HA NOI (VNS)— Experts speaking at the Viet Nam Business Forum (VBF) in Ha Noi yesterday called for the Government of Viet Nam to take decisive action to enhance economic and financial reform to create a more attractive business climate.
|A worker casts iron at Thai Nguyen Iron and Steel JSC which was equitised in 2009. The Government should boost equitisation to create a more competitive market in which the market mechanism can do its work.—VNA/VNS Photo Trong Dat
The conference entitled ‘Restoring Economic Dynamism'saw business leaders meet to discuss the challenges and opportunities for investment in the country.
According to Christopher Twomey, chairman of the American Chamber of Commerce (AmCham), Viet Nam faced challenges creating macroeconomic stability at a time of unacceptably high inflation, causing tension in the foreign exchange market and high interest rates.
"Many AmCham members found it more difficult to conduct business here than in past years," he said, pointing out that the Government's unsuccessful efforts to sufficiently manage business activity was one of the things discouraging numerous investors.
Chairman of the European Chamber of Commerce in Viet Nam, Preben Hjortlund, said the favourable treatment offered to State enterprises through loans, access to land and more limited profit targets was hampering the growth of the economy. "The Government should boost equitisation to obtain a more competitive market in which the market mechanism can do its work," he said.
Twomey added that although the Government launched anti-corruption efforts in 2004, little progress had been made after eight years, citing a recent Amcham survey that revealed over 80 per cent of respondents listed corruption as one of their top concerns in Viet Nam. "Corruption is getting worse in every factor of doing business here."
"Urgent reforms are strongly needed," he stressed, adding that focus should be placed on addressing the real issues of the banking system and reform of SOEs to head for sound sustainable economic growth.
To improve the situation, Chairman of the Korea Chamber of Business, Kim Jung In, said Viet Nam should do more to restructure State-owned enterprises and improve the competitiveness of the private sector in leading the future economy.
The Ha Noi Young Business Association proposed that the laws and regulations system should be more consistent in order to better encourage investment and create favourable conditions for doing business.
The VBF's infrastructure group suggested that acceptable returns and legal security should be promised to foreign investors and lenders to attract more financing in infrastructure.
Deputy Prime Minister Vu Van Ninh said the Government would introduce policies to create favourable conditions for the development of enterprises, including making capital access easier.
Ninh also said that the minimum wage of Viet Nam remained low in comparison with other countries in the region, and agreed with proposals from... enterprises that is should be increased to a level of 17-18 per cent from next year.
"Viet Nam's fragile financial system is one of the country's biggest economic problems," said Twomey, adding that resolving bad debt needed to be dealt with without delay because the problem did not just affect the banking system, but the whole economy.
According to the VBF's Banking Working Group, the implementation of the Government's banking system restructuring plan had been slower than hoped and less comprehensive in tackling problems such as non-performing loans, cross shareholdings and an over-reliance on real estate collateral for loans.
The group also emphasised the need to return to an agenda of market-based structural reform of the banking industry as soon as possible to enable this industry to efficiently help the economy develop.
In response, the SBV's Deputy Governor Dang Thanh Binh said that concentrated efforts had already been made to resolve bad debts, and the increasing rate of these debts in credit institutions had slowed down since the second quarter. He declared that the ratio of bad debts was expected to be reduced to 5 per cent by the end of 2015.
Binh added that mergers and acquisitions would be put under close watch while the SBV would enhance inspections of share transfers among credit institutions.
Tax issues were also discussed at the forum, with Vu Thu Huong from the Investment and Trade Working Group proposing that the Government have a more consistent tax system and calling for the removal of the advertising and promotion cap.
The VBF was held ahead of the Consultative Group for Viet Nam's annual meeting, which will take place on December 10 with overarching theme ‘Laying the Foundation for Sustainable Growth'. — VNS