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Endless Government fiddling makes it harder for businesses

Update: August, 07/2012 - 09:00

If Government policies keep changing every month, businesses will feel the strain, Hoang Van Dung, vice president of the Viet Nam Chamber of Commerce and Industry, told Cong Thuong (Trade and Industry) newspaper.

How do you assess the private sector's role in the ongoing process of economic restructuring in Viet Nam?

I must say that 25 years ago, the private sector was very small. There were only some 3,000 privately owned enterprises; now there are 600,000. However, as in other countries, small businesses are the backbone of the national economy. If our country wants to develop rapidly, the private sector must act as a driving force. Vice versa, if the private sector wants to develop quickly, it needs support from the Party and government through both national and local policies.

Resolution No 09-NQ/TW issued by the Politburo on the topic of enhancing the role of Vietnamese entrepreneurs has served as a guideline for the development of private enterprises. We cannot simply lean on State enterprises. Rather, as I aready mentioned, the private sector will be a driving force in the development of our national economy, as it is a dynamic sector creating many jobs.

Do you think there have been interactions between policymakers and private enterprises?

The central government issues macro policies while local governments build a foundation for businesses to develop. The development of a regional economy depends very much on the support of the local government towards local enterprises. History shows that if the local government is not on the side of business, the economy of that region develops very slowly. That's how it works all over the world and Viet Nam is no exception. Recently, businesses in major cities like Da Nang, Vinh Phuc, and Hung Yen have developed quickly thanks to strong co-operation between private enterprise and local governments.

Quite a few businesses have difficulty obtaining credit because they don't have collateral. Do you think intervention from the central/local government will help solve this problem?

In today's climate of fierce competition, smaller businesses are in a very weak position, particularly when it comes to the interest rate. In many countries, interest rates for long-term loans are only about 3 per cent per annum. However, in our country the rate is between 15-20 per cent. In many cases, businesses can only access medium-term credit, which lasts one to two years. This means they can't invest in long-term production such as investing in machinery, for which the lending term must be from 5-10 years.

That's why I say, opening up a dialogue between businesses and central and local governments is imperative for economic development.

In my opinion, there are three important measures to help small and medium-sized businesses develop: a borrowing guarantee mechanism, simple administrative procedures, and more production-supporting policies, including land, taxes and credit.

A clear and simple policy seems to be imperative as well, would you agree?

If our policies keep changing monthly and quarterly, it will create problems for businesses. When a law is compiled or a policy is issued, there should be a dialogue between law or policy makers and businesses that would be affected. In addition, once the law or policy is issued, businesses should be able to implement the changes and then give their feedback. — VNS

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