VietNamNet Bridge – The Viet Nam Government has again sent a clear message that it will enhance the domestic investment environment to both dampen the impact of the global financial turmoil and hold and build business confidence.

Photo: VOV

In recognising the challenges now facing Viet Nam, he reiterated that the Government would spare no effort to find the measures needed to maintain the country’s competitiveness and support business.

The message was delivered immediately after the forum Secretariat’s survey of more than 254 enterprises revealed concern and uncertainty about Viet Nam’s economy.

Viet Nam’s economy faced its greatest challenges since the introduction of Doi Moi (Renewal), warned International Financial Corporation (IFC) country director Sin Foong Wong.

The challenges, which followed the robust growth of 2007, included high inflation coupled with a mounting trade deficit; a volatile exchange rate and a sharp downturn in the equity market.

Nevertheless, enterprises represented at the forum were confident that Viet Nam would overcome the challenge and stabilise the economy.

“Now is the time to focus on competitiveness,” said American Chamber of Commerce (AmCham) chairman Michael J Pease.

“Now is the time to make it easier to do business in Viet Nam,” he said.

“Now is the time to take action that will help Viet Nam’s economy strengthen, not weaken.”

Six priorities

The Government has been asked to consider the six priorities to help business. These are: The building of infrastructure;

Protection of intellectual property rights;

Improvement of the judicial and arbitration system;

More effective administrative services, and

Provision of skilled labour.

The forum identified infrastructure; the judicial and arbitration system and inefficient administrative services as the major hindrances to business growth.

“The critical issue of physical infrastructure has been raised by AmCham and other business associations at every VBF meeting since at least May 2006,” said its chairman, Michael J Pease.

“Today, we note that there are still shortages of key infrastructure, especially electric power, seaports and related land-side infrastructure such as road and bridges,” he said.

Viet Nam Maritime Administration (Vinamarine) figures provided at the forum show that of the country’s 266 ports, not one has the capacity to receive 50,000-tonne ships.

Other regional ports are capable of receiving ships weighing hundreds of thousands tonnes.

An insufficient, unstable supply of electricity; port congestion and poor roads heavily impede commerce, increase costs and weaken competitiveness.

Opportunity

European Chamber of Commerce (EuroCham) Viet Nam chairman Alain Cany suggested that the falling input costs offered the chance of remedy.

“We encourage the Government to involve the private sector to help accelerate the infrastructure project programme and speed up the completion of those key projects underway and pending,” he said.

Infrastructure Working Group representative Tony Foster estimated that investment needed for telecommunications, ports, airports, roads, railways and aircraft was likely to total US$139 billion in the next five years.

AmCham’s chairman Michael J Pease said that China and other neighbouring countries had announced increases in government spending for key infrastructure projects to boost competitiveness and sustain economic growth despite falling foreign investment, he said.

Senior transport ministry officials conceded mounting demand was taxing existing infrastructure and the ministry was working to alleviate the difficulties through the Marine Transport Development Master Plan.

They promised quarterly publications to keep business advised about their progress.

HCM City Young Entrepreneur Association chairman Vo Quoc Thang said ambiguities in the regulations governing business encouraged bureaucratic discretion and invited opportunities for “rent seeking.”

The forum asked the Government to make all information about business administration more transparent and reduce unnecessary procedures.

It welcomed the Government Inspectorate’s draft anti-corruption strategy with its three-year programme to strengthen its capacity.

‘This is not an easy problem to solve,” said AmCham chairman Michael J Pease.

“Existing control systems are inadequate and do not prevent corrupt officials from misappropriating funds intended for public infrastructure.”

The paucity of circulars to accompany policy implementation was also criticised.

Bank Working Group chairman Ashok Sud said Decree 160 issued in December 2006 provided a clear framework for foreign-exchange dealings.

However, of the 13 implementing circulars only one had been issued although drafts had been sent to the banks.

It meant that obsolete circulars had to be used for guidance.

Inadequate manufacturing and distribution, some shortcoming in taxation, the shortage of skilled labour and the need to encourage in-house training programmes and innovate retention strategies were also discussed yesterday.

The yearly Viet Nam Business Forum is held within the Consultative Group Meeting of donors to Viet Nam.

(Source: Viet Nam News)