Ahead of the Vietnam Business Forum (VBF 2024), taking place tomorrow (March 19), business associations as well as working groups continue to send their unanswered concerns about difficulties and obstacles in administrative procedures related to investment and business activities.
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| Businesses are still complaining 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 electricity 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 zones in the North last summer remains a major concern for many businesses.
Sharing this concern, the Korean Business Association stated that Korean businesses are eager to invest in Vietnam, especially high-tech companies such as semiconductor companies. However, they also expressed the view that power shortages are a major factor causing them to 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 submitted three recommendations to the Vietnamese government, aiming to ensure the smooth operation of manufacturing businesses. These are: stabilizing the power supply to industrial zones; providing advance notice of power outages and energy saving requirements to allow sufficient time for adjustments; and introducing incentive mechanisms to encourage companies to save and increase electricity production.
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 manner, the American Chamber of Commerce wrote: “Our members, like many businesses here, are facing delays in approval procedures. The burden of time-consuming bureaucracy hinders or stalls business projects and affects Vietnam’s competitiveness.”
This sentiment is not unique to American businesses.
The Human Resources Working Group has submitted a report to the Ministry of Labour, Invalids and Social Affairs regarding the inconsistency in the procedures for renewing work permits for foreign workers, calling it an unnecessary administrative burden. Specifically, the Working Group noted that some provincial Departments of Labour, Invalids and Social Affairs require the resubmission of applications for approval of foreign labor needs before applying for work permit renewal; while others require a complete re-application process, including posting job advertisements and submitting applications for approval of foreign labor needs.
Currently, according to businesses' calculations, the process of granting work permits to foreigners takes about 4-5 months, involving numerous paperwork procedures, notarization requirements, and consular legalization. “We propose developing and implementing short-term work permits; clarifying and standardizing the necessary documentation requirements for applying for or being exempt from work permits, ensuring that regulations are applied consistently across local labor management agencies,” the Human Resources Working Group proposed.
The tax and customs working group has submitted to the Ministry of Industry and Trade a report on the issues faced by businesses producing supporting industrial products. Specifically, the working group stated that many businesses producing products that are components or parts of products listed in the List of Priority Supporting Industrial Products under Decree 11/2015/ND-CP have applied for preferential treatment but have not been approved for this product group. Businesses reported that the process of obtaining preferential treatment takes a very long time, with many having to submit supplementary documents multiple times as requested by the licensing authority. Many past compliance issues have been rectified and supplemented by the businesses with relevant authorities, but the licensing authority still uses these issues to reject the applications.
"These difficulties have caused complications, increased costs and time for businesses, and have not truly maximized the effectiveness of the incentive policy," 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 Supporting Industrial Products for Development.
Businesses belonging to the British Business Association submitted four specific recommendations to the VBF this year to continue efforts to reform administrative procedures. Firstly, strengthen e-government in managing promotional activities. Secondly, simplify procedures and reduce the time for issuing business licenses. Thirdly, unify regulations between central and local governments. Fourthly, abolish the requirement for pre-approval of advertising, shifting 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
To encourage companies to make significant investments that generate substantial economic activity, on February 16, 2024, Singapore's Finance Minister proposed an investment exemption policy to provide support to eligible entities, including all businesses with investment projects in key economic sectors and emerging economic growth areas. The US government also recently allocated hundreds of billions of dollars to sustainability and climate financing programs, in addition to semiconductor manufacturing, through the enactment 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 more effective in retaining and attracting strategic investment corporations.
Regarding the investment support targets outlined in the Draft Decree on the establishment, management, and use of the Investment Support Fund, we find that the scope of eligible entities remains narrow. The requirements of investment capital exceeding VND 12,000 billion or annual revenue exceeding VND 20,000 billion are met by only a very small number of businesses, failing to represent the majority of investors in the high-tech sector.
How is the social insurance agreement between Vietnam and South Korea applied?
- Korean Business Association
The social insurance agreement between Vietnam and South Korea was signed in December 2023 and came into effect in January 2024. However, there are currently no precise regulations or guidelines regarding how the agreement applies to South Korean citizens in Vietnam; therefore, South Korean citizens are not yet covered by it.
It is recommended that 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 the 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 Corporation, and relevant private sector stakeholders to find viable short-term and long-term solutions for Vietnam to meet its energy security needs, including promoting the 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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