external world and improving the way it now works, especially in intellectual property and judicial recourse, protecting Vietnamese consumers and offering more choice in food safety and pharmaceuticals, and coordinating with provinces to ensure the uniform application of laws and policies.
In terms of environmental issues, Mr. Andreatta urged Vietnam to develop renewable sources of energy, which have a smaller scale than alternatives but have a much faster implementation time. If Vietnam does not hurry to utilize the advantages of foreign investment in the sector it is possible that it will miss this investment.
He also urged Vietnam to improve its logistics in a sustainable manner, as well as intellectual property and judicial recourse. “EuroCham calls on the Vietnamese Government to step up its efforts in guaranteeing an effective protection of intellectual property rights in order to develop technologically-advanced industries and to promote innovation,” he said. “The foregoing may result in more foreign investment in manufacturing, research and development and it will also encourage Vietnamese companies to invest in innovative activities.”
Regarding food safety and pharmaceuticals, he said that with adequate disclosure of product characteristics, consumers around the world can enjoy a variety of choice in both food and pharmaceuticals, which is partially denied to Vietnamese consumers, through tariff or non-tariff barriers.
On the uniform application of laws and policies, he pointed out that many investors in Vietnam find more problems from administrative challenges at the provincial level than at the national level when opening facilities.
“Within their powers, provinces could be more open than FTAs require, for example in opening up some important procurement to international bidders, thus securing more quality and variety and potentially sources of funds for their projects,” he said.
We highly recommend that the loan term applicable to foreign individuals should be based on their repayment capacity rather than their permitted period of residence, as stated in the regulations. Accordingly, the loan term could be extended until the expiry of the remaining term of residential housing (for instance, 50 years) if they are provided as collateral. This regulation would support the development of Vietnam’s financial industry.
In South Korea a probationary period for workers is usually three to six months in practice but there is no limit on the period under law. Therefore, we would like to propose to extend the probationary period.
Overtime restrictions are often pointed out by foreign invested enterprises, particularly in manufacturing and other labor intensive industries that take advantage of cheap labor costs when investing into Vietnam. This limitation may greatly impact on foreign investors’ decisions on investing into Vietnam.
Therefore, we would highly appreciate if the Vietnamese Government would consider removing the overtime restriction of 30 hours per month and adjust and apply overtime work regulations more flexibly in the following measures. Firstly, during the peak production season, enterprises should be able to flexibly extend the overtime of employees to satisfy the due date set by a client/customer. Secondly, during the off-season, the enterprise may flexibly reduce the working hours and overtime of employees.
Mr. Ryu Hang Ha, Chairman of the Korea Chamber of Commerce in Vietnam (Kocham)
The government’s recent decision to increase the number of countries on the list of visa-exempt countries was very welcome. Vietnam now has visa waivers or exemptions for citizens of 21 countries, which is far lower than neighboring competitors such as Malaysia (with 164), the Philippines (157), and Thailand (52). Despite this positive move AusCham still has several concerns in this area.
First, we strongly recommend promptly extending the list of visa waiver countries to include Australia and New Zealand as a means of further facilitating trade, investment, and tourism between the nations.
Secondly, we recommend the exemptions be for 30 days not the current 15 days, with returns allowed within 30 days, as a means of encouraging people to use Vietnam as a hub.
Mr. David W. Carter, National Board Member of the Australian Chamber of Commerce (AusCham)
- Vietnam Business Forum