Building Friendly Government to Accompany Businesses

 

In the context of the world’s financial-currency crisis and declining growth in recent years, Hanoi’s enterprises faced a lot of difficulties. In 2012, Hanoi had 16,297 newly established enterprises, but also had 12,833 deactivated enterprises (428 dissolved; 7,366 left business address and 5,190 suspended). To adapt to the circumstances, many companies have implemented solutions like cost savings, business structuring, technological innovation and seeking new markets, and achieved certain results. Compared to 2011, the industrial production index rose 5.1 percent, total sales of goods and services revenue increased by 18.8 percent, exports increased by 5.3 percent and imports decreased by 3 percent.

 

In 2013, due to the weaknesses of economic structure and slow growth pattern, increasing bad debts, large inventory and high interest rates, the performance of businesses is not effective. In the first 4 months of the year, Hanoi has established 4,679 new businesses; decreasing 7.8 percent compared to the same period last year and had 1,134 suspended enterprises. Compared to the same period in 2012, during the first 4 months of 2013, the index of industrial production rose by 4.9 percent, total retail sales of goods and services increased by 11.8 percent, exports accounted for 98.1 percent and imports 99.3 percent. Overall, in the past few years, the production of Hanoi’s businesses has prospered, but the general picture is still bleak and facing many difficulties.

 

The striking and pervasive difficulty of business is accessing production area. Price of land (with infrastructure) in the industrial park in Hanoi is 2 times higher than the industrial park in neighbouring provinces such as Bac Ninh, Hung Yen and Ha Nam, which makes many companies in need of land or to expand production have to hire land with high-price (even there is no land for lease). Many projects in the deployment process also encountered many difficulties in site clearance, significantly affecting the progress of investment. Capital and interest are also problems. Businesses not only have difficulty accessing the banking system but when approaching, they are also concerned about some problems: controlled lending limits, high interest rates of 13 -15 percent / year, and interest rate policy changed so much in a short time. In addition, there is the lack of policies to stabilize prices and supplies and materials to calculate the cost basis, prices for companies to implement major and long-term projects. Prices of inputs such as oil, gas, coal and electricity increase unstably and make product prices increase so it is difficult for goods to be consumed. In addition to the above difficulties, the policies of the State are constantly changing and getting more perfect, which are major factors affecting business operations.

 

Noticing early how the difficulties of the economy will negatively impact business operations, the city authority has actively implemented some solutions.

 

Hanoi People's Committee has issued a number of guidelines and policies and applied many incentives to make a timely legal framework to remove difficulty for companies. On that basis, the city also directed departments, districts, and towns to research advisory, issue and implement many solutions, supporting programs and activities, to remove difficulties for enterprises. Until now, Hanoi has implemented a series of programs to support businesses such as training human resources and consulting and providing information for business, key trade promotion and development of key industrial products, encouraging the development of supporting industries, priority industry, key, high-tech and energy-saving industry; supporting following interest rate for investment firms and reducing tax under Resolution 13 / NQ-CP of the Government.

 

Along with the requirements of government agencies to accelerate administrative reform, proactive detection, and seeking measures to remove difficulties for enterprises, the city’s authority, departments and districts also increased contacts and dialogue with entrepreneurs and businesses. The city also clarifies top solutions as to support local businesses, remove difficulties for business in 2012 and the first 4 months of 2013, the city government leaders, departments and the district has held dozens of meetings, contacts and dialogues with companies and entrepreneurs. Typically, on May 23, 2013, the city’s people committee held a business meeting with the participation of over 200 companies, in which many specific issues were directly settled by provincial leaders through dialogue. These solutions have started to take effect, the industrial production enterprises have gradually overcome the difficulties and are active in production and consumption.

 

One of the outstanding support activities is to reschedule and extend tax deadlines and remove financial problems for businesses. Implementing resolution 02 NQ-CP dated January 07, /2013 on solutions to addressing hardship of businesses, market supporting and bad debt handling, the city promptly issued a guideline to implement specific tasks. So far, the authorities have postponed, extended tax on value added for 10,769 companies with more than VND 388 billion and rescheduled payment of corporate income tax for a total amount of VND 61.8 billion. The city is also working with a number of banks, suggesting lowering interest rates and getting timely sharing. Specifically, most commercial banks have adopted lending interest rates lower than 11 percent / year, as well as considered the possibility of further lowering the interest rate.

 

Besides, the trade promotion activities are also promoted. The city has allocated huge funds for trade promotion funds (VND 30 billion in 2012 and VND 50 billion in 2013) to support enterprises to promote trade and join exhibitions and trade fairs in the country and abroad, thereby addressed output for products of businesses. The City has issued Decision 2495/QD-UBND dated April 10, 2013 supporting investment interest rates for the local enterprises with the supporting capital of VND108 billion; initial support of 0.2 percent per month. In particular, to solve the inventory problem, Hanoi has linked trade promotion activities with the campaign "Vietnamese use Vietnamese products” and helps businesses consume construction materials by applying an appropriate mechanism to use iron, steel and cement for renovating, upgrading or constructing new project/construction or irrigation in rural areas under the policy ...

 

For more than 10 years, public administrative reform (PAR) has always been identified as the city’s key task to be implemented comprehensively. Content of PAR is focused on 4 areas: institutional reform, organizational reform of the administrative apparatus, construction and development of staff, civil servants and public finance reform.

 

The reform of administrative procedures aimed at minimizing the cost and time of enterprise to set up business and the implementation of the provisions of the State. In particular, the city has to simplify the administrative procedures in the model of "one stop shop" (OSS) in units of the city; timely handle difficulties of enterprises, at the same time promote the publicity and transparency of information for business. In particular, the city also receives reports on problems and recommendations of businesses in simple way. So far, 9Hanoi is the first locality to standardize and publicize the Administrative Procedures implemented by OSS and contribute to the fight against corruption and waste.

 

In 2013, Hanoi chose the theme: “The year of administrative discipline”. That also means the central task is the weaknesses that should be addressed to change the situation. In terms of administrative discipline, firstly it requires team leaders, public officials at all levels, sectors, especially leaders, heads of agencies and units to be exemplary in raising awareness and responsibility at work. It’s required to promote administrative reform, the focus is administrative reform towards simplicity and convenience for citizens and public transparency. At the same time, it’s required to overcome and implement strict measures to settle the phenomena of harassment, extortion and negligence. The city requires the implementation of assessment, grading to determine the PAR index to ensure the accuracy and objectivity, honesty, comprehensiveness to all areas and criteria.

 

In May, the city established seven working groups, working directly with enterprises (each group in charge of 5-7 enterprises) helping them overcome difficulties and obstacles.

 

The City Steering Committee was established to overcome difficulties and promote business for enterprises in Hanoi (2780/QD-UBND Decision dated 04.25.2013). The Steering Committee is chaired by the City president as its head and some vice presidents as vice leaders in charge of some areas, such as construction, finance, industry and trade, along with the members of the departments of Planning and Investment, Finance, Construction, Natural Resources and Environment, Planning and Architecture, Hanoi Tax Department, Industry and Commerce, State Bank-Hanoi Branch, Labour, Invalids and Social Affairs. The Steering Committee is responsible for directing departments to perform their assigned tasks in the action plan of 22/CTR-UBND, dated January 29th 2013 of the city people’s committee, to remove difficulties and promote business development, direct timely to resolve difficulties and problems proposed by business. The Steering Committee focuses on solving problems related to business, supporting market as stated in Resolution 02/NQ-CP dated January 7th 2013 of the Government.