Businesses Contribute to National Development Strategy

 

In earlier recommendations as well as in presentations at the meeting, high tax rates have been raised such as 28 per cent for enterprise income tax. In reply, Mr Nguyen Sinh Hung, Finance Minister said that the policy of the Finance Ministry in the next five years to reduce taxes for instance, enterprise income tax will be down to 25 per cent or 23 per cent. However, added value tax on imports will remain at 8 per cent-10 per cent, for some protection is still needed to ensure successful accession to WTO - a process described by Trade Minister Truong Dinh Tuyen, as challenging when Vietnam reduces taxes, abolishes subsidy and opens the market.

 

The problem of investment capital is even more critical. Many enterprises asked for loans but were refused. Explaining on the difficult access to commercial banks, Mr Le Duc Thuy, Governor of Vietnam State Bank said that businesses should treated commercial banks as equal partners for they also have their own risks, loans cannot exceed the value of assets of enterprises. The Governor raised three problems: First, conditions are not met: without or insufficient asset, inadequate legal formalities; Second: important projects consume most of the resources; Third: inexperienced evaluators reject out of hand difficult projects. The Governor also promised to reduce the inflation rate below 8 per cent, upgrade Vietnamese banks and especially commercial banks to international standard before 2010, mobilise capital for efficient businesses, important or   as well as distant projects.

 

In his statement, VCCI President Vu Tien Loc emphasized on the application of science and technology: the development of technology market will boost the growth quality. For his part, Finance Minister Nguyen Sinh Hung added that the State should lend support to businesses in applying science and technology and improving their competitiveness. Especially, he urgently called for relevant authorities to join hands to set up a national strategy for business development with the aim of realizing Vietnam’s target of having 500,000 enterprises by 2010.

 

Minister of Planning and Investment Vo Hong Phuc said that in 2006-2010 plan, the government will promote science and technology in key areas, establish and start operating an assistance fund.

 

Many complaints were made on land compensation, slow site clearance and complicated formalities. Minister of Natural Resources and Environment Mai Ai Truc pointed out two problems: First, investors of housing projects often negotiate with local people instead of the State, while the State is truly responsible; Second, real estate is associated with land, however businesses deal directly with land. Real estate businesses must have capital and experiences. Real estate must be diversified, for example, the people may invest to build roads and bridges and collect toll fees. Replying to the complaint of high land rental. Mr Triet said that in the past land rental was low, it has been readjusted to be compatible with the market prices.

 

In conclusion, Prime Minister Phan Van Khai said that, concerned ministries and VCCI will pursue the remaining issues and together with business community implement the tasks in the new stage. He highlighted the contributions of businesses and entrepreneurs in the economic development and called on greater efforts in the implementation of 2006-2010 plan, with better market strategy and products to ensure sustainable development in the process of integration. He added that young entrepreneurs should be shock brigade helping Vietnam advancing high and far in the world market.

Although manpower has been emancipated, in science, it has just started. It is a discrimination. We have been working and contributing efficiently to the socio-economic development but receiving insignificant investment, even in laboratory. We are not allowed to do some business because “State employees must not engage in business”. The government should accelerate the renewal process to promote our contribution.

 

EuCham believes Vietnam is a good business environment for private sector. It requires however an equivalent infrastructure, especially energy and telecommunication. Vietnam-EU forum is an important channel to promote trade. We were very happy to make contributions to Common Investment Law and Unified Enterprise Law and are ready to do so in the future. We hope that labour disputes and work strikes will be settled quickly. If the law on work strike is drafted with contributions of related parties it will facilitate the enforcement.

 

Investment in technology is only 0.2-0.5 per cent of turnover while it should be 1.5 per cent. According to a survey of 300 industrial enterprises, only 4 per cent of enterprises spared 0.03 per cent of workforce for scientific research. In the next 5 years, the government ministries and agencies must transfer science and technology organisations into enterprises or science businesses in compliance with Decree N.115/2005/ND-CP. The government should also stipulate that enterprises must contribute 2 per cent of turnover to technology so that Vietnam can be equal with other countries in the next 1 or 2 decades.

 

Good stock market requires strong commodities acceptable to investors. Sacom company for example, has just issued VND54 billion and received VND243 billion. 27 strategic investors, local and foreign, ask for stocks, but we could only satisfied 17 investors. The buying exceeded the intended selling. Therefore, capital can be mobilised at the market and not necessarily from banks and government. I believe that the State share should not be 51 per cent in joint stock companies. It makes the companies tend to rely too much on the State without making efforts and developing their own effective business planning. The dominating State employees will discourage shareholders and foreign investors. I suggest that the State share should be reduced to 30 per cent-35 per cent.