Corruption biggest business obstacle in Vietnam: private equity firms

By Ha Phuong   August 21, 2016 | 11:31 pm PT
Corruption, red tape and the lack of a long-term strategy are stifling businesses.

Most private equity investors say that “corruption” is the main obstacle they face in Vietnam, according to a survey conducted by business advisory firm Grant Thornton Vietnam of decision makers working in private equity both in and outside of Vietnam.

"Government red tape/processes" and "management's lack of long-term strategies" are the second and third biggest obstacles for investors in Vietnam, the survey said. Meanwhile, 20 percent more investors from a year ago consider constantly changing policies the "most critical issue". 

Source: "Look out for steady investment growth", Grant Thornton, August 2016

Corruption in Vietnam is perceived as "serious", with the country ranking 112th out of 168 countries on the 2015 Corruption Perceptions Index compiled by Towards Transparency. This is reflected in the country's business environment where companies need to offer bribes to get things done and suffer political interference. 

Investors are hoping for greater transparency now that the new government is looking to revise the Anti-Corruption Law, which took effect in 2005.

In an effort to improve the business environment, the government revised the Enterprise Law and Investment Law in 2014. The move has helped to reduce the time needed to register a business, obtain an investment license and eased regulations for mergers and acquisitions, while also clarifying the role of foreign investors. 

However, such changes to laws and regulations could backfire and actually raise concerns about the legal environment among companies and investors, said Grant Thornton. If policymakers continue to issue new documents without synchronizing the entire legislative system, it could become one of the most critical investment obstacles for Vietnam, the firm said.

Still, over 80 percent of surveyed companies put their faith in Vietnam, and plan to increase their investments in the country over the next 12 months.

Source: "Look out for steady investment growth", Grant Thornton, August 2016

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