Support for businesses to put money into the economy

The problem of quickly restoring private investment flows requires a change in thinking and the way of implementing solutions to support businesses.

Many businesses do not expect support, but only hope that policies do not create additional burdens for them. Photo: Duc Thanh

There are still many regulations that make businesses worried.

Last week, 6 associations sent another petition to Prime Minister Pham Minh Chinh , Deputy Prime Minister Le Thanh Long and Ministers of several relevant ministries and branches. The content was still concerns about the content of the Draft Decree amending Decree 09/2016/ND-CP (on fortifying micronutrients in food).

Dr. Le Duy Binh, Director of Economica Vietnam, mentioned the petition of associations, including the Ho Chi Minh City Food and Foodstuff Association, the Association of High-Quality Vietnamese Goods Enterprises, the Phu Quoc City Fish Sauce Production Association, the Vietnam Association of Seafood Processors and Exporters, the Association of Transparent Food and the Vietnam Cashew Association, with many concerns.

“There are many proposals and recommendations for solutions to support businesses, but what is needed most are specific decisions and actions in implementation. In fact, many businesses frankly do not expect support policies, but only hope that policies do not create additional burdens for them,” Mr. Binh shared.

Private sector investment, although recovering slightly, remains far below pre-pandemic levels. Among the causes, delays in administrative procedures need to be clarified.

As a business expert, Mr. Binh also cannot remember the number of times these associations have sent petitions to state management agencies on the same content, since 2016 - the time Decree 09 was issued. But the most recent time he knew was in June 2024, during a meeting between business associations and the Central Institute for Economic Management ( Ministry of Planning and Investment ) on the implementation of Resolution No. 02/NQ-CP on key tasks and solutions to improve the business environment and enhance national competitiveness in 2024.

It is worth noting that the content of the recommendations these two times is not much different, still "requesting the Prime Minister and the Government to direct the Ministry of Health to soon complete and issue the Draft Decree amending Decree 09, in accordance with Resolution 19/2018/NQ-CP, the 2013 Constitution and the National Strategy on Nutrition", specifically not requiring iodine supplementation for salt used in food processing, iron and zinc fortification in wheat flour used in food processing...

The new point and also the reason why these associations had to gather, get opinions and sign the petition, is that the Draft that the Ministry of Health released for comments on the Government's Electronic Information Portal on July 3, 2024 has not yet been implemented in accordance with the Government's direction as well as the two consecutive directions in 2023 and 2024 of Deputy Prime Minister Tran Hong Ha.

The problem is that cases where draft legal documents contain provisions that can exacerbate concerns and uncertainties for businesses, such as the above, are not unique.

In the report of the Ministry of Planning and Investment sent to the Government on the situation and results of the first 6 months of the implementation of Resolution No. 02/NQ-CP, the list of drafts in this category is quite thick. It is worth mentioning some provisions on expanding the subjects, changing the tax rates that are said to be in the Draft Law on Special Consumption Tax or requirements on vocational skill certificates, business conditions... in the Draft Law on Employment (amended) leading to concerns and worries about the burden of administrative procedures, while there is no clear and convincing analysis of management efficiency.

Inadequacies in the draft legal documents on management and use of financial contributions from manufacturers and importers to the Vietnam Environmental Protection Fund to support waste recycling and treatment; and recycling cost norms (Fs) in implementing the responsibility of waste collection and treatment of manufacturers and importers are also pointed out.

In particular, the lack of regulations on interconnectivity in state management is creating unnecessary administrative procedures, thereby increasing compliance costs for businesses. For example, the Draft Law on Standards and Technical Regulations amendment requires businesses to notify basic standards to the Ministry of Science and Technology, while many products such as drugs, food, cosmetics must be registered with the specialized ministry, the Ministry of Health, veterinary drugs must be registered with the Ministry of Agriculture and Rural Development, etc.

“In this context, it is understandable that not many businesses are ready for new investment plans, which will directly affect economic growth this year,” Mr. Le Duy Binh worried.

 

Changing mindset to support businesses

The relatively stable return to 54.7 points of the Purchasing Managers' Index (PMI) in June and July, after surpassing the 50-point threshold in April 2024, did not reassure Dr. Nguyen Dinh Cung, former Director of the Central Institute for Economic Management (CIEM) when calculating the contribution to GDP of the main growth drivers.

“Although private sector investment has recovered somewhat, it is still too low compared to before the pandemic. Among the causes, it is especially necessary to clarify the delay in implementing administrative procedures and investment procedures. A business with 20 years of experience in the wood industry said that they were forced to refuse a number of contracts because they could not complete the investment procedures to build new factories in time. Because wood export production is seasonal, if the procedures are slow and unpredictable, it is very difficult to assess the ability to meet the needs of importers,” Mr. Cung explained.

It must be said frankly that delays in legal and administrative procedures are the cause of the slowdown in disbursement of public investment capital in many localities. However, Mr. Cung said that there is not much room for growth in this capital source, due to absolute limits. Therefore, growth drivers are relying on the recovery of exports, industrial production, and service growth when domestic demand increases again.

“What I am concerned about is that import-export turnover may reach its limit if current production capacity is not expanded. The hypothesis is that foreign import demand is increasing sharply, although it is forecasted that it will not recover for sure, but domestic production capacity is not enough to meet the demand, so it cannot create a rebound,” Mr. Cung analyzed.

This is also Mr. Le Duy Binh's concern when he cannot read much information about the groundbreaking ceremonies of large enterprises, nor can he observe the bustling atmosphere of the small and medium-sized enterprise sector.

“With the assumption that the growth rate of public investment and import-export remains the same as in the past months and that people’s spending will be supported by salary increases, VAT support solutions, etc., GDP by the end of this year is likely to reach about 6.5%. The remaining part of the 7% target belongs to the return of private investment,” Mr. Binh analyzed.

Thus, the current problem is still how to quickly restore this capital flow. However, Mr. Binh said that solutions to support businesses must set clear goals, such as specific requirements on the number of investment projects, the amount of money that businesses and investors put into the economy, etc.

This means that the problems that have been summarized in the past such as procedural difficulties, concerns about legal risks, high costs, etc. need to be resolved in the direction of removing each project and each enterprise to immediately have cash flow into the economy, not in the direction of adding 3-4 procedures into 1, or making enterprises wait for 8 years without resolving their petitions like the case of the Ministry of Health...

“My point of view is still that a safe, favorable, low-cost business environment will stimulate great enthusiasm for business people, whether they are trillion-dollar corporations or individual businesses,” Mr. Binh said.

Source: https://baodautu.vn/ho-tro-de-doanh-nghiep-dua-tien-vao-nen-kinh-te-d221627.html