AusCham is proud of our relationship with the Vietnamese Government, and we are thankful our concerns are constantly being addresses in the appropriate fashion. However, our members are still experiencing some of the same issues when dealing with government departments. There is a lack of consistency with different departments within the government, meaning many share the same rules, but have different interpretations of what these mean. We would like to see the formation of a standard, consistent procedure throughout all departments. We believe this would improve efficiency for both business and government, while decrease the amount of confusion form both ends.

 

In relation to this, we would like to see more communication between the government departments and businesses. Therefore, businesses, and chambers, would appreciate the opportunity to view documents, such as the Circular 9, before it is passed in Government. Considering these documents are primarily here to improve business, AusCham feel that by being able to view them, we could help in ensuring the documents cover our members best interests from our opinion.

 

Many of our members have expressed difficulties in trying to be compliant to laws, as they are not exactly sure what the laws are, or how to find out. They have shown a will wanting to be completely compliant, but are struggling to know how. This again relates to communications between business and government. If we can have a better communication system in place, AusCham believe that vital information would be easier to find and it would again create a more efficient outcome for all concerned. In addition to the communication issue here, once our members find out the laws, they say they are ambiguous and again, very hard to follow. The laws should be defined and clear to ensure companies that want to abide by these laws are able to do so in a productive manner.

 

Our members in the Manufacturing industry expressed concerns about the controlling of tariffs. AusCham feels this concern is not exclusive to manufacturing either. Members want guidance and controls around tariffs to make them more consistent and practical, again also, making them work for all parties.

Corruption:

Unfortunately the perception of our members (as per our attached Survey) is that corruption in Vietnam has reached a significant and concerning level. On this basis it is often unclear in many circumstances as to what is legal and what is not. Corruption needs to be addressed as a major cause of concern from the top level down, meaning the leaders need to be taking the initiative to set positive examples for their younger, less-experienced staff.

 

AusCham would like to acknowledge the good reputation Vietnam has with using aid money to the best of its ability and funding many worthy projects. Our members also note that the younger generation is becoming increasingly concerned about corrupt practices. We note that these are signs that this issue is being dealt with by the government and praise the efforts to instill increased transparency.

 

The VBF position papers reflect a consistent theme on the issue of corruption in support of the Government’s efforts to fight it.  As a foreign business community, we feel we can bring suggestions from our own environments to help improve on this concern. Looking at the successful battles fought by other countries in the region, the lessons are that there are three important pillars in any policy to combat corruption:

1.      Make laws that are transparent and self-enforcing and remove discretionary/unnecessary licensees and permits wherever possible;

2.      Pay officials a competitive wage (the inflationary consequences are not avoided by driving the payments under the table); and

3.      Create more public awareness about issues, so the public realize the government is acting upon this

In these regards, it is worth noting the efforts of markets such as Hong Kong in building up a professional and independent anti-corruption body, like the ICAC. 

 

AusCham recognizes Vietnam has made efforts on these points. While this is only a start, we hope to see further actions taken in the near future.

 
Utilities & Infrastructure

SOE’s (State Owned Enterprises) who have monopoly rights over provision of services are quite clearly diversifying attention away from core business and into speculative activities such as real estate development, securities companies etc. The government has rightly moved to limit this but in essential industries such as provision of power, an increase in opening up projects to BOT (build,  operate, transfer) on say 30 year terms would give the government a quicker answer to shortfalls and a valuable source of infrastructure assets for the future.

 

As mentioned, on a consistent basis in our submissions, our members express their concerns on the infrastructure and power concerns as a barrier to business expansion. Unreliable power and communications (internet, telephones etc.) make doing business extremely hard and create a mass inefficient system for all concerned. AusCham does recognize the efforts made so far in investing in attacking this issue, but to date, we are yet to see much return on this investment. 

In addition to the increasing unreliability, it has been noted that the price is dramatically rising, above the international levels. With the rise in price, our members would expect to see a better service or quality level; neither of which has come about.

With the growing economy and population boom, the current road system is becoming increasingly inadequate and cannot cope with increases. In a recent AusCham Membership Survey a major percentage of AusCham members stated the infrastructure issue was one of their key concerns. Whilst AusCham recognises the efforts the Government has made to date to address the road system, our members feel that a stronger focus on future town-planning, with an associated increase in traffic policing, would assist to alleviate the current heavy congestion.

 

AusCham is impressed with the recently introduced compulsory helmet laws and we feel this is a marked step in the right direction for improved road safety in the major city regions.

 

For our members to function to their full potential and add to Vietnam’s growing economy, they require reliable and stable infrastructure. Without this, it not only harms business performance, but harms the confidence business has in the government to provide these services.

