Phạm Ngọc Hưng, a lawyer and deputy chairman of the HCM City Union of Business Associations

Phạm Ngọc Hưng, a lawyer and deputy chairman of the HCM City Union of Business Associations, speaks to Sài Gòn Giải Phóng (Liberated Saigon) newspaper about how to create a conducive business environment, especially amid the uncertainties caused by the Covid-19 pandemic.

What do you think about the rapid increase in the number of new companies in the past three years?

It is true that in recent years the number of newly established enterprises has increased sharply. In 2019 the country had 138,100 with a total capital of VNĐ1.73 quadrillion (US$74.97 billion). In 2020 despite the Covid-19 epidemic’s negative impact on the economy, nearly 135,000 enterprises with a total capital of more than VNĐ2.2 quadrillion ($95.3 billion) registered. This attests to the great attractiveness of Việt Nam’s investment environment.

In 2020 the country also saw more than 100,000 enterprises leave the market. This shows the business environment still has many shortcomings that need to be eliminated.

What are the major hurdles private enterprises face?

I can list the five biggest barriers businesses are facing. These are also reasons why Vietnamese enterprises have not managed to become bigger.

Firstly, 90 per cent are small and medium-sized enterprises, and so they lack resources and technology.

Secondly, private enterprises also have poor management capacity and do not have legal divisions or financial resources to cope with commercial disputes in export markets.

This has kept businesses at home though trade agreements are throwing up many opportunities for them.

Thirdly, private enterprises do not have a level playing field. There is unequal treatment of the private and public sectors and domestic and foreign private enterprises. This lack of equality is clearly reflected in the opportunities to benefit from the Government’s support policies in terms of capital, tax breaks and particularly land-related support.

Private enterprises also lack the opportunity to participate in trade promotion and business matching programmes.

Fourth is related to the inspection and examination of authorised agencies.

The Government stipulates inspection frequency and co-ordination between inspection agencies, but in many places inspections are carried out too often, disrupting companies’ activities.

Certain local private firms are inspected more than 20 teams a year by ministries and other agencies, [but] State-owned and foreign enterprises [are only inspected] around two times.

Besides, regulations are understood and enforced differently by each locality, making it difficult for enterprises to operate.

The fifth reason pertains to specialised inspection regulations.

The Government clearly ordered ministries and other agencies to reduce specialised inspection regulations in 2019, but they have made very slow progress. Some ministries and agencies have even issued new regulations, making it more difficult for businesses.

A survey by the Central Institute for Economic Management found that many ministries reported to the Government that they had cut procedures and the number of goods subject to specialised inspection by 50 per cent, but the fact is they have merely switched from inspecting before customs clearance to after at businesses’ warehouses.

What should be done to remove these barriers?

In my opinion, the Government needs to create a safe investment environment for businesses. This sounds simple but is not really easy to achieve.

Local private enterprises face a lot of harassment from authorities but they dare not say so.

They think they will face even more problems if they publicly condemn [public officials].

Many businesses choose to speak about their problems through business groups, and the solutions are [thus] not very effective.

Creating a good and equal investment environment is essential to enable businesses to improve their production capacity, upgrade technology and expand domestic and export market shares.

What should the Government do to enable businesses to denounce wrongdoing by officials from authorised agencies?

The Government needs to create a safe channel for businesses to denounce and speak out about the shortcomings of public officials. It is also necessary to strictly and transparently deal with wrongdoing by official agencies, government workers and bureaucrats to deter others.

The Government should have an effective mechanism to assess the enforcement of policies related to administrative reforms, taxes and investment incentives with a focus on easing specialised inspections.

If [authorities] still abuse their power to harass enterprises, strict measures are needed. By doing so, we can gradually promote the development of the private sector and increase its contribution to the country’s GDP. — VNS