Ahead of the Vietnam Business Forum (VBF 2024), taking place tomorrow (March 19), business associations as well as working groups continue to send their unresolved concerns about difficulties and obstacles in administrative procedures related to investment and business activities.
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| Businesses still complain about some administrative procedures related to investment and business. Photo: Duc Thanh |
Not even summer yet but already worried about power shortage
“We propose that the Vietnamese Government have a plan to provide uninterrupted power supply in industrial zones so that foreign-invested enterprises, including Korean enterprises, can maintain stable production activities.”
The Korean Business Association submitted this petition to VBF 2024. The power outage due to power shortages in some industrial parks in the North last summer is still a big concern for many businesses.
Sharing the above concerns, the Korean Business Association said that Korean businesses are eager to invest in Vietnam, especially high-tech businesses such as semiconductors. However, they also expressed their views that the power shortage is one of the major factors that makes them hesitate in making investment decisions.
This is also the recommendation of the Japan Chamber of Commerce and Industry (JCCI) sent to VBF 2024, after gathering opinions from member businesses. JCCI said that the severe power shortage in the Northern region makes it difficult for businesses to plan production and forecast delivery dates.
“This situation has seriously affected the just-in-time model - the core element of the supply chain. Some JCCI member companies said they are considering reviewing their global production systems,” JCCI explained the reason for submitting the petition early.
In this proposal, JCCI sent to the Vietnamese Government 3 proposals, with the aim of helping manufacturing enterprises operate smoothly. That is, stabilize the power supply for industrial zones; give advance notice of power cuts and power saving requirements to have enough time to adjust and provide incentive mechanisms to encourage companies to save electricity and produce electricity.
Concerns about administrative procedures
In the long list of recommendations sent to VBF 2024 by foreign business associations and working groups, concerns about the burden of administrative procedures still account for a significant proportion.
In a very concise and straightforward way, the American Chamber of Commerce wrote: “Our members, like many businesses here, are facing delays in approval procedures. The administrative burden is time-consuming, hinders or stalls business projects and affects Vietnam’s competitiveness.”
This sentiment is not unique to American businesses.
The Human Resources Working Group sent to the Ministry of Labor, War Invalids and Social Affairs the inconsistency in the procedures for reissuing work permits for foreign workers and called this an unnecessary administrative burden. Specifically, the Working Group informed that some Departments of Labor, War Invalids and Social Affairs require re-submission of the application for approval of the need to use foreign labor before re-applying for a work permit; some places require the entire procedure to be re-done, including posting recruitment notices, submitting applications for approval of the need to use foreign labor, etc.
Currently, according to calculations by businesses, the process of granting work permits to foreigners takes about 4-5 months, with many paperwork procedures, notarization and consular legalization requirements. “We propose to develop and implement short-term work permits; clarify and unify the requirements for necessary documents to request work permits or work permit exemptions, ensuring that regulations are applied consistently at local labor management agencies,” the Human Resources Working Group proposed.
The tax and customs working group sent to the leaders of the Ministry of Industry and Trade the issues of enterprises producing supporting industrial products. Specifically, the working group said that many enterprises producing products that are details, parts, and components of products listed in the List of Supporting Industrial Products Prioritized for Development stipulated in Decree 11/2015/ND-CP submitted applications for confirmation of incentives, but were not approved for this group of products. Enterprises said that the process of requesting confirmation of incentives took a lot of time, many enterprises had to submit additional applications many times as required by the licensing authority. Many compliance issues in the past had been resolved and supplemented by enterprises with relevant agencies, but the licensing authority still relied on that to reject the applications.
“These difficulties have caused confusion, cost and time waste for businesses, and have not really promoted the effectiveness of incentive policies,” the Working Group wrote in its proposal to VBF 2024, along with a recommendation to add details, parts, and components that are part of the products listed in the List of Priority Development Support Industrial Products.
Businesses under the British Business Association sent four specific recommendations to VBF this year to continue efforts to reform administrative procedures. One is to strengthen e-government in managing promotional activities. Two is to simplify procedures and time for granting business licenses. Three is to unify central and local regulations. Four is to remove the requirement for pre-approval of advertising and switch to post-market control.
“Vietnam should take advantage of international treaties to simplify and eliminate regulations requiring foreign documents to be legalized for use, as more than 100 other countries have done,” the British Business Association further proposed.
- Tax and Customs Working Group
In order to encourage companies to make large investments that bring about real economic activities, on February 16, 2024, Singapore's Finance Minister proposed an investment deduction policy to provide support to eligible entities, including all businesses with investment projects in important economic sectors and new economic growth areas. The US government has also recently allocated hundreds of billions of dollars for sustainability programs and climate finance in addition to semiconductor manufacturing through the promulgation of three new laws.
To be able to compete with countries in the world and the region, Vietnam needs to perfect its investment support policy to be more comprehensive and effective in retaining and attracting strategic investment corporations.
Regarding the investment support objects according to the Draft Decree on the establishment, management and use of the Investment Support Fund, we see that the support objects are still within a narrow scope. With the condition of investment capital scale of over 12,000 billion VND, or revenue of over 20,000 billion VND/year, only a very small number of enterprises can achieve it, not representing the group of investors in the high-tech sector.
How does the social insurance agreement between Vietnam and Korea apply?
- Korean Business Association
The Social Insurance Agreement between Vietnam and Korea was signed in December 2023 and will take effect from January 2024. However, there are currently no precise regulations and guidelines regarding how the Agreement applies to Korean citizens in Vietnam, so Korean citizens are not yet covered.
It is recommended that the competent authorities issue specific regulations and instructions on the application of the Agreement, and take measures so that Korean citizens in Vietnam can implement this Agreement.
Continue dialogue between the Ministry of Industry and Trade, Vietnam Electricity Group and relevant parties.
- American Chamber of Commerce
We recommend continued dialogue between the Ministry of Industry and Trade, Vietnam Electricity (EVN) and private sector stakeholders to explore viable short- and long-term solutions for Vietnam to meet its energy security needs, including promoting approval of large-scale liquefied natural gas (LNG) projects, to support energy security and transition goals.
We need to remove regulatory uncertainty and focus on approving short-term, realistic and bankable projects to ensure power supply meets growing demand.
We recommend that the Government consider adjusting power purchase agreements (PPAs) to international standards, facilitating multilateral organizations and development finance institutions to lend to large projects in the energy transition and renewable energy sectors.
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