AusCham’s last submission to this Forum in May 2007 provided an initial detailed discussion of Vietnam’s progress in implementing its WTO commitments. We continue to monitor this process closely and congratulate the Government on its progress over the past six months in promulgating a number of important legal documents that assist in this process.

 WTO accession has existed for over a year now and the milestone is widely touted as the direct cause of Vietnam’s current strong economic development. The reality is that apart from the symbolic value of accession the benefits of joining the WTO are long-term. We understand the process will take time and Vietnam has been given some concessions on this front, but, it is crucial however that the pace and depth of economic reforms not be left to the wayside.

The timely and consistent implementation of commitments are of upmost importance for foreign business to ensure new opportunities and continuing the very successful process of economic liberalisation that Vietnam post Doi Moi. It should be noted that not just foreign business already operating in Vietnam is wathcing this implementation, the world is with a keen eye to investing in Vietnam's potential. AusCham is of the view that this process is central to Vietnam's acceptance on the world stage as an economic power and we certainly do not doubt that is a possibility.

We welcomed the Circular 9 proposals but did express some concern which were conveyed to the Minister of Industry and Trade on 19 November 2007. We thank the Ministry of Planning and Investment for the open dialogue and exchange of papers between our organisations. As outlined the issue of trading and distribution rights is extremely important to the foreign business community and how it is handled will also impact significantly on local business. It is therefore vital that the Government of Vietnam implements its international commitments in this sector but more widely in a transparent and liberalising manner that inspires investor confidence, establishes a clear regulatory framework, and sets a positive precedent for future implementation of international commitments.

 On the issue of tariffs, while we are not receiving many complaints from members regarding delayed implementation or arbitrary management of new tariff rates, members have expressed concern about import tariff policies. As we have mentioned in our previous submissions, in line with WTO objectives more broadly, AusCham urges the authorities to lessen the use of direct control mechanisms in tariffs and gradually let market-based mechanisms take their place. Significant tariff changes and uncertainty over particular tariff treatment over short spaces of time, without notice, jeopardise investor confidence and, at times, the commercial viability of enterprises.

AusCham welcomes Vietnam’s efforts through the recent Circular 9 submission to address the issue of foreign labor contracts. This was a true step in the right direction, but there is more that needs to be done. The use of foreign employees throughout all industries is vital to the growth of the economy in Vietnam. But currently the process of bringing over skilled employees is becoming increasingly difficult. There is no streamlined process for this, making the process impossible to abide by, and a timely activity. We urge the government to look at creating a streamlined process for bringing over and hiring skilled foreign employees. 

 

In addition to the process, AusCham members have express their concerns on the strict rules and regulations Vietnam in regards to getting work Visa permits. The understanding is that unless the employee is qualified in that particular field, they cannot get a work visa for that company to come across. This arrangement is both impractical and inconvenient for Business and Employees. If these laws are relaxed, it will mean a larger swing in multi-skilled employees, adding to the economy and growth of business in Vietnam.

To continue growth and expansion, companies are seeking tax deductibilities for important business related expenses, including marketing and advertising expenses.  Similarly there is no current deductibility of bonuses and pensions. Pensions in particular for the local population will, like Singapore, provide the capital for advancement.

Inflation is another key issue confronting the Government and the population at large. AusCham would strongly support any initiatives the Government would undertake in this respect.

With a growing economy it is only natural more companies want to set up premise in Vietnam. Ho Chi Minh City has seen a recent demand for property which is affecting the business world quite dramatically with the increase in rental. While this is a business-generated issue, the government needs to look at how to protect the market and open it up to transparent process for sale and registration and then apply a sensible property tax regime to enable them to collect the money for infrastructure development before the situation becomes worse and completely unaffordable. The current two year lead time for a building permit is restricting potential employment and development opportunities.

 

Land access is currently a problem for local and foreign investors. Land is not being released, hiking up the cost of property that is available. This in itself is creating a mass divide in the market as the less property the more demand and over the higher prices can go. 

 

Poor infrastructure with all the new building going up is starting to lead to very concerning issues. Already, it is noted people are not spending enough money on projects and they are therefore unstable and many projects are being left unfinished simply due to lack of funds. This is an unsightly spectacle throughout Ho Chi Minh City at the moment. 

 

This can be addressed by monitoring, measuring and controlling the releasing of land at an acceptable level. The government needs to look at projects they’re approving and ensure the financials are there to back it up.

 

Vietnam can take advantage from their local neighbors in regards to looking at how growing economies have counteracted these dilemmas. China, at present, in particular demonstrates an emerging economic player who has overcome the situation Vietnam is currently facing.