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Businesses hope for State reforms in 2015

Update: February, 26/2015 - 08:30
Vu Tien Loc,VCCI Chairman

The local business community in Viet Nam is hoping that this will be breakthrough year in terms of reforming economic institutions and administrative procedures. They also hope that 2015 will herald an improvement in the business and investment environments to create strong and necessary support for enterprise development.

Vu Tien Loc, chairman of the Viet Nam Chamber of Commerce and Industry (VCCI) spoke to the Vietnam News Agency about these issues.

How will administrative reforms impact the local enterprises this year?

Last year, the Government had taken specific actions to improve the investment and business environments to create favourable conditions for enterprise development, including the passing of a decree to improve the business environment and competitive abilities in Viet Nam. A directive was also issued for solving the difficulties of local enterprises.

Additionally, ministries, sectors, cities and provinces have also initiated activities to improve the investment and business environments, and resolve any impediments in the implementation of administrative procedures. These actions have instilled confidence in the local enterprises.

Meanwhile, the amended laws on Enterprise, Investment and Taxation have reduced the spending burden borne by local enterprises.

According to the targets of the latest Government decree, indices of competitive ability in Viet Nam's business environment must achieve the average rates seen in the ASEAN-6 countries by the end of this year. Meanwhile, standards for starting a business, getting investor protection, tax payments and import-export procedures must also be improved.

I think the implementation of administrative and institution reforms will surely result in a favourable business environment for the public and the businesses, reduce spending, expand opportunities and boost transparency.

n However, local businesses are still facing many difficulties due to which they have either halted operations or dissolved their business. What is causing this situation?

In 2014, around 60,000 enterprises had stopped their operations or dissolved their business, while 30 per cent of 500,000 existing enterprises said they earned a profit from their business.

Those numbers reflect that local businesses have undergone a difficult period.

Institutional bottlenecks, tough administrative procedures, delayed reforms and restructuring have acted as barriers in the development of enterprises, as well as the local economy. Specifically, legal documents have created risks in policies governing investment and business. Meanwhile, the quality of legal documents lacks consistency and organisation.

The content of these documents is also changed often, especially circulars that have a direct impact on business operations of the enterprises.

Therefore, the task of improving the business environment, promoting restructuring and boosting competitive abilities of local businesses has proved to be a really big challenge for the Government and the business community vis-a-vis the economic integration situation at present.

n Many are of the opinion that administrative reform is only one solution. There is also a need to reform organisation and improve the functioning of State offices and agencies. What do you have to say about the issues?

The Prime Minister is determined to carry out reforms in institutions and administrative procedures for improving the competitive ability of enterprises and the nation.

But it is important that the Government's determination is replicated by provinces and city administrations, because local businesses need organisation, which is the responsibility of the State offices, which also need to reform the legal system, policies and procedures.

Therefore, it is essential to reform staff organisation and improve the functioning of the state offices. The State should actively render public services that do not need State control, to social organisations and the market, according to a realistic schedule.

State offices are currently burdened with too many functions, including work that social organisations can also do. The quality of services rendered has not improved significantly.

n What tools should the Government and State offices use to resolve the difficulties encountered by enterprises, improve their competitive ability and create the dynamics for domestic economic growth?

By 2016, institutional reforms will be implemented with an aim to achieve a breakthrough in economic restructuring. To solve the difficulties of enterprises, I think the relevant offices need to get the amended laws on business, investment and enterprises efficiently enforced.

They should also simplify regulations governing business sectors, keeping in mind the existing economic conditions.

Additionally, I propose that the Government continue its support for improving the competitive abilities of enterprises, including giving preferential treatment for credit and credit interest rates to small and medium sized enterprises (SMEs), especially in the rural areas.

Support for training workforce, technological reform and construction of infrastructure for SMEs' investment and production activities are also urgent issues.

Local enterprises should review their production and business to focus on developing core businesses, promoting management, reforming technologies and improving the quality of its workforce. — VNS

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