Improved business environment to stimulate private sector growth

By    May 19, 2016 | 03:31 pm GMT+7

Vietnam wants to strengthen its economic muscle through the proliferation of private domestic enterprises.

The Vietnamese government has issued several policies aimed at transforming the private sector into the economy's driving force.

Private enterprises are expected to contribute to the restructuring of the economy, enhancing the country’s overall efficiency.

Private sector to drive economy

The number of private enterprises in the next four years will double to a million, said the government in its latest resolution to support small and medium-sized enterprises and start-up firms.

The private sector currently contributes about 49 percent to gross domestic product (GDP). It also employs some 51 percent of the total labor force, and creates an additional 1.2 million new jobs each year.

However, 96 percent of private enterprises are small-scale and encounter difficulties such as a lack of investment funds and outdated technologies.

The government has developed a package of five specific solutions which includes (i) administrative reform to create a favorable business environment; (ii) start-up ecosystem development to support business continuity and innovation; (iii) fair treatment to all businesses to provide them with equal access to resources; (iv) reduction in costs of doing business; and (v) protection of legal rights and benefits of enterprises.

Local authorities have been instructed to hold open dialogues with the business community at least twice a year and set up an online information gateway so that enterprises can quickly connect to the administration and to each other.

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Prime Minister Nguyen Xuan Phuc shakes hands with private entrepreneurs during an event in April. Photo by Vietnam News Agency

In addition to the above-mentioned general guidelines, the government has assigned specific tasks to ministries and other relevant bodies in order to help enterprises quickly clear any obstacles they may face.

“Currently about 35 percent of imports must go through customs at border gates. [We must] cut the number to 15 percent by the end of this year,” said Deputy Finance Minister Do Hoang Anh Tuan.

He added that customs authorities have tried to cut days off clearance times by setting up quarantine surveillance and phytosanitary control checkpoints at airports and seaports.

The government’s Steering Committee of Business Development and Reform is in charge of monitoring how fast ministries the ministries complete their tasks.

“There is no way we can let this continue any longer,” said Le Manh Ha, deputy chief of the Government Office.

He noted that the privatization of state-owned enterprises will accelerate in the time to come, which will lead to less intervention by the state in various economic sectors so that private enterprises will have more room to grow.

Better business environment, greater national competitiveness

Vietnam’s business environment remains less favorable than other countries in Southeast Asia, said Nguyen Minh Thao from the Central Institute for Economic Management at a conference on Wednesday.

For example, it takes 20 days to start a business in Vietnam, while it is only four days in Malaysia and two day and a half days in Singapore.

Vietnamese enterprises must also wait 59 days on average to get connected to the power grid, while their counterparts in the Philippines don’t have longer than 42 days, in Thailand 37 days, in Malaysia 32 days and in Singapore 31 days.

It takes up to five years for a firm in Vietnam to declare bankruptcy, while it is only 2.7 years in Thailand and the Philippines, a year in Malaysia and less than a year in Singapore.

Aware of such gaps, the Vietnamese government has pledged to reach the average level of “ASEAN 4”, which includes Singapore, Malaysia, the Philippines and Thailand, across several competitiveness indicators outlined by the World Economic Forum by 2017.

By 2020, Vietnam aims to reach the average level of “ASEAN 3” (Singapore, Malaysia and Thailand) in terms of its business environment and national competitiveness.

Vietnam will also reform its legal framework so that entrepreneurs can do business without fear of being charged with criminal offences.

Last month, criminal charges brought against a restaurant owner on the outskirts of Ho Chi Minh City for “being five days late in obtaining a business registration certificate” evoked public concern about the country's unfair business environment.

The government has issued two resolutions to support enterprises so far this year, emphasizing its own role in promoting business development.

 
 
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