VIETNAM: Vietnam’s Prime Minister, Nguyen Xuan Phuc, has requested for ministries and government agencies to remove and simplify at least 50 percent of business and investment conditions by 2019.
This follows the government’s resolution No. 19 which is aimed at improving Vietnam’s business environment and enhancing national competitiveness. To add to this, the Vietnamese government has also recently issued resolution No.139 which acts to approve the action plan on reducing financial expenses for enterprises, meaning that enterprises can now save up to a minimum of 10 percent of financial costs when investing in Vietnam.
According to the Minister Nguyen’s new directive, ministries and ministry-level agencies are required to report to the Prime Minister on a quarterly basis on the remaining number of business conditions and goods subject to specialised control. Clear justifications are also required in the event that there are changes to the number of business conditions and goods required for specialised inspection. Additionally, proposals on removing business conditions must also be substantial in order to produce new conditions that would be viable for businesses.
Based on Minister Nguyen’s vision, the lessening of business conditions will function as a key for economic growth and efficiency and the successful execution of this vision mandates strong collaboration from government leaders and ministers. Minister Nguyen has also strictly prohibited government agencies and ministries from establishing new business conditions or abusing specialised inspections.
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Experts have projected that the strengthened bilateral ties between Japan and Vietnam as well as Vietnam’s high economic growth and enhanced business environment will attract an influx of Japanese investments.
During Vietnamese Prime Minister Nguyen Xuan Phuc’s recent visit to Japan, wherein he met with Japanese companies such as All Nippon Airways Co., Ltd, AEON Co Ltd., Mitsubishi UFJ Financial Group, Mitsui and Mitsubishi, sentiments were strong on the part of the Japanese investors regarding their interest in investing in Vietnam. With Japanese companies stating that they have plans to invest billions of US dollars in Vietnam, across a diversity of sectors.
Seiji Imai, Head of Mizuho Bank for Asia and Oceania has also commented that Vietnam is the first destination for overseas investments in Japan and the country could be experiencing a new wave of investments from small and medium Japanese enterprises with advanced technologies that are looking to enter the domestic market. Furthermore, he believes that the country will experience two waves of investments from Japanese firms with the first wave being attributed to large manufacturing companies and the second to follow shortly thereafter.
Umeda Kunio, the Japanese Ambassador to Vietnam has told the local media that many Japanese companies are very interested in conducting business in Vietnam in areas such as urban development. This can be witnessed with projects in the northern part of Hanoi as in the case of the the Binh Duong project, subway route No.1 in Ho Chi Minh City, and subway routes 1 and 2 in Hanoi.
Currently, Vietnam ranks as the third country in a recent survey on the overseas deployment of Japanese manufacturing companies by the Japan Bank for International Co-operation, and second in the same survey if only small and medium companies are taken into consideration as observed by Mr Kunio.
In a survey conducted last year by the Japan External Trade Organization (JETRO), up to 70 percent of Japanese companies that are currently operating in Vietnam have expressed an interest to expand operations within the country, which is a relatively high percentage compared to other countries in ASEAN. Additionally in a Japanese survey questioning participants about countries and territories for potential expansion agendas, the number of companies choosing Vietnam has been observed to increase over three consecutive years.
According to Mr Kunio, the attractiveness of Vietnam as an investment destination can be attributed to its market potential, relatively low cost yet diligent workforce and political stability. Based on numerous economic forecasts, Vietnam’s economic growth is projected to remain high in 2018, and Japanese investment into Vietnam this year is also expected to be corresponding high. A trend that is also backed by reports from the Foreign Investment Agency.
As of 20 September this year, Japan had 3,900 valid investment projects that are worth a total registered capital of US$55.78 billion in Vietnam. Similarly, up till September of this year, Japan has been recorded as Vietnam’s largest foreign investor, with total investment capital of US$7 billion.
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The Ministry of Trade, Industry and Energy had announced an increased in R&D spending on five burgeoning industries—autonomous car, biohealth, IoT-fitted electronics, renewable energy, and semiconductor and display—to 50 percent of the nation’s total R&D budget by 2022 from the current 30 percent.
This year, the government has allocated approximately 900 billion won (about US$844 million) to the above five sectors out of its total 3.16 trillion won R&D budget.
Correspondingly, the ministry is seeking to cultivate development of original technologies, related core technologies, and the growth of new industries using these new technologies via efficient commercialisation.
Private firms will also be supported in adopting technologies developed by external talents. Along with this revision, companies are required to foot only 30 percent of the total cost in cash while acquiring technologies from external sources—with the rest in non-cash asset. Currently, businesses have to pay about 50 percent of such costs in cash.
A new review system will also be implemented by the ministry—run by a group of industry professionals—to assess the feasibility of innovative technologies and development proposals.
